Fractional Ownership Questions

Frequently Asked Questions

What does fractional ownership mean? What is co-ownership? Get the answers to all the most frequently asked fractional ownership questions here on our informative FAQ page.

Fractional Ownership Explained

Simply stated, fractional ownership indicates the purchase of an asset through fractions (or shares), which is typically facilitated by a Limited Liability Company set up to purchase a real estate property in its entirety. The property gets divided into equal shares of the company. The purchaser buys a share of the company that owns the real estate and becomes an owner of one deeded slice of the property.

The fractions typically come with exclusive and private annual usage, which the owners can book, use, or rent out each year. As an example, if the property is split into 12 shares, each share comes with 4 weeks usage.

The running costs are equally split between the co-owners each year, so the reality is that you are buying a more expensive property for less investment. You’ll also be eliminating the sole burden of maintenance, upkeep, and repair, which the property management company usually executes – so that you can arrive, relax, and concentrate on your vacation time as soon as you enter the property.

Co-ownership means sharing property ownership with others and splitting the annual running costs equally. A maximum number of shares (typically 8 or 12) are sold in each property, giving each owner a set number of weeks’ annual exclusive and private use of the property. Each co-owner owns a percentage of the asset – a deeded share of the property – not just time.

The two have distinctive differences, and one should not be confused with the other. Fractional ownership of a property gives you a percentage of the deeded ownership of the actual property, while timeshare provides you with access to time each year for a set period – you don’t own any of the bricks and mortar assets. Learn more about fractional ownership vs. timeshare here.

Each share purchased comes with a designated number of weeks’ usage attached. By becoming a co-owner of the property, you have access and the right to use, typically four or five weeks a year, based on the percentage you own. The number of fractions assigned to each property takes into consideration any blocked-off weeks per year for scheduled maintenance etc. An example of a fractional ownership property divided into 12 shares with one month assigned for maintenance during the year, the purchaser will enjoy four weeks’ annual usage for each fraction held.

Anyone can purchase additional shares available according to their financial budget. Further shares may be purchased if there is the desire for extra weeks’ usage of the property or to rent out via the property management company to bring in additional income. Any limit on the maximum number of shares available for purchase depends on the individual fractional ownership company or developer’s terms and conditions.

Yes, you purchase a share in a Limited Liability company specific to the property. You own a legal, deeded share of the company that owns the property. Therefore, you have a direct percentage of ownership in the real estate property along with your co-owners.

So, you’ve purchased your share of the property and are ready to enjoy your exclusive usage at your property. Turn up to a sparkling clean property, freshly laundered linen, and towels: these are a couple of the great benefits of having a property management company looking after your property share. Along with ensuring that the annual insurances and taxes have been paid, the pool cleaned, the grounds taken care of, the utilities paid, and any maintenance carried out, this means that you don’t have to deal with any of this.

Splitting the running costs amongst the other owners is one of the top reasons people opt for fractional ownership of a property, eliminating the sole burden and financial responsibility that comes with sole ownership. Read more on stress-free vacation property management.

The answer will always depend on what is written into the contract. Sometimes the developer continues to run the property management company, or the group of co-owners may appoint another company to provide these services in the future, so make sure you ask for the House Rules when you buy if you’re looking for a home-from-home for your furry friends too!

Yes, all the shared ownership homes are interior-designed and furnished to the highest standards. Each home is unique in design and furnishings, but luxury comes as standard in a fractional ownership property. Fully equipped kitchens come complete with all cooking utensils should you choose to whip up a dish of local ingredients. Everything awaits your arrival so you can walk through the door to your vacation-ready luxury home away from home and simply relax. After all, isn’t that how vacations should be?

More and more fractional real estate companies are offering a service whereby owners that buy a share of the property also get to personalize their exclusive time in the property, elevating the experience and truly making it feel like a home from home. The important personal effects like photographs, art, and keepsakes that give you that home-from-home comfort can be in situ when you arrive and safely stored away upon your departure until your next visit.

Purchasing a fractional ownership property means that there are other owners involved. Hence, a fair system is required so that all co-owners can enjoy their exclusive annual usage at the desired time, especially considering the peak times of the year. This is done annually on a rotating priority basis via an app or direct request to the property management company.

Suppose your share gives you four weeks’ usage to schedule. It will typically be executed as follows: the initial two-week period will be actioned on the highest priority. The second two-week period will be based on the reverse priority order. These two two-week periods will then rotate so that after receiving the peak time stay request, the subsequent peak-time request will move down the priority order (benefitting other owners to move up). The off-peak requests will move up the priority rota – allowing your second choice to be confirmed. All co-owners will then get a chance to receive their first or second choice of dates, and never a third.

While buying 1/8th or 1/12th share of a property enables you to enjoy vacationing in a luxury second home for less by sharing the property cost with others, you will have exclusive and private access each year, so you will never share the property at the same time. The fractional ownership property companies or developers selling the fractions will find and vet new co-owners and facilitate any decisions regarding the property via the established property management company.

With everyone being invested in the properties, there is a genuine pride of ownership amongst co-owners. Obviously, accidental damage could occur over time. Still, with a pre-and post-arrival inspection, any issues can be rectified, and the property kept in tip-top condition. Any damages that occur outside the normal wear and tear will be repaired and always charged to the owner responsible.

The price will vary depending on three things: the size and style of each individual property and the number of owners for each property. Check out the latest fractional ownership properties here.

The answer depends solely on the developer or fractional ownership real estate company. While some do offer finance facilities and payment options, others do not.

Yes, the properties all have insurance – this is something that the property management company actions and is one of the costs that is equally split between all owners each year.

There will be legal fees associated with the purchase. Also, when buying a fraction of a property through a UK Limited Liability Company, there will also be UK Government Stamp Duty based on the property price to take into consideration.

After purchase, there will be an annual amount to pay based on the estimated annual budget for the property. These operating budget costs are shared between all owners and are for the property management services delivered, including maintenance of grounds and swimming pool, utilities, insurance, internet, etc. Generally, a property management fee is levied either as a percentage or as a monthly fee which will cover the cost of managing the company and provides you with a House Team to take care of all aspects of your property.

As for any real estate, prices will fluctuate according to the market. Properties of a higher standard in sought-after areas of demand are generally more likely to see an increase in value.

Yes. As a co-owner of the property, you will benefit from any capital appreciation percentage of the asset value over time.

Yes. As a co-owner of the property, you will benefit from any capital appreciation percentage of the asset value over time.

Yes! The properties are divided into individual fractions and independent of each other, giving you the option to sell your share of the property should you choose. The first refusal will go to your co-owners, after which you can choose to sell through an agent of your choosing.

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