The owners of a £2million luxury two-bed flat in Kensington have refused to give the property to the winners of a £10-a-ticket raffle after just £227,000 was raised.
Property developers Jonny Jackson and Harry Dee offered the two-bed flat — located on the famous Exhibition Road next to the Victoria & Albert Museum — in the raffle but did not sell enough tickets.
Despite needing to flog 200,000 tickets to make enough from the raffle to fund the £2million cost of the property, seven months after the competition was announced just £227,000 worth had been sold.
The pair wanted to guarantee the two-bedroom flat, which is also moments away from the Science Museum and Hyde Park, they had just renovated would sell while at the same time as giving a lucky punter a ‘lottery win’.
But the winner can now expect a measly £53,500 in prize money while the property owners say they will keep £173,500 of the raffle’s earnings for themselves to fund VAT, marketing and legal costs.
The property is on the famous Exhibition Road and is close to the Victoria & Albert, Science Museum and Hyde Park
Property developers Jonny Jackson and Harry Dee decided to make the unusual offer due to a drop in the housing market
Experts in the London property market have responded to the trend in raffling homes with fury.
Henry Pryor, a buying agent, told the Times: ‘If you want to play games then sell raffle tickets. If you want to actually sell a property then sober up and retain an expert to do it for you.
‘I am struggling to think of a single redeeming feature about this.’
And this is not the first time the method of raffling off a property rather than selling has failed, resulting in the property being kept by the original owners.
Mark and Sharon Beresford launched a competition last year for their six-bedroom home in Hampshire — now valued at £2.5million.
They needed to sell 120,000 £25 tickets to achieve £3million for their award-winning Huf Haus near Ringwood, Hampshire.
But, despite throwing in a £160,000 Aston Martin as a second prize, they only sold 30,000 tickets, generating £750,000 – a quarter of the value of the home.
As a result, the couple called off the raffle draw scheduled for January 9.
Mark and Sharon Beresford launched a competition last year for their six-bedroom home in Hampshire — now valued at £2.5million
Susan DeVere launched the competition to get rid of Orchardton Castle, near Auchencairn, Kirkcudbrightshire when attempts to sell it failed
What are the rules on raffling a home?
Lotteries cannot be held for commercial gain or profit, so home-owners considering raffling off their house would need to run the raffle to benefit a charity or other not-for-profit cause.
Those who want to keep the money gained for themselves must either hold a free prize draw or add a competition element to the raffle.
Competitors should have to prove their skill, knowledge or judgment in order to win the top prize.
Many people get around this by asking an incredibly simple question such as ‘what style of property is this house: A – Victorian, B – Tudor or C – Georgian’ when people pay for their raffle ticket.
It is also important to have watertight terms and conditions, such as a setting a minimum number of tickets in order for the raffle to go ahead (like the Rosses have done).
Although getting a house for the cost of a coffee is a great deal, the winner will still have to pay stamp duty on the house based on the open market value (in some cases) – and also bear in mind any maintenance costs or other upkeep charges where apartment blocks are concerned.
And in April this year the winner, Carina Alcock, from Christchurch, Dorset, was given a cash prize of £110,000, while the couple kept £640,000 to cover marketing costs.
In their terms and conditions, the Beresfords stated that in these circumstances the first prize would be cash to the value of 75 per cent of the final ticket sales – but only after their promotion costs were taken out.
The couple maintain they racked up around £450,000 in advertising, marketing, PR and legal bills and were also entitled to keep up to 25 per cent of the ticket sales – about £187,000
The remaining £110,000 from the £750,000 pot was won by Carina Alcock from nearby Christchurch, whose ticket was drawn in January, she refused to comment on her victory.
In the face of criticism, Mr Beresford, a 61-year-old company director who made his money turning around failing businesses, defended the veracity of the draw and the costs they racked up.
He said at the time: ‘If we charged our time on an hourly rate we would be a little bit above minimum wage’ and threatened to call the police if the reporter did not leave.
The property has been valued at £2.5m – £500,000 less than it was estimated at during the raffle and the same price as it was previously listed for in 2006.
The luxury Huf Haus, distinguished by its steel and glass design, has six bedrooms, six bathrooms, five main reception rooms, a games or snooker room and a cinema.
Susan DeVere was rapped by the advertising watchdog after the winner received just £65,000 instead
Another case of a failed raffle saw the owner of a £2.5million Scottish castle rapped by the advertising watchdog earlier this year, after the winner of the draw received just £65,000 instead.
Susan DeVere launched the competition to get rid of Orchardton Castle, near Auchencairn, Kirkcudbrightshire when attempts to sell it failed.
Built in the 1880s, the 17-bedroom property had been valued at between £1.5 million and £2.5 million and comes with five acres of land and views across the Solway Firth.
Tickets for the raffle, launched on Facebook and the winacastle.co.uk website, cost £5 and the winner was promised the opportunity to ‘win the whole building freehold’.
However the raffle failed to generate enough ticket sales and the prize was changed to cash giveaways of £65,000, £7,000 and £5,000, which were handed out in June last year.
One person complained to the Advertising Standards Authority that the raffle had been administered unfairly because the prize had been changed to a cash amount.
Mrs DeVere told the ASA that all property competitions were run in the same way and that the castle could not be awarded if there were not enough entries received to clear the mortgage.
She said it was made clear from the beginning that if not enough entries were received, the property would not be awarded and a cash prize would be offered instead.
The luxury £2million apartment in London’s trendy South Kensington district wass being raffled off for £10 a ticket
The pair wanted to ensure the flat they had renovated would sell while at the same time giving a lucky punter a ‘lottery win’
In Kensington Mr Jackson and Mr Dee were aiming to sell a minimum of 300,000 tickets to make the project viable. The £3million revenue was expected to cover the price of apartment itself as well as stamp duty, VAT, and legal and marketing costs.
It was also set to cover the winner’s utility bills and service charges on the property for the first year.
They said the raffle complies with UK gambling regulations and the prize would be drawn independently. Mr Jackson, 28, and Mr Dee, 27, bought the flat for £1.35million and spent about £300,000 refurbishing it.
The work included taking out stud walls to make it more open plan and installing modern and luxury fixtures and fittings. The pair from South Yorkshire, who met at university, have been property developing for two years.
Property developers Mr Jackson and Mr Dee were aiming to sell a minimum of 300,000 tickets to make the project viable
The £3million revenue would cover the price of apartment itself as well as stamp duty, VAT, and legal and marketing costs
The prize was also expected to cover the winner’s utility bills and service charges on the property for the first year
They have now launched the company Cadivus – Latin for ‘windfall’ – to legitimise the process of raffling off property and hope to do more in the future.
Mr Jackson said: ‘There is no denying the property market in London has slowed due to the uncertainty over Brexit and the recent increase in stamp duty. That has left people a little unsure about the property market.
‘Harry and I looked at the situation and thought about doing something outside the box. We don’t want this to be a one off and want it to be a recurring thing. We want to legitimise the whole concept of raffling a property.
‘We will have the opportunity to add further properties to this platform after this competition has finished. We aren’t trying to solve the London housing market.
The duo said the raffle complied with UK gambling regulations and the prize would be drawn independently
Mr Jackson, 28, and Mr Dee, 27, bought the flat for £1.35million and spent about £300,000 refurbishing it
The pair from South Yorkshire, who met at university, have been property developing for two years
‘We are trying to build a platform for people to spend £10 on a ticket to have a chance to buy a high-end London property.’ The flat had two bedrooms and two bathrooms and is in a luxury five-storey block.
Mr Jackson said: ‘We have fully refurbished it and it is now a very desirable property that we think would sell quite easily on the open market.
‘But we have held off putting on the market with the intention of running this competition. This isn’t a case where we have a property that won’t sell.
‘We are offering a very premium product to people who couldn’t others afford to buy it.’