Costa del Sol Property Blog

With the slowing property market and in an attempt to promote more expensive properties several developers and agents have started marketing properties in a different light. The new buzz word is fractional ownership of properties on the Costa del Sol. This is being treated as the newest way of owning a property in Spain, but really is just a a way of encompassing existing methods of buying a property under one term.

Property fractional ownership simply means the division of a property into portions or shares. It is worth noting that conceptual point of view; fractional ownership is not the same as timeshare. Fractional ownership affords much of the freedom and usage benefits offered in timeshare, however, the important difference with fractional ownership is that the purchaser owns part of the property, which is reflected in the title deeds as opposed to unit of “time”.

It should be noted that this is not a particularly new concept and in fact most properties are already co-owned. If both you and your partner or family/friend are on the title deeds then you both own 50% (or a fraction) of the property.

The difference now is that some developers/agents are marketing the same idea, but instead of buying with family/friend you can buying with total strangers. And it gets cheaper as more are involved, which is obvious as 1/8 will cost less than 1/2of the same property.

So what are the benefits of fractional ownership on the Costa del Sol.

Well the most obvious benefit is that by several people combining their wealth they would be able to purchase a more luxurious property than they would be able to separately.
There is also less wastage. Even if you and you partner only intend to use the property during the winter months, you will still have all the costs of maintaining the property while it is empty. By buying with another couple who will be using the property during the summer months for example, the property will not be going to waste and all costs are split 50/50, such as mortgage repayments, taxes, etc…

The disadvantages of fractional ownership

The property has to be treated more like a business asset than a holiday home. Normally a company has to be set and managed to prevent a conflict amongst the share holder. Although this has the convenience of allowing someone else to deal with all the taxes and general costs of the property itself there are the additional costs of setting up a un/limited company and of course the management company fees.
There is also the situation where the shareholders are able to sell their shares. The other owner would have the option of first refusal, but you as one of the owners could not stop the sale to an unknown.
As part owner you are also very limited in what you as part owner are able to do to the property in regards to refurbishments/improvements on the property. Especially if one of the other owners is unwilling to pay.
Also remember that by buying a property this way you are limiting yourself in another way. This property can only ever be a holiday home. You will never be able to simply move to Spain and take residence, nor change your routine and come to stay on the Costa del Sol at a different time of your.

If you do want to buy a property on the Costa del Sol, and are willing to purchase with a second party, make sure you have a personal relationship with them. Whether its sibling, parents, friends, etc… You are still able to protect yourself via the title deeds but will not be stuck in the situation of only owning a small fraction of the property and having one of the other owners sell his/her share on to someone you find less that desirable.

Regards
Andrew Belles