The gamble with housing raffles

It’s a bleak time for millennials in the UK. The gap between older and younger generations has slowly but steadily widened: young adults have less to spend on non-essentials than their older counterparts did, are less likely to own homes, and in fact are worse off in general. 40% of young people are unable to afford even the cheapest homes in their area – even if they have a 10% deposit. One in three will never own a home at all.

And as Keir Milburn writes in his book Generation Left, the 2008 financial crisis destroyed our aspirations too. No longer do we feel as if our living standards will improve – for ourselves or for our children.

Meanwhile, we’re inundated with columns, features and money diaries explaining that we could afford somewhere if only we really tried. Stop buying coffee! Cycle everywhere! Take your own lunch to work! Oh – and it helps if you also have incredibly wealthy parents, too.

It’s in this desolate landscape that companies have started to promise us a route out of our cramped rented flats, far from the whims of dodgy landlords and safely away from our jacked up, overpriced rent. But they’re not lowering house prices, giving us payment plans or even offering financial advice – they’re holding raffles.

“House raffles” first emerged in the early ​’00s, with a crop of homeowners trying to flog their unsold homes via £5 or £10 tickets; more recently, the enterprise has professionalised, with companies set up with the express purpose of raffling homes. The competitions operate much like a normal raffle: you buy a ticket, normally priced between £10 and £20, and are entered into a draw with the possibility of owning a new home.

Raffle House, the most prominent of the competitions, had a tempting prize: a beautiful £650,000 flat in Brixton, plus enough money to cover stamp duty and other service charges. It’s now offering a second property, a two bed in Whitechapel, while another, WinMyDreamHome, has also just launched, giving away a £2.1m house in Kentish Town.

Entrants know – as they do when they enter the Lottery, buy a scratchcard or engage in any other kind of gambling – that their chances are slim. Indeed, Raffle House founder Benno Spencer cites a statistic that claims 70% of the UK public enter the Lottery every week: ​“from a consumer perspective, there’s huge demand for these types of competitions,” he says.

But entrants may not be the typical Lottery-playing demographic that Spencer had in mind. ​“I don’t enter a lot of competitions, let alone buy tickets for them at cost,” Tom, 30, told me. He bought four tickets for Raffle House – one £10 ticket, then three more at a discounted price when the company was trying to sell more. In all, he spent £20 on the competition (he didn’t win).

“I entered because I love Brixton – I used to rent there and am the classic case of a millennial who can’t get a London deposit,” he says (he currently lives in Hampshire). ​“So the home factor had a particular pull to me.” He doesn’t feel ​“any particular shame” in renting – after all, more people are renting than ever before. But Tom did want the opportunity to escape the rental market. ​“It would be one less thing to worry about.”

He cites a ​“heady mix of economic squeeze, high cost of living and greedy sellers” as the engine behind their rising popularity. ​“It’s so obvious that [some of the companies] are using these methods because they can’t hit asking prices,” he says. ​“This Brixton one, which was valued at £650,000 – it was probably getting offers of closer to £550,000.”

“But it’s risk averse – they can just… not give it away if the competition doesn’t sell enough tickets”.

Sophie, 25, spent £15 on Raffle House entries for similar reasons. Born in London, she realised any chance of staying in the city would mean moving ​“way, way further out” than the area she grew up in: at the moment, she’s in Zone 5, and feels pushed out of a place she sees as a home.

“I do think the rise in their popularity hints at the difficulty of getting on the housing ladder,” she says. ​“It definitely has got more difficult.” She ​“wouldn’t be surprised” if those running the competitions were being ​“opportunistic,” either: ​“the competitions being run now certainly seem more professional and geared towards making lots of money than the ​‘fun’ type that appeared in the mid 2000s,” she says. ​“I think that says a lot about the fact there’s a definite market being targeted.”

Both founders basically agree with this analysis (though not, presumably, the idea that their endeavours are opportunistic). Spencer cites his younger siblings and their own inability to get on the property ladder as part of his inspiration: ​“the delta between earnings and property is just insane,” he says. ​“There’s no way my siblings can afford a place in London.” WinMyDreamHome founder Marc Gershon agrees that the property market has something to do with it, though his focus is more on those who are not choosing not to buy in unstable political and financial circumstances, rather than those who are priced out of doing so altogether.

“The housing market is not as good as it could be,” he says. ​“There’s a lot of uncertainty. And until people see more stability, they’re not necessarily committing to buy.”

Spencer notes that people aged between 20 and 40 (a group that could roughly be defined as ​“millennials”) were the ​“key demographic” that emerged through focus testing, though says the company’s marketing strategy focused on a wider age group. But targeted ads on Instagram and Facebook – which, anecdotally, me and all of my late-twenties and early-thirties friends were absolutely bombarded with – seem to suggest that this priced out demographic may be particularly valuable for the industry.

Unsurprisingly, neither Spencer nor Gershon feel they’re monopolising on our anxieties about our living conditions. Gershon points to the wide age range of entrants (from 18 to 70, he says), whilst Spencer says that they ​“never try to freak people out about the fact they can’t own a home.” Whether people are entering because they’re already freaked out is a different – and unanswered – question.

The pair also point to their dedication to charity donation, with a portion of all ticket sales going towards a good cause. But a spokesperson from the Gambling Commission noted that raffles and lotteries can ​“only be run by good causes” to even pass legal muster – which makes their goodwill look slightly less innocent.

It’s also not always clear what competition entrants will actually receive, even if they win. Raffle House ticket sales fell short at 80,000, so the house remained unsold, the winner receiving a cash prize instead.

This didn’t go down well with some entrants – Tom, in fact, even complained to the company. ​“They’d delayed by a year because they hadn’t sold enough tickets, then marketed the last few hundred or thousand tickets saying they’d almost reached their target – totally aware they were giving away a much reduced cash prize,” he says. ​“They were totally misleading in those last few months, because they knew ​‘we have 1000 tickets left to sell to win a £175,000 prize cheque’ wouldn’t sell and would undermine the entire concept of a ​‘Raffle House’.” The company’s Instagram is littered with aggrieved comments, with company responses to less angry commenters somewhat passive-aggressively thanking them for ​“being one of the good ones” and being ​“better, not bitter.”

Whether these competitions can ever actually provide us with homes is questionable (Which? says that it doesn’t know of a house that has been successfully sold in this manner). But their emergence in the market at this time is undeniably significant.

If your wages are stagnating, your living costs are rising and you don’t happen to have parents who can give you a deposit, your chances of owning a home are slim; Oxford, Edinburgh, Brighton and Leeds are all in the top ten most expensive cities in the UK, so the problem is not isolated to London, either. Many of us live in intolerable conditions – and even if we don’t, we still have to grapple with the fact that our landlords are just getting richer, happily snuffling up half our salaries every month as we struggle. In these conditions, who wouldn’t want to indulge in the fantasy of winning a dream home – or any home at all, in fact?

Once, a high-end car or beach holiday would have seemed like the ultimate prize – unnecessary luxuries that we didn’t need, but wanted nonetheless. Priced out, ripped off, precarious: all we want now is somewhere to live.

“Holiday prizes seem so archaic now,” as Tom put it. ​“We want a house!”.