There is a housing crisis in the UK, with young people feeling increasingly excluded from the property market. Not enough homes are being built to satisfy demand, and that is leaving many in the situation that they may be renting for life. With the situation so uncertain, people are increasingly looking to new ways to get on the housing ladder, with housing raffles a growing market.
In London and the south east the average house price has soared in recent decades to over £470,000, which at over 13 times the average London salary makes them impossible to afford for the majority of young people.
The crisis has been well documented. Over the past few decades, house prices in London have risen in some years by more than many people’s total salaries, taking them ever further out of reach. Successive governments have attempted to address the issue, with ideas like the Cameron government’s Help To Buy scheme, but this meddling has only served to prop up property prices and done little to solve the underlying issue of a lack of housing.
As potential mortgage costs continue to rise for first-time buyers, housing raffles have become an increasingly attractive option according to consumer charity Which. These involve a seller offering raffle tickets for their house, generally for £5-£25, with one raffle entrant winning a new home.
The idea is theoretically sound, but to date no British housing raffle has ended with someone winning a house (one raffle was successfully completed in Ireland last year). The most common reason for failure is that the seller fails to offload a sufficient number of tickets to make the economics work, but the Gambling Commission is also keeping a careful watch over such competitions to make sure they comply with the UK’s strict gambling laws.
Despite past setbacks, there are at least five housing raffles that expect to complete by the end of this summer, and one company, Raffle House, has gone further and created a whole business around the idea of raffling houses. Their first raffle, to win a £650,000 flat in Brixton, south London, is due to close at the end of this month on 30 June.
The last 18 months have been a learning journey for the young company, as founder Benno Spencer explains: “We began this process in 2017, spending over a year making sure that we met the legal requirements required by the Gambling Commission. We wanted to make sure that our process was water-tight as so many amateur raffles are shut down for being illegal lotteries. We then took another step that no other company in our industry has, which was to take on investment so we had the capital to advertise our competitions.
“With all that in mind, our data shows that we’re now only about 6,500 entrants away from being able to guarantee the property as the prize, which is so exciting, and ready to launch our next on July 1, which is another incredible property in the heart of London. Over 35,000 customers have made this possible and we’ll be rewarding their commitment come July 1 with a special bonus scheme just for them.”
Nonetheless, he believes that people are excited about the idea of winning a home and thinks housing raffles could provide the shake up the UK property industry needs. He explains: “We all know how expensive property in the UK is and that’s no truer than in London. Frustratingly, that’s where many graduates dream of living as they start their careers – but after years of working most simply can’t afford to buy and rent can often be in the thousands.
“We definitely see a great deal of interest from those priced out of the property market – most 20 to 40-year-olds really – but we also have customers of all ages from all over the UK – I was chatting to one recently who was buying tickets for his grandchildren. London has this special place as one of the great capitols of the world and many people see the sense in having a chance at owning some bricks and mortar there for a fiver with odds well over 1,000 times better than Euromillions.”
Will Raffle House become the first successful property raffle and the start of a new way for people to get onto the property ladder? We will find out later this month.