The odd case of the housing competition in London

For some time now, we have been looking for an image or show that captures the horror of London's real estate market.

This week we found it.

Misuma Limited, a real estate developer, is selling a £ 2.1m housing unit in Kentish Town as part of a housing contest. To participate, you pay £ 10 plus £ 1 booking fee. You then receive a ticket which, if you win, entitles you to the house.

The contest, which doubles as a legitimate candidate for the Turner Award, will run until the end of the year. More details on winmydreamhome.com.

Housing competitions – an alternative and controversial way to sell a property, in which the casino's business model is disguised as a charity – have continued to grow in recent years.

Here's The Sun from last year, with a clbadic of the genre costing £ 25, or about the price of nine good meals at McDonald's, in March 2018, the newspaper tells us.

They usually involve a question, which is a legal requirement, because otherwise, a contest that charges the entry and selects a random winner is a lottery, which requires a license. This is the Kentish Town contest question:

(Answers in the comments below.) From the FAQ: In the end, the Gaming Commission and the courts will have the final say on whether the Question complies with the 2005 Gambling Act.)

Winmydreamhome.com is slightly different from the fact that it is run by a developer rather than a random individual who can not sell his house. Marc Gershon, one of the directors of the company, explained to us that his goal is to "clean up" the space reserved for the housing contest.

"I think it's the first project that works properly, cleanly, openly and transparently, and is not designed to sew people," he says.

So what are the chances? The small print is pretty important. If less than 250,000 tickets are sold, the house is not given at all; instead, the contest yields 60% of the prize pool. If more than 250,000 are sold, the house is sold and a stamp duty of £ 165,600 is paid. In each case, the company contributes 10% of the proceeds to charities.

According to our calculations, the competition makes points of balance while yielding the house to 252,000 tickets sold. If less than 250,000 tickets are sold, the purchase value of £ 10 drops immediately to £ 6. If, for example, 400,000 tickets are sold, £ 4m in revenue comes into play and the developer makes a big profit.

Pretty standard practice for a gaming business. But for those who bet, there is a strange dynamic at play, where rational buyers are encouraged to wait until 250,000 tickets have been sold (or are likely to have been sold) before you buy.

Misuma has three other apartments under development. If the first competition goes well, they will also try to get out of these developments through a competition. But what we originally thought of as a simple advertising exercise was a subtle reflection of the growing pressure on small developers in London after Brexit.

"We have seen a drop in prices in London in the last two and a half years," said Marc, who kept his word on the point of transparency. "We are quite open to the fact that if we sell the property now, we would make a small profit. . . as a company that makes no sense to us, "he added. "It's an experience for us to see if we can make this competitive base work, if we can maximize our value."

He added that Misuma had bought the house for £ 1.57m at the end of 2016 and had spent £ 460,000 on renovations. The valuation of £ 2.1m comes from the consolidation with the bank, post-redevelopment.

The developer incurs considerable costs in public relations and advertising. It is therefore a very risky move. This risk implies that conventional methods of selling the property seem unattractive at the moment.

So, everything ultimately depends on the number of people registered. This is where the vision comes in: a desperate population of tenants, clinging to the redemptive power of the game to get what Mr. Gershon himself describes as an "average house".

Even if the project fails, you must admire its extraordinarily subtle ability to bring together two concepts – play and housing in London – that no one would have badociated with.

"Buying a house is not easy now," says Marc. "If it becomes a method for people to become owners. . . For a potentially low cost, a large part of the British population likes to have a hand for something, be it horses, the lottery, "he adds.

"This is not a form of gambling addiction".