Should I Raffle My House?
Selling a property can be difficult. Seasonal fluctuations, economic trends and even the area in which you live can affect how quickly your property sells. Sometimes, people have to go beyond their local estate agent and find an alternative way to sell. If you have ever had a house that sat on the market for months and months with little interest, you’ll understand how demoralising it can be, especially if you miss out on the property of your dreams as a result.
Whilst there are some fantastic alternatives to the traditional house selling route to explore, property raffling is still relatively unheard of. Whilst you’d happily tombola away a cake or jar of sweets, would you really raffle your house?
What is a property raffle?
Just like the tombola draw at a summer fete, you ask people to pay a few pounds to enter your property raffle. Once all the raffle tickets have been purchased, someone will be the proud new owner of your house. The buyer would have paid a minimal amount for their new property and you’ll have avoided the need for an estate agent.
Whoever wins may stamp duty fees included in the prize win. HMRC state that, for raffled homes, Capital Gains Tax is based on the open market value on the date of attaining the property. This means that if the winner of the property raffle was to sell their current house immediately there would likely be no Capital Gains Tax to pay.
Win a house raffle
Property raffling in the UK has only garnered popularity in the past couple of years. However, it is still not a mainstream notion. Although some properties in the high-value bracket have sold in raffles over the past two years, most draws have been met with varying degrees of success. One issue many people struggle with is meeting the ticket quota. For example, if you wanted to make £600,000 on your property and were charging £5 a ticket, you would have to sell 120,000 tickets.
One notable example that pricked the media’s attention in 2018 was a £2.7 million prize draw for a castle in Scotland. Once expenses had been paid, the raffle had only raised £77,000 – way off the £2.7 million needed. Therefore, the cash was given to the winner instead of the property.
The downsides of property raffles
If you want to sell your home via a raffle you will need to be aware there are many hoops to jump through. You will need legal advice to make sure everything is permissible before going ahead. The Gambling Commission released a warning in 2007 that revealed some improperly organised raffles have gone against gambling laws. These raffles are referred to as illegal lotteries.
If you still have a mortgage on your property a raffle might have to be reconsidered. They are typically more appropriate for a property with no mortgage. However, if you have a mortgage you will need to have a higher asking price to at least break even. If you do not break even you could face negative equity.
There are also pitfalls for raffle entrants too. Whilst winning a house for very little money is the dream for many, you will need to consider the following upon purchase:
- Stamp duty may still need to be paid
- Outstanding bills
- Repairs and maintenance
- Remember, you won’t have completed a property survey
- Moving costs and stress
What’s more, although it may sound obvious, when you enter a property raffle it is highly unlikely you will actually win the property. Whilst you have to be ‘in it to win it’, there could be a better place for the £10 or £20 you were going to spend on property raffle tickets.
Are house raffles complicated?
Property raffles can end up being more challenging than many sellers and buyers initially think; which is the reason why they are not more popular. Expenses and legal implications tend to scupper the option for many, alongside mortgage issues and repayments. Frankly put, selling your home or buying a property via a raffle is no easy option.
Selling your home doesn’t need to be demanding or difficult. If you’d like to have your home sold within seven days you can get a no-obligation cash offer from us today. Alternatively, if you’d like to find out more, browse our site or call us free on 0800 774 0004 and one of our friendly team will be able to help you sell your property.