Service
Fractional Ownership
MAKE DREAMS COME TRUE THROUGH FRACTIONAL OWNERSHIP
All of us look forward to the day that we can afford to buy a holiday home.Unfortunately this is made extremely difficult by property prices that are forever increasing.These high prices can make owning a holiday home nothing more than a dream for more and more South Africans.
Fractional ownership schemes can make this dream come true, rather than buying a traditional holiday home.Traditional holiday homes generally require cumbersome maintenance, and the fact that they stand empty for most of the year, when not used by paying guests or the owner, is also a problem.You can only afford to go on holiday so many times a year.
Engel & Völkers Projects has decided to become involved with fractional ownership developments.Our involvement in such project stems from the fact that they are ideal solutions for South Africans dreaming of owning a holiday home, but who can’t or don’t want to buy one outright.
WHAT IS FRACTIONAL OWNERSHIP?
Fractional ownership is where a group of shareholders (normally 10-13) form a company to purchase or construct a leisure property. These homes are typically situated within resorts (such as golf estates) or at holiday destinations and, unlike timeshare, any increase in the value of the property accrues to the shareholders.
In essence, fractional ownership is a syndication structure that offers a buyer the opportunity to buy a share of a property.
WHY FRACTIONAL OWNERSHIP?
The main reason for fractional ownership becoming increasingly popular in South Africa is the boom in property prices.High property prices, especially at choice holiday destinations, make owning a holiday home very difficult for South Africans.
Previously the only option for people who couldn’t afford to buy their own leisure property was timeshare.At the present moment there are around 240 000 households that hold rights, normally in share blocks, to 360 000 weeks or the equivalent thereof in points.The drawback is that they do not own a real estate asset.The amount of members and the existence of exchange clubs also make it very difficult for owners to go on holiday when and where they want.This decline in the quality of timeshare also makes fractional ownership more appealing.
HOW DOES FRACTIONAL OWNERSHIP WORK?
The Engel & Völkers selling agent offers the turnkey solution of developing and marketing superior homes at choice destinations.We are also responsible for the management of the property and all financial and administrative duties related to the property.
The joint-ownership company, in which the buyer owns a share, owns the property.The shareholder’s agreement, into which all shareholders enter upon investing in a joint-ownership company, stipulates that each shareholder has the right to let the weeks allotted to him.Accordingly, a shareholder could either let weeks in the property himself, or request the agent to let the weeks on his behalf.
Proof of ownership is by means of a share certificate in the private company (joint ownership company).
The development is monitored and managed by a full professional team, as all developments should be.Hence the involvement and responsibility of an architect, structural and civil engineer, project manager, land surveyor and other professionals.
As all homes are furnished to a high standard with superior furnishings that normally cost between R300 000 and R400 000, the agent usually employs the services of an interior design consultant to design and oversee the entire interior design including the layout and installation of finishes such as cupboards, furniture, fittings and features.
LEVIES
The monthly
levy varies from one leisure estate to the next and also depends on the size of
the residence. Investors in fractional ownership schemes can budget between
R400.00 and R600.00 per month in levies. This usually covers the following
expenses:
Levy Includes |
Approximate Monthly Cost per Unit |
|
Estate levy |
R800 - R1 200 |
|
Building insurance |
R250 - R400 |
|
Short-term insurance |
R300 - R550 |
|
DSTV |
R450 |
|
Full time domestic worker |
R1 000 - R1 200 |
|
Pool and garden maintenance |
R250 - R450 |
|
Accounting & secretarial services |
R500 |
|
Audit by Malherbe Lourens |
R400 - R600 |
|
Property managers |
R600 - R800 |
|
Water, lights, rates & taxes |
R900 |
OCCUPATION
Occupation of the property is based upon a roster system, which depends on the location of the property and the number of shareholders.Each owner usually has four weeks holiday per year. The shareholders may decide on how the four weeks are used during each year, but are usually allocated as a week per season.The roster also usually advances a week each year.
EXCHANGES
Agents, in some instances, can also arrange exchanges with similar properties at different destinations in Southern Africa and worldwide.
