Fractional ownership or shared ownership as a concept is not new, but is gaining momentum as property prices continue to rise and buyers seek a stepping stone to a holiday home in the sun.
Unlike time share or vacation clubs, fractional ownership comes with a property deed, making it a true asset that will appreciate at current market rates. Immediate returns on your investment are also possible in the form of rental income on the property for the weeks you are not using it yourself.
The concept is based around a maximum of four co-owners each purchasing a thirteen week fixed share of a property, with a maximum of only four owners giving the purchaser more of a tangible share in the property and the realization of a true investment.
Typically those who buy into fractional home ownership are people who can afford to buy outright, but dont have the time to use the property or want the responsibility of outright ownership. The purchase of shared ownership has the flexibility to choose the right option that suits their needs, appealing to retired couples, families and young couples alike. Fractional ownership also means lower maintenance and running costs for the property, maintenance and care of the property can be undertaken by either an independent management company or the resort itself, eliminating many of the headaches associated with owning a property abroad.
All owners are governed by a pre-signed shared ownership agreement detailing procedures under the fractional ownership concept for any damage or misuse, giving you peace of mind that your investment is still in good hands while you are not there.
All annual running costs are divided equally between the owners, while a fund provides for refurbishment of the interior of the property assuring you that it will always be maintained to a first class standard on a regular basis.
If you like the idea of owning a vacation home in your favourite location, but dont want the burden and cost of repairs and upkeep this may be a perfect choice for you.
So what is the difference between fractional ownership and time share?
Of course all the above perks add up to another major difference: price.
The cost of fractional ownership is quite a bit higher then that of a typical timeshare, although still much less expensive then whole ownership of a luxury home in the same location. If an owner does not use the entire allocated period, the management team can arrange to let the property on the owners behalf for the remainder of the annual allocation, or the owner can let on his own account, so generating a return on investment. Each owner will appear directly as such in the land registry and on the Escritura (title deed) in conjunction with the common agreement which would contain, in an exhaustive form, the rules by which the co-owners were to be governed.
Holiday homes on the western Costa del Sol can easily be self supporting and provide a good rental income, owners enjoy very good capital growth and low cost euro mortgages, but prices have risen steadily, driven by the high rental income that is easily achievable, as a result many can no longer afford to start on the property ladder.
Shared ownership offers a hand- up to people with many different requirements and is becoming a popular way to invest spare cash, it may not be to everybodys taste, but it could be right for you.