Fractional Ownership: Australia Has Enormous Potential
The concept of owning your own home appeals to many people. It also brings responsibility and can be geographically confining. You can’t simply leave the house behind while you travel – or can you?
When I was in Paris earlier this year attending the Who’s Who in Luxury Real Estate Conference I was amazed at how far Fractional Ownership had developed. In some parts of Europe and the Caribbean, fractional ownership is a way of life.
So what is fractional ownership?
It is where you purchase part of a deeded interest in a property. In other words you are not the only owner and typically you would buy 1/10 of the total deeded interest – giving you 35-36 days use of the home each year. Typically you can own no more than one quarter of the total deeded interest (this can vary).
What Makes fractional Ownership different to Time share? The difference is massive!
Fractional Ownership means that you “truly” own part of a property. This means that you can benefit from the capital increase in the value of the home and you can choose to sell your deeded interest at any stage. Time share is not actually buying a property – it is buying the right to spend time in a home. So if the property increases in value you have no right to any of that capital gain.
I know of a lot of people who have bought into time share programs in the past and they feel somewhat “fooled” by the experience. With the massive internet and technology explosion we can now find cheap accommodation on websites like lastminute.com and wotif.com and the benefit of paying for time share has been very much eroded.
Fractional Ownership allows you to have a real stake in a property that you may not be able to purchase wholly due to its total cost. You may not have the capacity to live full time in a $10 million home but you might be delighted to spend 35-36 days each year and pay $1 million to enjoy the high life. This is especially sweet when you realize you actually will benefit from the capital gain as the price of the home increases.
Given the cost of housing fractional ownership will very quickly become a major part of the housing market in Australia. For those wanting to purchase property in holiday areas such as the Sunshine Coast and the Gold Coast this system of ownership makes a lot of sense. Time share is really a thing of the past as people will surely want the benefit of the capital gain of their property – fractional ownership delivers that! It’s a very exciting concept and I look forward to exploring it further in future articles.
Marquette Turner Luxury Homes on MarquetteTurner.com