What Is Fractional Ownership?

Fractional property is quite simply property that is shared. Many people dream of owning their own luxury holiday home or indeed investing in a second property, however find the initial financial outlay and running costs difficult to justify. Fractional ownership can meet the needs of many more potential buyers and offers a property which is:

• Shared Ownership
• Freehold Ownership – Bricks and Mortar
• In Perpetuity – Forever

Fractional ownership simply means the division of a property into portions so people can own a percentage of the property without all of the costs associated with a complete purchase. The title deed can be legally divided into members. In most cases this is done by creating a "mezzanine structure", i.e creating a company which owns the property then allowing multiple owners or investors to own a certain percentage of the company, depending on how many portions they purchase. Those members can then be purchased and owned by more than one individual.

Creating a "mezzanine structure" allows you to transfer your percentage of the company/your membership certificate without the need to reflect changes on the title or deed to the property. Creating this kind of structure also prevents any problems with inheritance issues and can also be beneficial for tax purposes.

Shared ownership of a property and its deed entitle shareholders to certain usage rights, usually in the form of weeks. This often reminds people of the dreaded T word, although this is mainly because the concept is little understood by Europeans. Fractional Ownership is not the same as Timeshare.

Fractional Ownership affords much of the freedom and usage benefits offered in timeshare, however, the fundamental difference with fractional ownership is that the purchaser owns part of the title (as opposed to units of "time"). So if the property appreciates in value, then so will the owners fraction of the unit. As with outright owners, fractional owners can sell whenever they wish.

The Scheme explained

Fractional Ownership is the alternative route to owning Freehold Property and is not to be confused with timeshare. Purchasers of fractional property are investing in the Bricks and Mortar and enjoy the same ownership rights as any individual purchasing freehold property and offers you:

• Deeded property with the same rights as any other real estate purchase
• Each year specified months are allocated to each owner on a rotational basis so they can enjoy sole occupancy of their property
• Owners share the maintenance and running costs of the property
• Owners can still benefit from rental income if they do not use their property

This form of ownership also benefits those who would like to test the idea of holiday home ownership before making a larger investment. It is also a fantastic way of reducing investors financial exposure and giving them the opportunity of spreading their portfolio.

What is the difference between Fractional Ownership and Timeshare?

Fractional ownership is freehold ownership and NOT timeshare.

Timeshare gives Guaranteed occupancy right for a defined period each year, which is in common with a shared fractional ownership, however it is:

• Not ‘Freehold’ ownership
• Unlikely to achieve any capital appreciation
• It is a cost rather than an asset
• Carries a lot of negative media coverage

Fractional ownership gives you actual freehold ownership of a property as opposed to just the right of usage. Buying in this manner meets the requirements of many more potential buyers including those who:

• Would love to buy their holiday home outright, but lack the funds
• Who may have the funds but recognise it makes little economic sense to pay for and maintain a property when only used for a limited period each year
• Those who see fractional ownership as a way of spreading their portfolio and reducing their financial exposure