Get a holiday home through shared ownership

The fractional owner with the most shares gets more access to the house.

However even with as little as two per cent ownership, you can still enjoy the benefits of staying in a luxurious cottage for a period of up to one week each year.

The advantage of this concept is that you can always nominate a third party to take up your allocated time for the year.

This is especially ideal where you want to offer a loved one a vacation as a gift.

The other attractive feature is that your capital contribution (in form of percentage owned) remains an asset and can be sold and transferred to third parties.

The fractional provider (initial owner) forms a company (which usually owns the property) and offers shares to would be fractional owners.

The fractional owners own the company as well as the property jointly pro rata their shareholding and a minimal service charge is payable to the management company.

The relationship between the owners is regulated by the Articles of Association of the management company as well as the Companies Act.

Fractional owners

Where there are fewer fractional owners, then instead of forming a management company to own the property, ownership is vested jointly to the fractional owners under common tenancy where each is allocated a percentage of ownership pro rata his contribution.

The title deed is therefore jointly held.

A common advantage of fractional ownership is that risk is shared and therefore minimised.

Risk could include damage to the property, depreciation and destruction of the property.

Rather than bear the entire risk alone, fractional ownership enables the owners share the risk pro rata their shareholding.

A major disadvantage of fractional ownership is the loss of privacy due to the sharing concept and the fact that accessibility to the home is limited to your share.