Fractional Ownership: Examining The Pros And Cons

Timeshare/ fractional ownership - is it for you?

Once upon a time, fractional ownership was called timeshare, and it was something that people were conned into and regretted.

However, in recent years timeshare has been vamped up and received celebrity endorsement and is now referred to as fractional ownership.  The question is, is fractional ownership a good way to buy a property abroad or not?

Fractional ownership – what is it exactly?

Whether you’re for or against the concept of part-owning a home overseas thanks to fractional ownership, we will examine the pros and cons of this way of buying for you so that you can be armed with facts before you buy in or pooh-pooh this concept altogether.

So, read on to learn what is good and what is not so good about part owning a home overseas.

According to the likes of Zoe Dare-Hall, who writes for the Telegraph’s property abroad pages, the solution comes in the form of fractional ownership…whereby instead of buying a whole home overseas, you buy a share of one and can, therefore, use it for a set number of days or weeks a year. 

Sounds very similar to a timeshare, doesn’t it?  Well, that’s because it is, despite what everyone trying to flog the idea to you will tell you!  Anyway, moving on, here are the pros and cons of fractional ownership.

The advantages of owning a part share in a property abroad

You can afford to buy into a more luxurious property than you could afford to buy by yourself outright. Therefore, you may gain access to superior amenities and facilities as a result – and you buy yourself the right to a luxury holiday for a set term every single year.

Your share is saleable or transferable if you decide you no longer want it.  You have no management or maintenance worries with the property as it’s all taken care of by a management company – for a fee. 

Apparently, a purchase made in a luxurious fractional ownership development is an investment that can theoretically increase in value – however, we’re not sure anyone can prove this.

Finally, you can guarantee your holiday every year in a stunning location for a one-off down payment on what some say is a lifestyle investment.

The disadvantages of fractional ownership of property abroad

You have no real control over the property. You cannot change it, redecorate it, or alter the furnishings and finishing.

But there are those who will tell you that every fractional ownership property abroad is a luxurious one, so you might not need to make any changes. 

Consequently, fractional ownership’s restrictions on your own personal input into ‘your’ home may annoy you.

You are sharing your property with lots of usually unknown people.

Therefore, there is a risk involved that others may not be as careful with the property as you are, and this could be passed on to you in the form of higher annual management and maintenance charges.

Ultimately you don’t own the property – therefore, you cannot benefit in the same way that you could if you bought your own home overseas, invested in it, improved it, and then resold it for profit. 

You are more restricted in terms of getting out of the deal often. This is because it is generally harder to sell a fraction than a whole.  And the bottom line is, aren’t you just buying a posher version of a timeshare?

How to buy fractional ownership safely

You need to do all you can in the form of research to decide whether fractional ownership IS a good buy.

To that end, you have to ensure that you look into the management company, the developer, the property itself, and above all else, the contract that you will be asked to sign. 

Everything has to be researched and watertight in terms of protecting your investment, capital, and rights.  And finally, you need a good lawyer who understands the legality of fractional ownership, can ensure you understand all the potential pitfalls, and ensure that the contract you sign is as secure as possible.

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