Jonathan Curtis Lake(45) Joel Homes S.L Log in to become a member of Jonathan Curtis Lake's Fan Club!
17 th Febuary 2006 Shared or Fractional Ownership of Property A Lifetime of luxury for a fraction of the cost You may think that the days of finding a cheap property in Spain for under €50,000 have gone but you would be wrong. For those who feel that they should have bought ten years ago but didn’t, the dream is still achievable with Shared or Fractional Ownership.
Shared Ownership schemes are not new, they have been around for many years but normally associated with the purchase of the ultimate in luxury such as private yachts and jet aircraft, but you can now extend this luxury to a dream home in the sun. The concept of Shared Ownership in property is now gaining momentum as property values escalate and consumers seek a stepping-stone or practical alternative to full ownership of the perfect holiday home.
An added value of this method of purchase is that many would be purchasers will be able to afford to purchase into a house of much greater value and quality than they could otherwise afford.
A new variation on the shared ownership principle is one offered by Guest Invest. This allows one to purchase a room in a hotel and gain the advantage of not only being able to use the room at a very low rate but also to gain a percentage of the letting income.
This scheme is not a Time Share What sets this apart from timeshare developments is that the properties are legally owned, with the purchasers recorded on the escritura, the Spanish version of the title deeds. In contrast to a timeshare whereby you only buy a “right to use", you actually own a part share of the bricks and mortar of the property making it a tangible asset that will appreciate in value (currently increasing in the province of Almeria at an average of 14% per annum).
Most outright owners tend only to use their property for a maximum of six weeks in the year yet support the costs for the full 52 weeks. The most significant benefit of shared ownership is that you can match your purchase with your expected use of a holiday home plus the opportunity to make an immediate return on your investment by earning income from letting out any of your occupancy weeks that you do not use for yourself. This ownership scheme allows purchasers the exclusive use of the property for at least thirteen weeks of the year whilst maintenance and care of the property is undertaken by the management company, eliminating the headaches associated with owning a property abroad.
Flexibility of use The purchaser of shared ownership has the flexibility to choose the right option to suit their needs, appealing to retired couples families and young couples alike, without the full costs and responsibilities attached to outright ownership.
Individual members of any family can own shares thus keeping the whole property in one family.
The scheme is also applicable to groups sharing similar interests such as club members especially golf club members.
The way the scheme works Purchase of the property . The purchase of the property is exactly the same as purchasing outright except that you will be one of four owners. Your solicitor will set up and register a local Spanish company, which will be registered with the local land registry office. In Spain a minimum of three shareholders is allowed. A bank account is then set up in the Company’s name through which all financial transactions will take place. Legally the company will own the property that will have the shareholders names registered with the Companies Registrar and each shareholder will own one third or more percent of the shares. Your solicitor will complete all the necessary formalities and appoint an accountant to prepare the simple yearly accounts of your company.
The property that you buy is usually fully furnished and sometimes comes with a first years mortgage guaranteed. A number of companies offering this purchase option also have a management scheme that will let the weeks that you do not use, thereby providing a level of income for the owners.
An added advantage of using this method to purchase in Spain is that a company can gain considerable advantages when requiring mortgages. Often 100% mortgages are available.
Property In Spain.net is also using the scheme to gain considerable tax advantages using a consortium of Spanish banks.
Occupancy.
Each year, together with the other owners you can rotate your time of occupancy throughout the seasons. For simplicity your occupancy is usually divided into six, two- week periods and one, one-week period. You can usually take advantage of the management services for both the allocation of weeks and the rental of any of your time not used. On the first year, after completion of purchase, it is suggested that a simple ballot apportions your allotted weeks.
Frequently asked questions. Will I be able to sell my share? Yes, you can sell your share at any time, at the current value, after completion. There will be a small tax on the transfer of the shares.
Will I be able to let the property? Yes you can gain rental income from any of your weeks that you do not use for your personal use. Joel Homes runs a scheme whereby the four owners can share the rental between each owner according to your letting availability, so mitigating the problems associated with seasonal letting.
Can I give my time to my family and friends? Yes you can give anyone a holiday in the sun during any of your allotted weeks. In fairness to the other owners you should declare any income you may receive for that period.
Who will maintain the property? Your property will be maintained in exactly the same way as all the properties on the development. You, through your company, will have the same rights and responsibilities, according to the laws of “horizontal habitation" for the management and costs of taxes and maintenance as all the other owners, but individually, at a quarter of the cost.
What happens if I die? Your share of the property becomes part of your estate and will be passed to your next of kin according to your wishes. They will have the same options as you do. It is recommended that you make a Spanish will just as you should if you fully owned a Spanish property as inheritance tax differs in each country.
Investment opportunities.
Although it is not possible to give finite figures, due to fluctuations in all property markets, we can see that over the last few years’ property in the Almeria Province has risen at a rate of at least 17% per annum. This rise has slowed but is predicted to be around 12% this year. Over a five year period if we take a reasonable rate of 5% per annum, one can expect that a property bought now at €190,000 would be worth €242,500 in five years.
At current prices you will have paid only €47,500 for your share and would be entitled to €60,625 from the sale, you will have made €13,125 and this is without the benefit from any rental income achieved throughout that time.
If we take the more realistic figure of 7% you will make €19,121 representing around 40% profit.
For any further information on specific offers is available at sales@joelhomes.com or by visiting www.joelhomes.com
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Article added to SearchWarp.com on 2/16/2006 8:09:40 AM. View other articles written byJonathan Curtis Lake(45)
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