Raffles are in the news as a way of ‘selling’ homes, and not just because an Irish club has won a bundle of publicity by launching one with the clever title “Win A Feckin House”.
In fact, raffles are back in the news because there’s a flurry of them now - 16 according to EAT’s research, with 15 in the UK and that one in the Republic of Ireland.
In addition they’re worth looking at because two agents known to EAT are at least flirting with the idea of setting up companies to handle raffles as a possible option for vendors.
The acid test, of course, is whether they actually work - and the answer is yes, but extremely rarely it appears.
Of 30 UK property raffles that are now closed and which date back to mid-2017, only one is thought to have had sufficient take-up to cover the cost of the house and organisation of the competition, and thus produced a ‘win-win’ for both the seller and the entrant.
This was Win A Country House (website details at the bottom of this story) where lucky Marie Segar of Warrington had her entry selected: the financial services worker paid £2 to enter (in fact she purchased 20 tickets) and won a Lancashire property estimated in value at £800,000.
And, as a bonus, she also received the title of Lady of Melling, which was also included in the competition.
Other than that example, however, the other 29 raffles which appear to have closed in the past 18 months or so all attracted insufficient entries and either folded or continued to the end but offered a cash prize once the organisation costs were deducted from ticket sales.
A few, of course, didn’t even make it that far because they fell foul of the rules.
The Gambling Commission says there are two options for individuals or companies wishing to raffle a property - and repeated failure to abide by one or the other option could, at worst, lead to a year’s prison sentence.
Firstly an owner could run a raffle based purely on the luck-of-the-draw, providing he or she obtains a Gambling Commission licence.
However, this may in some cases require the organiser owning the property themselves (which means an agency may have to buy a home ahead of offering it in a competition); the commission says such events cannot be run for private gain and cannot offer a prize valued above £200,000 (both limiting the attractiveness of a raffle for many).
Secondly it is possible to hold a competition to dispose of a highly valuable prize such as a property but this needs to be convincingly “skills-based” rather than involve the random drawing of a ticket requiring nothing more than chance.
This latter point is why many raffles in recent years have had ‘false starts’, with their organisers believing they could simply publicise the property and sell tickets. Back in 2008 when the housing market was in poor shape - significantly worse than now - the Gambling Commission closed down around 100 attempted raffles because of no ‘skills’ requirement.
Research by EAT suggests that the first successful attempt at a raffle competition of this kind was in 2008 when the owner of a Devon estate staged a competition after failing to sell the property in the conventional way.
The owner succeeded in covering the market price of the estate by selling competition entries at £25 a time and the skills-based competition was a relatively simple easy-to-find-an-answer question: "What is the cost of an adult full-season coarse fishing licence for 2008/2009?”
However, there have been extremely few successful attempts since and the crunch issue appears to be the marketing required to sell sufficient tickets to cover the property price and, in most cases, the stamp duty too - any competition failing to do this would lack appeal to a prospective entrant who, if successful, could face a hefty SDLT bill.
The more expensive the house the more attractive the competition - but the more tickets to be sold, as well.
Is it worth it? Are raffles a last resort in a sticky market, or a simple waste of time and money and potentially misleading too? Let us know…
You can find a list of property raflles, current and recent, on www.loquax.co.uk.
Last year’s winning competition is on winacountryhouse.com.
That Irish raffle is here: www.winafeckinhouse.com.