LEGAL BRIEFING: Why house raffles are fraught with difficulties
18 January 2019
Helen Hart, Regulatory Affairs Manager, IPM
In a difficult housing market, some people have turned to the idea of holding raffles to dispose of houses they can’t sell for the prices they want. However, such raffles are fraught with challenges, and regularly lead to bad publicity for the house-owners concerned. CAP issued guidance on house raffles last year, but cases are still being reported in the press. For example, the Times and Sunday Times recently reported on a case of a couple who raffled their £3 million home who have been criticised after they scrapped the competition. They sold only £750,000 worth of the £25 tickets, and substituted a cash prize of £110,000 despite the value of the house being £3 million.
I am not sure whether anyone has made a complaint to the ASA about the promotion, but the issue that springs to mind is the rule in the CAP Code that consumers must not be disappointed. In addition, the Code stipulates that prizes must be awarded.
A promoter can substitute a prize if it is of the equivalent or higher value, but this was clearly not the case in the promotion mentioned above. The promoters claimed that their terms and conditions allowed them to deduct the costs of the promotion which they also claimed came to well over half a million pounds.
It is important that if people want to run these promotions, they don’t just consult property lawyers to deal with the transfer of the house, but also consult specialist advertising lawyers.
I mentioned above that CAP issued guidance on house raffles. In it, they say that the ASA has investigated multiple ads for this type of promotion, and has found many in breach for changing closing dates or other terms and conditions, withholding the prize advertised or offering a significantly lower value cash prize, and omitting significant conditions. The key points are:
- Award the prize or a reasonable equivalent.
- Include a closing date and think very carefully before changing it
- Consider if you need a free entry route (in Northern Ireland)
- Do not omit significant conditions as this will mislead consumers
- Ensure all terms and conditions are freely accessible for the duration of the promotion