The poor state of the real estate market in Spain is resulting in a revival of fractional ownership which makes owning a second home more manageable, it is claimed.
In the mid to late 2000s, when the Spanish property boom was showing its first signs of petering out, many estate agents started peddling fractional ownership as a way to widen their potential customer base but it didn’t catch on.
Now, in the wake of boom turning to bust, fractional ownership is enjoying a revival and it is more transparent, avoiding the inflated prices of the previous boom.
‘Fractional ownership has been big in the US for decades, it now works well in Greece and Portugal, but Spain has struggled with it largely because those estate agents in the mid to late 2000s over inflated prices and scared buyers away,’ said Nick Stuart, director of Spanish Ownershare, part of estate agency Spanish Hot Properties.
‘Now, as wallets tighten, Spanish property prices fall and the pound strengthens, we have the perfect environment to resurrect fractional ownership in a transparent, inexpensive manner. Spanish Ownershare fits the mood of the moment,’ he explained.
He believes that fractional ownership makes good sense.
‘Some research shows the average second home is only used between ten and 17 days per year, others say a maximum of 40 days a year, whichever is true, it seems futile to bear the costs attached to owning a home for 365 days each year,’ said Stuart.
‘With Spanish Ownershare clients have 84 days available to them but pay just a fraction of the cost of outright ownership. This means they can afford to buy a far nicer property than would ever be possible if footing the entire bill,’ he explained.
‘Basically we’re matching people’s spending power to their expected use of a holiday home. With prices from as little as €55,000 for a share of a two bedroom two bathroom apartment, those who never thought they would be able to afford an overseas property now have one right in their reach,’ he added.
He pointed out that the annual running costs of the property are divided amongst the owners so ongoing annual fees are kept to a minimum. An ‘average’ person who only uses their second home somewhere between 10 and 40 days a year, can rent it out for the remainder.
With Spanish Ownershare a UK limited company is set up to buy the freehold property and then buyers take a quarter share of that company therefore becoming equal equity owners of the property.
Participants complete a questionnaire to assess eligibility and suitability and the share can be handed down to family members, left in a will or sold on the open market with the seller benefitting from any profit.
Stuart said that properties are bought at the best possible price as they are either bank repossessions or distressed, and the price clients pay includes all purchase costs and brand new furnishings.
Annual costs are the relevant percentage of community fees plus payment to a management company to handle cleaning, handovers and maintenance. The 12 weeks are allocated on a rotating basis and evened out over a four year period such that by the end each owner will have used the property for every month of the year. Week swaps are permitted, via the management company, as are private rentals.
Examples include a modern style two bedroom two bathroom apartment with onsite facilities, including swimming pools, set in tropical landscaped gardens, next to a golf course, within five minutes reach of shops, restaurants and the beach and 40 minutes from Málaga Airport at €55,000 for a quarter share including buying costs and furnishing.