A raffle to win a Brixton home has finally announced a winner – except the victor walked away with £173,012.93 instead of the property.
While this is no doubt a decent sum of money to get your hands on, it is not the £650,000 one bedroom flat in London that was advertised as the main prize by start-up, Raffle House.
Additionally, Raffle House told This is Money that it took home 50 per cent of ALL ticket sales – defending the decision, it said it needed the funds to ‘get up and running’.
The firm initially faced criticism after the raffle deadline date was pushed back further and further after it consistently failed to sell enough tickets.
Winner, Lois Wright, received £173k instead of the one bedroom flat in Brixton worth £650k
It announced today that Lois Wright, from London, has won the cash prize as opposed to the flat – once again blaming the lack of tickets sold, confirming it only sold 80,925, just over half of its original target of 150,000.
Raffle House also awarded three runner-up cash prizes of £1,000 and raised £13,955 for three charities.
Benno Spencer, Founder and chief executive of Raffle House, said: ‘It would have been fantastic to have hit our ticket sales target and to have been able to award the property as the first prize.
‘In the end, we sold just over 80,000 tickets but still fell short of our reduced total. The business was prepared to cover the shortfall but we simply didn’t sell enough tickets or have enough capital.
‘We have learned a lot during our inaugural competition and have launched our second draw with major changes that will reduce the number of tickets we need to sell in order to be able to award the property as the main prize, which is excellent news for us and for our players.’
Spencer confirmed the Brixton flat has remained in the hands of its current owners as the firm didn’t sell enough tickets to cover the value of the property as well as other costs such as stamp duty.
However, despite not selling enough tickets, Raffle House has already started its next raffle with customers now buying tickets in the hope of winning a two bedroom flat in Whitechapel, London, worth £500,000.
Pictured: The £650k one bedroom flat in Brixton that was meant to be the raffle prize
Spencer said: ‘We are very confident that we will sell enough tickets for the second property we are raffling.
‘We have made significant changes to help achieve this including reducing the number of ticket sales to 60,000, which is a 60 per cent reduction from our initial 150,000, and the property we are raffling is of a lower value while still being aspirational.
‘Given we now have a user base of about 40,000, we’re in a very different place than 12 months ago and confident of achieving our goal.’
As well as changing the number of tickets that need to be sold, it also raised the price of each ticket to £10 – double the original cost of £5.
It confirmed it would also take 25 per cent of all ticket sales, as opposed to the 50 per cent it did the first time round.
Spencer defended the decision by saying: ‘We have yet to make a profit. We believe this shows that we are honest and fair and that our ultimate goal is to be able to award our winners with a property.
‘We got close with our first draw but given the lessons learnt we are confident we will be able to do this with our second draw.’
The new £500k property up for raffle on the website – situated in Whitechapel, London
In its first competition, Raffle House had to delay the deadline for the winner to be announced several times after not selling enough tickets – extending the finishing time to 30 June 2019, despite launching well over a year ago in April 2018.
It was initially expected to end in June 2018 before being extended to November last year, due to the lack of tickets being sold, before being prolonged for a third time.
Not only was the date changed but so was the amount of tickets that needed to be sold.
Originally, the company said it required 150,000 tickets to be sold at £5 each before the flat could be won – which would total £750,000 in ticket sales.
This was then changed to 120,000 tickets – a 20 per cent reduction, or £600,000, perhaps highlighting the slowdown in prices in London.
In the final week of the competition, it told This is Money it needed an extra 5,000 entrants – but it fell short.
After changing the amount of tickets that needed to be sold, it also began offering extra tickets to customers who snapped up multiple entries.
For example, if they bought 10 tickets at £50, they would get 10 free, meaning each ticket was £2.50.
This did not sit well with two customers who complained to the Advertising Standards Authority (ASA).
An advert for the raffle was then banned by the watchdog which said it had breached its code of conduct after changing the method of entry.
Yet another house raffle?
Raffle House is seemingly not the only company with the idea of putting a house up for raffle.
Winmydreamhome.com has also started a competition for a London home to be won – except it needs 250,000 tickets to be sold before the house can be won, more than three times the amount Raffle House managed to sell in nearly 15 months.
The £2.1million house up for grabs is located in Kentish Town, London and comes with four double bedrooms and three bathrooms.
Tickets cost £10 (plus a £1 booking fee) and the competition is due to end on 31 December 2019.
However, if not enough tickets have been sold, the winner will only get 60 per cent of the amount raised.
Marc Gershon, director of the property development company behind the house, said: ‘House competitions are a fantastic format.
‘It isn’t the format itself that has let people down in the past, it’s those operating without the correct level of knowledge or with a lack of transparency that has created this negative stigma around house competitions and we want to change this.’