Lottery type competition to win a (so called) £5m house in Belgravia - how fair?

gauly

Imagine_Corporation wrote: »

Hi,
Regarding stamp duty as the law stands it is not payable as the price paid to purchase the house is the total amount the winner spends on tickets.

If you sell a house to a relative for considerably less than its real value then you have to pay stamp duty on the real value - it seems highly unlikely this would not be the case here too. All the other contests I have seen of this type say that they will pay the stamp duty which seems to back up the idea that it is necessary to pay it. I'm sure the government would not be happy if these contests were exempt from stamp duty - I could see some fantastic loop-holes to avoid paying tax!

buglawton

1. It looks like stamp duty will have to be paid, with similar competitions in the past the competition organiser confirms this in advance, so stamp duty liability was carried by the property owner. The HMRC letter linked to from this comp's FAQ section completely fails to clarify the situation, including as it does phrases like "Purchaser must assess own liability" and "in my opinion" statements by one single HMRC employee.

2. The organisers of this comp have included the skill element to satisfy the Gaming Commission's rules. OK so far. However, when a numerical value must be guessed, the comp organizer does not seem to state upfront any realistic tolerance.

For example. 100,000 people buy tickets.

1 punter guesses that the average of the 3 valuations will be £4,500,900
19,999 others guess other values between £4,500,000 and £5,000,000, some really close to but not exactly £4,500,900 to the penny. The remaining 80,000 punters guess outside the above range altogether.

Does this mean that only ONE punter goes forward and so MUST win?

Triniti

buglawton wrote: »

1. It looks like stamp duty will have to be paid, with similar competitions in the past the competition organiser confirms this in advance, so stamp duty liability was carried by the property owner. The HMRC letter linked to from this comp's FAQ section completely fails to clarify the situation, including as it does phrases like "Purchaser must assess own liability" and "in my opinion" statements by one single HMRC employee.

2. The organisers of this comp have included the skill element to satisfy the Gaming Commission's rules. OK so far. However, when a numerical value must be guessed, the comp organizer does not seem to state upfront any realistic tolerance.

For example. 100,000 people buy tickets.

1 punter guesses that the average of the 3 valuations will be £4,500,900
19,999 others guess other values between £4,500,000 and £5,000,000, some really close to but not exactly £4,500,900 to the penny. The remaining 80,000 punters guess outside the above range altogether.

Does this mean that only ONE punter goes forward and so MUST win?

There can be only one winner, if one person gets the right figure as this site seems to lock off the value as unique per entry. So it seems to me that the only problem would be if no one gets the correct answer and two people are the same value (say £100.00) off. One above and one below...i quess they have a tie breaker planned.

As for stamp duty will make a call today to HMRC and ask for myself.... still worth a punt

buglawton

We are not told if the valuation average will be rounded to nearest £1000, £100 or £10. If nearest £1000 then there is a fair chance that a bundle of competitors will be in the hat to be randomly selected (the more acceptable/interesting chance IMHO).

Its all a bit unclear really, at £50 a pop it should not be.

poppy10_2

Triniti wrote: »

There can be only one winner, if one person gets the right figure as this site seems to lock off the value as unique per entry.

I don't think it does, on the "recent entries" page two people have selected £3,250,000. I have also entered using the same value and got to the point of entering payment information without being stopped, so I don't think it locks off unique values.

From the T&Cs:

The winner will be the person whose entry matches the average of the values submitted by our panel of experts.
In the unlikely event that more than one entry matches the panel's answer the winner will be decided by setting a tie-breaker question or series of questions

Interestingly this competition has upped the ante in the scam stakes, by acknowledging they will cream off 40% of the value of all entries, in the inevitable event that it fails to sell out, leaving just 60% to be distributed as the cash prize to the winner. Normally with these scams they are only brazen enough to keep 30% as their spoils.

7 Wilton Street last sold in 2006 for £2,575,000 in November 2006, just before the house price crash. No way it is worth the £5mil they are expecting from ticket sales. Zoopla (admittedly an awful website) values it at 2.95mil, less than the £3mil minimum you are allowed to guess.

Imagine_Corporation

Hi all, just to clarify - people can put in the same values to answer the question when they are just "testing" the site to see what their guess/estimate would look like. Imagine only "locks off" the value once the ticket is purchased. Otherwise "visitors" to the site could close off most of the possible values and therefore stop purchasing clients getting the values they want.

Imagine_Corporation

Hi All,
Past values on the property have been as low as $2,750,000. However this was nearly 4 years ago. Current values are within the range indicated on the website and are those of Estate Agents and Property valuers operating in the local area and not online "research" website such as Zoopla!

thanks

Imagine_Corporation

buglawton wrote: »

We are not told if the valuation average will be rounded to nearest £1000, £100 or £10. If nearest £1000 then there is a fair chance that a bundle of competitors will be in the hat to be randomly selected (the more acceptable/interesting chance IMHO).

Its all a bit unclear really, at £50 a pop it should not be.

In regards to your comment, we have left it as open as possible, so that if the actual valuation is not provided by someone taking part then, it could be won by an individual placing a nearest to guess that is just £1.00 closer than anyone else. This seem the fairest way to construct this part of the competition.

goldbyron

I thought that there were genuine 'lotteries' which are legal if run in a certain way to avoid loopholes. I know there are other instances of other people trying to sell their homes in such a way in the UK and USA which have been successful and not. One person recently made more money than the value of their home. I know one person did not raise enough ticket sales and they then (as already stated in the rules) drew the winner who got 50% of the money raised so far or similar. I think if it is in the Telegraph it is more likely to be kosher than something circulating around the internet. Maybe you could call some agents in the area and check it out?

buglawton

Telegraph merely reported the existence of this competition or is it lottery, which does not mean it is endorsing it.