Since time began we have seen innovative and imaginative ways of doing business and one emerging trend relates to home raffles. In simple terms entrants buy tickets to win a home and once a certain figure has been reached the draw is made and the winner takes ownership. Sounds simple? In theory there is nothing simpler than buying a ticket to win a prize but the gambling authorities in the UK have issued a number of warnings.
The Gambling Commission has issued a statement warning those who flout the U.K.’s strict gambling rules that they risk a potential £5000 fine and up to 51 weeks in jail. This is no make-believe threat these are the actual laws in place at the moment for those who ignore the rules. While legal advice should be sought before arranging a house raffle, in simple terms there should be an element of skill involved in entering the raffle as well as a way to enter for free. There is obviously more to consider from both a practical and a legal standpoint but competitions which are based entirely on luck such as lotteries, tombolas and raffles can only be held to raise money for charity.
Tax considerations and more
When looking to raffle your home there may also be a variety of tax issues to take into consideration such as stamp duty and the impact on your personal taxation. As a consequence, lawyers up and down the country are becoming more heavily involved in home raffles drawing up often complicated terms and conditions for the benefit of all parties. The most successful home raffles to date have involved houses towards the higher price range because the opportunity to own an expensive property for a ticket costing just a few pounds obviously grabs headlines. However, be very careful in how describe the property in question!
While many people often mock estate agents for the way in which they describe a variety of properties you need to be extremely careful when selling a home. All of the information should be factual and ensure that each potential entrant has a full understanding of the prize and the financial obligations they may be taking on. It is interesting to see that PayPal, the online payments giant, has recently stopped members from using their PayPal account to buy house raffle tickets because “the schemes present unusual challenges”.
There are many other challenges which include ensuring the draw is conducted in a fair manner, excluding entries from countries where the raffle may be unlawful as well as ensuring the differentiation between a competition and a lottery in the eyes of the law.
Traditional sales channels
For those who have looked into house raffles you will probably notice that the vast majority of them are seen as the last option for many owners. That is not to say there are issues with the properties but perhaps there are no buyers willing to match the asking price. Indeed, this in itself could be interesting because those hoping to win a new home and then sell it on for cash may struggle. There is also the subject of capital gains tax, another matter which should be discussed in great detail with your legal advisers.
So, while house raffles have grabbed the headlines of late they are unlikely to have any major impact upon traditional real estate sales channels. They do offer the opportunity to acquire a potentially expensive property for just a few pounds. However, in the midst of all these dreams it is worth remembering there can only be one winner per raffle.