The property lottery trend has finally reached London, and WinALondonPad.com in association with Great Ormond Street Hospital has just handed over its firs London pad. In this instance, a family property development business is selling tickets to win York House in E1, a block of 11 service apartments worth £8m. More are up for grabs each month, and everyone who enters gets 11 chances to win.

The theory behind these property competitions is that, even though some properties for sale on the open market aren’t selling so well at the moment, you could still make back the desired asking price if you sell enough tickets and run a competition to win the house. It’s a nice idea and, in theory it could work. However, some people have already come unstuck. One property competition that notably fell foul of the Gambling Commission’s rules was Oldborough Retreat, a detached house, holiday cottages, grounds and fishing estate at Morchard Bishop in Devon (WinADevonPropertyWithFishing.co.uk) owned by Brian and Wendy Willshaw. The million pound property was up for grabs in a competition, with tickets priced at £25 and 46,000 entries available.

Although the couple had sold all their tickets and thought they’d stuck to the rules by issuing a question for entrants to answer, the Gambling Commission stepped in and halted the draw days before it was carried out. The problem lies in the fact that there’s a fine line between holding a property lottery and a property competition. In order to avoid contravening the 2005 Gambling Act, anyone offering a property as a prize needs to ensure they’re operating a competition, not a raffle. According to the Gambling Commission, you need to obtain a Gambling Commission Licence in order to run a raffle, where someone simply buys a ticket and a winner gets picked at random. However, under the rules of the license, the raffle can’t be run for private gain and you aren’t able to offer a prize with a value above £200,000. Prize competitions, on the other hand, are free of statutory control under the Gambling Act and can be run for profit. But – and this is where many property competitions have come unstuck – the Gambling Commission say the questions entrants answer have to be ‘skill-testing questions,’ yet many are seen as being too easy.

Stephen Beasley, a developer and estate agent from Village Property in Devon, who launched WinADevelopment.Com, with a prize of four luxury Devon apartments worth £1.72m, went to great lengths to ensure his competition went smoothly. But despite spending £20,000 on legal fees and help from law firm Kitson Hutchings, he’s also had to put his competition on hold whilst the Gambling Commission decides whether it’s classed as a lottery or not. “The current state of the property market has seriously hampered saleability, even though these are four stunning properties in an amazing location. Desperate times call for desperate measures and the competition was born,” said Stephen. “Newspaper reports of previous competitions make it look like an easy way to get the full asking price of your home, no matter what the market is doing.”From experience, he warns that it’s definitely not as easy or as straightforward as it looks. “The reality is that it’s a legal minefield.” Despite the problems, he’s optimistic that the competition will still continue in the near future, albeit in a new format, and says they’re exploring the options of a ‘reverse auction,’ or ‘spot the ball’ format at the moment.