Roll up: Niomi won a £500,000 raffle home
The odds are certainly unlikely but it’s not impossible, as 27-year-old Niomi Boontam will tell you. She now owns a London apartment valued at £500,000 after winning a raffle. Her ticket cost just £5.
‘I never thought I’d actually win. I was shaking and thinking ‘this is not real’. I live with my partner and we’re renting and it’s a lovely location, but we don’t own it,’ says Niomi, who currently lives in Bournemouth.
The firm behind the competition, Raffle House, also pays the stamp duty where it applies, plus conveyancing fees and throws in £3,000 to help with running costs.
Niomi is not the only lucky winner this year. Administration assistant Jemma Nicklin, 23, who lived with her parents in Wolverhampton, won a £500,000 four-bedroom cottage near Shrewsbury after buying two tickets at £2 each.
In recent months there has been an explosion in the number of property raffles, because many owners who put their homes on the market in the traditional way with an estate agent just before lockdown have become frustrated waiting to find a buyer.
But while raffles may change the lives of a fortunate few, are they a serious way of trying to buy and sell a home?
The jury is out, not least because organising a raffle with such an expensive prize is complicated and recent examples have collapsed.
What’s more, the Gambling Commission has stepped in to shut down many house raffles because it is illegal to simply sell tickets with a prize valued at £200,000 or above, unless the organiser obtains a formal licence. Otherwise a seller could end up with a £5,000 fine or even a year’s prison sentence.
Instead, there must a competition element: in many cases an entrant has to answer a question, which avoids the need for a licence. Secondly, there is the issue of selling enough tickets to cover the home’s value, plus the costs of holding a raffle. Most raffles to date have failed to sell enough tickets and had to give a cash prize. This had led to complaints to the Advertising Standards Authority.
Raffle House failed to sell enough tickets for a draw in 2019. ‘Our first competition closed with a cash prize of over £170,000. We’re over the moon at being able to award such a huge sum of money and to have raised nearly £14,000 for charities,’ says chief executive Benno Spencer.
Even for the few winners who actually get a property, there could be downsides.
Consumer group Which? points out some raffles do not pay stamp duty, so a winner may end up with significant costs.
‘It’s also important to know whether the prize is a leasehold or freehold. If it’s a leasehold, check how many years are left, and whether any service charges or ground rents apply’, says a Which? spokesman.
Drawn out of the hat: Consumer group Which? points out some raffles do not pay stamp duty, so a winner may end up with significant costs
In addition it might be worth trying to find out why the property is being raffled in the first place, instead of the traditional and simpler route via an estate agent.
‘There’s the risk that the property wasn’t accurately described and may include some unwanted and expensive surprises,’ says Shilpa Mathuradas, head of property litigation at London legal firm Osbornes Law.
But if you do bite the bullet, there are plenty of opportunities as several raffles are now ‘live’.
One competition is offering a two-bedroom apartment in Manchester city centre. Tickets are £1.80 and the draw will be held in September 2021 or earlier. If too few tickets sell, 75 per cent of the monies raised will be awarded to the winner.
Owner Stella Wong says: ‘I know it is a little unusual, but we thought this was a great way to give something back. We want to give someone a fresh start and, the apartment will come fully-furnished with stamp duty paid so it really is the chance of a lifetime.’