Key questions for consumers to consider before entering property raffles

Consumers considering buying tickets for property raffles are being urged to make sure they understand what such prizes involve.

Record house prices, now standing at £261,743 on average across the UK, according to Halifax may encourage some people to take part.

Alison Farrar, lead officer for property at the Chartered Trading Standards Institute said businesses are required to comply with the Consumer Protection from Unfair Trading Regulations 2008, which means they should not make misleading statements or omissions.

She said: “Anyone purchasing a raffle ticket in the hopes of winning a property is advised to read the terms and conditions carefully before making their decision.”

Ms Farrar told the PA news agency that people should establish answers to questions such as whether they can sell the house immediately if they win; whether they would be liable for conveyancing costs; whether money towards the running costs of the property such as council tax is included in the prize; and what happens if not enough tickets are sold.

Sometimes, cash alternatives may be offered instead of the property.

Ms Farrar suggested people should ask themselves whether the amount of cash offered sounds reasonable.

If tickets are very cheap, she said people should consider how many would need to be sold to cover the value of the house – which could affect their odds of winning.

People should also ascertain whether a property has already been offered unsuccessfully as a prize or for sale, she said.

 

She added that advice from Trading Standards is, as always, to do some research before parting with money, and report anything suspicious on 0808 223 1133.

Jenny Ross, Which? Money editor, said: “Housing raffles promise the chance to win a property for £10 or less, but in reality very few properties ever end up in the hands of an entrant.

“The vast majority of property raffles have either been shut down for failing to comply with gambling laws, or have awarded a cash prize after failing to sell enough tickets to cover the value of the property.

“While property raffles are now regulated by Trading Standards, it’s vital that entrants read the competition’s terms and conditions carefully to find out if they’re entitled to a refund if the raffle is called off and whether potentially eye-watering stamp duty or conveyancing costs are included as part of the prize.”

Marc Gershon, founder of Winmydreamhome.com, called for greater transparency in the sector.

He said: “We allocate 10% of all ticket sales to charity and set aside a further 60% of all ticket sales for the alternative cash prize. We’re completely transparent about this from the outset.”

Highlighting issues in the industry, he said there may be confusion over the odds of winning and how money raised through ticket sales is spent.

Advertising campaigns can be costly and some industry initiatives fail to reach the goal of giving away a house, he said. Instead, a lesser cash prize may be offered under the terms and conditions.

If they do win, people may not be clear on the costs associated with running the home.

Mr Gershon added: “There is definitely a market for house raffles if done correctly and we have learned some hard lessons on how to improve the sector during our own efforts.

“Being up-front about the number of tickets you need to sell, what percentage of ticket sales income is guaranteed to be awarded as a cash prize if you don’t reach this target, and what percentage will be awarded to charity all help to increase consumer trust.”

We don’t want to see members of the public getting into trouble because they don’t understand the rules about lotteries and the distinctions between them and competitions, and free draws

Gambling Commission

The Gambling Commission said it is important to understand what activity is behind the prize.

It does not regulate free draws or prize competitions based on skill or knowledge, which are not considered forms of gambling.

However, competitions may sometimes cross the line into a lottery, and the commission can take action if it finds a competition is being run as an illegal lottery.

Lotteries happen when someone pays to enter and prizes are awarded on the basis of chance.

The Gambling Commission has tips to understand the difference between lotteries, competitions and free draws at gamblingcommission.gov.uk/PDF/quick-guides/Prize-competitions-and-free-draws-quick-guide.pdf.

The commission said people should satisfy themselves that the competition complies with the law and they are happy with the terms and conditions.

It advises people to always exercise caution, particularly if they are paying a fee.

A spokeswoman told PA: “We don’t want to see members of the public getting into trouble because they don’t understand the rules about lotteries and the distinctions between them and competitions, and free draws, so we strongly urge people to read the advice on our website and take expert legal advice.”

Information for businesses can be found on the National Trading Standards Estate and Letting Agency Team website at ntselat.uk.