
Fractional Ownership is an increasingly popular concept where a number of people purchase a property between them. There are many variations on the basic theme of fractional where usually between four and thirteen owners enjoy rights to own and use a specific property.
Unlike timeshare where most people buy just one or two weeks and have only the rights to use the property for those specific weeks each year, with fractional you actually own a share of the property.
Fractional has become a huge industry in the US and The Caribbean with a wide range of properties at a growing number of locations as more and more people become aware of this attractive alternative to purchasing a property outright.
Europe is still lagging some way behind but it’s slowly catching up as the merits of this concept are being discovered by the discerning northern Europeans who are determined to escape the severe winters in search of a little sunshine.
With fractional being more affordable than buying your own holiday home outright (and making sound economic sense even if you can afford your own place!) it is predicted that fractional sales will exceed outright sales of holiday homes in the next five years.
Fractional ownership is not for everyone but for those who plan to use their property for less than 20 weeks each year, it should be considered as a possible alternative to buying outright. The number of owners for a property can vary considerably and is usually between four and thirteen, but research shows that ten is the ideal number.
With ten owners and each entitled to use the property for five weeks each year, there is greater flexibility as members are allowed to buy up to four shares in any specific property. This means that they can choose to buy five, ten, fifteen or twenty weeks each year depending on their requirements.
For comparison purposes, a quarter share in a property gives an owner thirteen weeks use each year irrespective of how many weeks they wish to use. This offers little flexibility and unless you are likely to use all or most of your weeks, you will be paying for something that you don’t need both in terms of the purchase price and also the running costs.
Each property is owned by a separate limited company and each of the ten shares is represented by a 10% stake in that company, thus providing total security and, equally importantly, control of their asset.
Compare this to many other schemes, in particular timeshare, where all aspects are controlled by the management company and the members have to pay whatever annual fees are demanded of them. This is the single biggest complaint about timeshare ownership where the members have no say in the running of their holiday home and invariably end up paying excessive annual fees, often more than double what they should be.
The only additional payment is an annual fee to cover the running costs of the property for items including utilities, insurance, cleaning, routine maintenance etc. An annual budget is prepared for running the property and then account for every cent spent with detailed accounts provided to the members at the end of each year.
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