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Fractional ownership-luxury living at what cost?
Fractional ownership
A luxury lifestyle for a fraction of the cost
In America, fractional ownership is the fastest-growing segment of the property market, and now it is catching on here. It has been around for nearly 20 years, and is often mistakenly linked with the much-maligned Timeshare concept.
Fractional ownership and asset-sharing gives you an ideal way to get the most out of your investment by purchasing only the shares or time you require from an asset. All other aspects are split, both the benefits and the costs, amongst a limited number of shareholders or members.
It is not just limited to property-it can include owning a share in a supercar, a racehorse, a yacht or even a designer handbag!
Fractional ownership means that you physically own a percentage of the asset until you decide to sell. You can cost-effectively own a quarter share in an exotic holiday home abroad, have access to your favourite yacht for eight weeks of each year, spend days behind the wheel of some of the most desirable cars in the world, have the latest handbag on your shoulder and even own a part-share in a nightclub. No matter what your budget, there's something for you.
Fractional property ownership
Fractional ownership within the property sector is booming at present. This is mainly due to the fact that so many people would like holiday homes, but don’t want the hassle and expense of owning a place that they can only use for a few weeks at a time.
However, they do want the value, equity and other benefits associated with property ownership, and this is where fractional ownership comes in. Like timeshare, you are entitled to stay at an apartment or town house for an agreed period every year. But unlike timeshare, you own a freehold share in the property.
In essence, fractional ownership is the shared ownership of a property. Usually, the title deed is divided into fractions ranging from a quarter to a twelfth. This gives you the right to stay in the property for the corresponding fraction of the year.
You can also sell your fraction whenever you choose. A management company runs the property and each fractional owner contributes to an annual maintenance fund.
The cost of second homes in the more desirable areas of Europe has been rapidly increasing over the past 10 years. A place in the sun isn't such a cheap option any more but with fractional ownership you can get a foot on the ladder for around £27,000 in a new development on the coast or a top golf course in Portugal or similar.
Until recently, one of the limitations of the scheme was that you had to fund your purchase of a share with cash, or by borrowing on another asset. It is, for obvious reasons, difficult to borrow for a part-share of a property because banks were not able to secure the whole property for resale in the event of a default.
However, from late last year, it became possible to buy your fraction with a mortgage from a British lender, provided you buy from a developer that uses a package developed by the Fractional Ownership Consultancy, specialist advisors to property developers and investors.
With fractional ownership there is also an obvious limitation in the dates of your holiday. For example, because of the fixed rota, you can't go to your house all August, every August, instead you will be restricted by the schedule and the other owners.
Bu perhaps the single most important limitation is the type of property available. The overwhelming majority of properties available to purchase fractionally are new-build villas or apartments. So, if you want to renovate a ruined tower at the top of a hill in Italy with no roads or electricity, fractional ownership is probably not for you.
Affordable Millionaire is one of the most comprehensive fractional property ownership services, so is ideal if you are looking to purchase a freehold share in one location or wish to build a portfolio of shares in luxury international properties. The list includes luxury properties are available across the world and to suit all budgets and tastes including beach locations, city apartments, golf resorts and much more.
Fractionallife.com is a website providing a one-stop ‘fractional superstore’ site to assist consumers in making sense of the currently expanding fractional ownership and asset – sharing marketplace. They have a number of properties on their site, all of which are involved in the fractional ownership concept.
If you fancy a second home in the UK, Penhaven Cottages is a selection of county cottages in Devon divided into ten equal shares, entitling you to five weeks access each year. Unlike some holiday schemes, fractional ownership gives you ownership of one tenth of the property on a 999-year lease, so does represent a real investment in bricks and mortar.
If you fancy looking a bit further afield, Someplace Else has recently launched fractional ownership at the acclaimed Caribbean beachfront resort of Bella Maya, Belize. This is a deeded ownership of a fully furnished waterfront penthouse apartment in one of the Caribbean’s finest resorts.
The Vintners Club in Burgundy, France, is designed for people who are interested in wine, food and grand estate living in one of the world’s wine top growing regions. With the purchase of a membership here, you get a second residence in a renovated manor house with full services.
One of the largest and most diverse fractional ownership and asset-sharing exhibitions in the world, the event caters for the growing number of people who want to enjoy a lifestyle of luxury items and experiences - without the ties, responsibilities and capital outlay of a complete purchase.
CONTACTS
Affordable Millionaire, www.affordablemillionaire.com
Fractional Life, www.fractionallife.com
Penhaven Cottages, www.penhavencottages.co.uk
Someplace Else, www.someplaceelse.co.uk
The Fractional Ownership Consultancy, www.fractional.net
Vintners Club, www.thevintnersclub.com
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