Think Fractional

By on January 20, 2014

Want to own a luxury property but only pay a tiny price for it? Fractional ownership might be just what you’re looking for. Fleur Kinson explains this safe and economical way to buy.

The general economic climate might be slightly better than it was a year ago, but that doesn’t mean that you’re any less eager now to save money! A home abroad is still a major investment, and many would-be buyers are currently hesitant to lay out a few hundred thousand euros to get one. But what if, for just a five-figure sum, you could own a share of a property worth millions? That’s the idea behind the purchasing system called ‘fractional ownership’ – devised a few decades ago specifically to allow affordable access to high-end products such as private jets, yachts, and luxury homes abroad.

Let’s be clear from the outset that fractional ownership is distinct from ‘timeshare’ – a dread word for many, who remember 1980s horror stories of dodgy dealing on the Spanish costas. Buying a timeshare property merely buys you a certain amount of time in it every year for a set number of years.

But fractional ownership is different, because you actually own a share of the property itself. Your name is on the deeds with the other co-owners. And as the property appreciates in value, so does your share. You can always sell your share, leave it in a will, transfer it or place it in a trust – just as with conventional ownership.

The only similarity between fractional ownership (often called ‘residence clubs’ in America) and the timeshare system is that access to your property is limited to a certain number of weeks each year. With fractional ownership, that’s usually about four to six weeks, spread across different seasons. Coincidentally (or perhaps not), four to six weeks is the average amount of time that a conventional buyer actually spends at his or her fully-owned home abroad. So you get to enjoy the same amount of usage you’re likely to get by owning a whole property, but this property will be a far larger and more luxurious home than you could probably ever afford outright.

How does it work? Typically, the typical legal framework is that the fractional ownership property’s developer establishes the property as a company and the buyers buy shares in that company – or ‘fractions’ of it. As with all property, ownership is defined by the title deed, which in this case is divided into fractions which carry your name and the names of all the other owners. Fractions usually range from one quarter to one twelfth, and give you the right to spend a corresponding fraction of the year at the property.

The usual system is that a rotating calendar gives you a different selection of weeks each year, with every owner allocated an equal number of peak-season and off-peak weeks. So let’s say you have a one-tenth share, giving you five weeks a year; two of those weeks will always be in the summer and three in other seasons. In practice, the system isn’t quite as rigid as it sounds. Usually all the owners are open to swapping weeks between themselves to secure the dates they want. There’s also the exciting additional possibility of joining an owners’ network scheme and swapping your property weeks with owners of fractional properties elsewhere in the world.

Note that all maintenance and security of a fractionally-owned property is taken care of for you. Most properties include hotel-style perks such as housekeeping, provision of linens and groceries, concierge service, even private chefs. Thus fractional ownership lets you live the high life at a low price.

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