NEEDTOKNOW

The Daily Telegraph - Property - - Propertycl­inic -

Con­tin­u­ing the se­ries in which our Clinic ex­perts pro­vide a guide to those thorny is­sues that can trip up the un­wary. This week, Lorna Vestey on frac­tional own­er­ship. What is frac­tional own­er­ship? It sim­ply means that you are buy­ing a share of a prop­erty, which en­ti­tles you to use it for a pe­riod each year equiv­a­lent to your share. That may sound like an up­mar­ket la­bel for time­share, but there is an im­por­tant dif­fer­ence. With time­share, you buy the right to stay for X weeks a year in a cer­tain prop­erty over a spec­i­fied num­ber of years; it is ef­fec­tively a re-saleable, pre-paid book­ing. Frac­tional own­er­ship means you ac­tu­ally co-own the phys­i­cal prop­erty, not just the right to oc­cupy it.

The con­cept started in the US and the Amer­i­can web­site www. frac­tion­al­life.com cov­ers it widely. There are now frac­tion­ally owned prop­er­ties in glam­orous spots all over the world (www.lux­ury frac­tion­al­guide.com). Al­though still in its in­fancy in this coun­try, you will also find a good range of op­tions here: you could buy a share in a Devon coun­try cot­tage (www.pen­haven­cot­tages.co.uk), a May­fair apart­ment (www. grandres­i­dence­club.com) or prop­erty on the Pit­tormie Cas­tle es­tate in Fife, part of the in­ter­na­tional Eden Club for golfers (01334 844924). Is this a good in­vest­ment? Bricks and mor­tar do ap­pre­ci­ate in value over the long term, and you will have some­thing more con­crete than with a time­share.

But frac­tional own­er­ship should be viewed as a lifestyle rather than fi­nan­cial in­vest­ment. In to­tal, the co-own­ers are likely to pay over the odds for their prop­erty, and there will be an an­nual ser­vice charge. The up­side is bet­ter hol­i­day prop­erty than you might oth­er­wise af­ford, of­ten with grounds, swim­ming pool and ten­nis courts, and, in cities, a very good lo­ca­tion. The man­age­ment com­pany will deal with main­te­nance and other prob­lems; you pay for this in your ser­vice charge, but it saves a lot of has­sle. Are there any down­sides? You won’t al­ways be able to have your pre­ferred weeks at the prop­erty. You are un­likely to ob­tain a mort­gage, so need to be cash- buy­ers. And it may not be easy to sell your share, though some de­vel­op­ers do of­fer a guar­an­teed buy-back.

You should get a sur­vey and in­de­pen­dent le­gal ad­vice, as with any other prop­erty pur­chase. Make it clear to your so­lic­i­tor that you ex­pect a share in the deeds, not a sleight-of-hand time­share. Check the ser­vices of­fered by the man­age­ment com­pany and that the con­tract with them cov­ers all even­tu­al­i­ties and pro­vides a proper fi­nan­cial frame­work for the up­keep of the prop­erty, with pro­vi­sion for a sink­ing fund. Rep­utable de­vel­op­ers will show you their pre­vi­ous schemes.

Lorna Vestey is a for­mer part­ner of a blue-chip Lon­don es­tate agency.

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