House Lotteries: What’s the draw behind these tempting offers?
You’ve seen the ads, you may have even bought a ticket, but are you curious about the house lotteries we see popping up everywhere?
It seems like all we see in housing news these days is that prices are rising, with the age for first time buyers creeping up every year, as larger deposits and bigger mortgages are required. First time buyers are turning to unusual properties and their friends to help them get on the housing ladder.
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So it’s no surprise that house lotteries are growing popular – after all, who wouldn’t want to win a beautiful million pound home?
… But what’s the catch?
What are house lotteries?
A house lottery is pretty straightforward in theory. You buy what is essentially a raffle ticket and, if your number comes up, you win a house! Often, the house comes with a car and a cash prize, pretty much offering to set you up for life.
Technically, these aren’t raffles, as the UK Gambling Commission states that lotteries and raffles can only be conducted for good causes, not for the sole purpose of ‘commercial gain or profit’. So legally, these offers are considered a prize competition rather than a raffle.
You may have seen Omaze house lottery ads on TV, offering stunning homes in the British countryside, as well as brand new cars and cash prizes for ‘early bird’ rafflers. Raffle House offers similar opportunities. Both are in support of charities, with Omaze supporting the RSPCA and Raffle House supporting Centrepoint.
This all sounds great, right? For a relatively cheap raffle ticket you could win a house worth millions, while supporting charities. Where are the downsides?!
Should I buy a ticket for a house lottery?
You have a 1/45,057,474 chance of winning a Lotto jackpot, but your chances of winning in a house lottery are much closer, around 1/9.3.
However, you need to consider the small print. Many of these lotteries rely on hitting a target number of tickets to run the raffle.
If the target (usually in the tens of thousands) isn’t hit, the house doesn’t go to anyone. A cash sum is then paid out instead – usually much less than the value of the house. As of June 2021, new research found that the raffles only handed out the top prizes 19% of the time.
It’s also worth remembering that in October 2019, the Advertising Standards Agency upheld two complaints against Raffle House:
- A £650,000 property was advertised as a prize, while the winner only received £173,012.93 in cash
- A Facebook post of a previous winner implied they had won a house worth around £500,000, when they had actually won a cash prize of much less
You could own a house outright - no tax, no stamp duty, no mortgage!
You might never win anything - no matter how often you enter!You might never win anything - no matter how often you enter!
You’re supporting a charity at the same time
It might not be in the area you want to live, so you may have to sell or rent rather than live in it
You could win other prizes - cash sums or cars
Could cost you a lot in upkeep
The tickets are cheaper than a deposit!
The raffle might not hit its target, so you may never have a shot at the house!The raffle might not hit its target, so you may never have a shot at the house!
While there are pros and cons on both sides, it’s worth considering some other points:
- Make sure you read the terms and conditions. While it can be a bit of fun to throw your hat into the ring for a multi-million pound house, make sure you understand what you’re signing up for and what targets the raffle has to hit to pay out
- Don’t get sucked in. Gambling addiction is very real and if you find yourself buying a ticket for every house lottery you see, at the expense of your budget, take a step back and see if you need help
- This shouldn’t be your only plan. Yes, getting on the housing ladder at the moment is tough, but you shouldn’t be relying on a lucky break to get you there. You definitely shouldn’t be spending hundreds on tickets, when that money would better serve you in a savings account or Help to Buy ISA. Book a call with our mortgage advisors, who can help you towards that first mortgage
What are alternatives to house lotteries?
If you’re looking to buy a ticket every now and then for a bit of fun, that’s pretty harmless. But as stated above – this shouldn’t be your only plan
- Start saving. If you haven’t yet, start saving towards your deposit now. Take a look at your budget and work out what you can afford to save per month and check out Help to Buy schemes to maximise your savings
- Look at where you’re living. Are there any sacrifices you can make in the short term to help you save more? Could you look at renting a smaller home or in a cheaper area? This might not be an option for everyone, but it’s worth considering
- Consider your spending. Take the time to look at your budget and outgoings (something like our free Expense Tracker makes this easy to do) – is there anywhere you could save? If you can shave some money off your spending, you can then put a little more into savings
- Speak to an expert. Getting on the property ladder can be daunting and you might feel like you don’t know where to start. If so, book a call with our mortgage specialists so you can ask all the questions you want!
It can’t hurt to try your luck sometimes – and we’d love to hear from you if you have won a house! – but we recommend taking a belt and braces approach to getting on the property ladder!