February 16, 2007 at 4:53 pm #52647
There was an interesting article on fractional ownership in last Saturday’s Daily Telegraph. It stressed that this is different to timeshare as the purchasers own a share of the freehold, typically 25% not just a right to occupancy for a certain number of weeks. This share can be sold on. The main benefits are the significantly reduced cost of holiday home ownership, the economic sense of not owning a property outright and using it for only 8 weeks a year and as an initial first step onto the overseas property market. It seems to be a new concept in Europe.
The disadvantages from what I can see are the limited number of participating developers and developments and information. However I suspect the concept will become more popular expanding the market and choice. The DT article cited only one company in Spain, Andalucian Homes based in Cheshire who I believe are not linked to a similarly named dreamy variant! Their website gives little useful information and I have a lot of unanswered questions about the practicalities.
The DIY version where you buy with a few friends is different. I plan to explore this too but does any one have any experience or comments on the concept of fractional ownership, know anything about Andalucian Homes or know any reputable companies offering a similar product? I would be grateful for any information.
February 16, 2007 at 5:09 pm #69323
I see this as time share in a different form. The current efforts are to have four joint owners. On a half decent property you could pay €350,000 plus 10%, this means you are paying nearly €100,000 per person.
My reservations are:
1) You will have to set up a Spanish limited company ( Cost around £3 to £4K), accounts etc have to be preapared.
2) The period that you are not going to use will have to be rented. This will entail agency fee, cleaning, management fee, wear & tear etc
3) The rents will be different in High & low season. How is this going to be
managed between the owners.
4) The present propeties in the market on such schemes are the ones where people cant complete and Banks have undervalued them for mortgage purposes as a large Agents fee was added on at the time of the sale.
5) You will be sharing the ownership with people you dont know.
6) The internal decor may not be to your taste.
February 16, 2007 at 5:19 pm #69324
I would not even consider it, there have been previous threads on fractional ownership (AKA timeshare). Most are tied up with some obscure company in Malaysia or similar and they have better lawyers than you will have. Previous thread some guy seems to have lost all his money in a similar scheme in Benahavis CDS. Could work with friends and family but would have to be carefully worked out.
These articles in the Daily Telegraph and other newspapers are just advertisements presented in a different way
February 16, 2007 at 5:44 pm #69325
It was interesting that both Shakeel and Katy see fractional ownership as a type of timeshare. However taking Shakeel’s points the article in the Daily Telegraph did not say anything about ownership through a company although the sections on title were vague and somewhat contradictory.
The issue of renting when not in residence will of course apply how ever the property is owned. Presumably the weeks of ownership are divided up equitably and individual owners will price rents based on demand and season etc. Andalucian Homes offer a “guaranteed” rental scheme which of course would have to be treated with caution.
Points 5 & 6 are very valid. Point 4 I have no knowledge of, although the Andalucian Homes website lists the participating developments on the Costa del Sol. Some readers may be familar with these.
February 16, 2007 at 6:20 pm #69327
I know of a few people exploring this. A couple of pointers
1. If you set up a spanish limited co, you will not be able to raise a spanish mortgage as banks now want the owners detils on the deeds.
2. I do know of one developer investigating this – alanda homes. They are reputable but I only know of multiple owners who bought together as a joint purchase. All outgoings and incomes were shared equally regardless of weeks/seasons.
Are you thinking of doing it?
February 16, 2007 at 6:50 pm #69329
If the Company does not buy and one of the owners dies, there will a lot of complications in terms of Inheritance Tax etc. The company gives you continuty. The scheme that I have seen shares weeks in high/medium/low, per owner.
The Guarantee is not worth the paper its written, they will e.g give 5% net, However the expenses will be jacked up, so the net will be very little or nothing.
Inez, is right that there will be mortgage. The developer/Agent expects you to pay your share without Spanish mortgage/Uk equity, so as per above you will need €100,000. Agents are trying to band these people along with some one who is already contractually bound and has paid the 30% or so.
I am afraid there more questions than answers and I can see that the newspaper would not have a large enough slot.
If you are going to time share why bother, stay in a hotel.
February 17, 2007 at 9:27 am #69353
Inez. Yes it does interest me given the affordability but I am at the very early stages and as Shakeel says there are more questions than answers. Initially I think my wife and I will explore buying with family and friends. That itself poses issues on title, disposal and other practicalities to be worked through.
On the issue of mortgages the Daily Telegraph article stated previously fractional ownership had to be purchased through cash although now the Manchester Building Society has entered the market and will now provide mortgages of up to 70% of the value of the fraction. The security is based on their ability to dispose of the share on the open market without selling the whole property.
February 17, 2007 at 10:44 am #69362
Can you please give the details of Manchester Building society. I find this to be very curious.I know that Building Socities to help first time buyers is lending on this basis.
I doubt if they are doing this is Spain. The only English lending in Spain is Halifax and it is registered in Spain. English Banks are lending from Gibralter. I have however never come accros the above name.
February 17, 2007 at 12:00 pm #69374
Skakeel. The article in the Daily Telegraph mentioned the Manchester Building Society specifically but I don’t have any further details of shared ownership mortgages in Spain.
The website http://www.themanchester.co.uk has very little information but you can request details of their mortgages by e-mail at firstname.lastname@example.org. I have not made any enquiries at this stage. If the scheme is viable I suspect other lenders will come into the market providing more competition and choice.
February 17, 2007 at 12:22 pm #69376
Mike, I get the feeling that you are trying to convince all of us rather than seek advice 😕
February 17, 2007 at 12:44 pm #69379
Katy your suspicion is without foundation and somewhat offensive. I have no vested business interest in this. I am not pushing a product or a service. My post was entirely personal based on what I found to be an interesting article and if you re-read my posts you will see I have expressed doubts and concerns about the concept and have only made further posts in response to Shakeel’s comments and enquiries.
February 17, 2007 at 2:21 pm #69388
I did put the emoticon that I was confused which was meant I hadn’t made my mind up about the postings 🙂
February 17, 2007 at 2:40 pm #69390
I think we should take the forum on face value. Its unfair to form opnions without knowing the people.
February 17, 2007 at 3:30 pm #69392
Yes Shakeel, you are correct 😳
February 18, 2007 at 1:10 pm #69418
Fractional ownership seems to be more common in Portugal. A site we looked at was Parque da Floresta in the western Algarve. Beautiful villas and apartments on a golf course and a very carefully worked out system of purchase – either monthly or for three months. Where it was 3 months you could buy a block or have the 3 months spread throughout the years and annually rotated so you got the main holidays over a period of 4 years. Quality of furniture and other arangements were well thought through. Not right for us but I could see the advantages including sorted rental.
February 18, 2007 at 4:32 pm #69421
I still don’t think they are a good idea, too much like timeshare. Low maintenence fees, admin charges for the first year and then the skys the limit in further years. Many timeshares were advertised as ownership too and that you could leave your block to family etc. Through a complex legal rip-off their shares were worthless.
Supposing that for one week you are charged 300 pounds fees per year.(Yes, most of them are!!) its possible to rent an apartment for that except for July and August and there would be the flexibility to go where you choose.
February 18, 2007 at 4:46 pm #69422
Katy. I share your views 100%. What life has taught me, is to keep things plain and simple. You will have very little or no grief in life.
These kinds of schemes are designed with a lot of assumptions, realistic or not. Allowing the scheme provider the benefit of doubt. I, certainly would not give benefit of doubt to such schemes that are created or have been thought out in Spain.
The legal system, can not make a fair judgement on normal clear cut breaches of contract. What chance ?
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