With gorgeous golf estates and ever-enticing holiday developments popping up all over the country, there is an increased demand for people to purchase these properties. But with the cost of living increasing on a nearly daily basis, there is only a small pool of people who can purchase a second or third ‘home for the holidays’. This is where the fractional ownership scheme comes into play…
Fractional ownership is a very similar concept to that of timeshare; you purchase your share of a property, and you split the operating expenses with the other owners. With timeshare, you purchase a particular week in the year, with 52 other owners and then you have your week guaranteed to you for life or until you sell your share. Depending on which week you choose, this often affects the value of your share, but the concept is a shared ownership. Fractional ownership is similar to that, although the number of shareholders is much lower. It can range from two to about 16 owners and their available time is also much longer than the time available to those people who own timeshare.
The exciting thing about fractional ownership is it gives you access to the best possible holiday homes at a portion of their listed price. You also get to split all the running expenses and property levies equally amongst the other owners. Having several investors on a single property ensures that the property is regularly occupied and thus doesn’t cost you money for an empty house.
With gorgeous golf estates and ever-enticing holiday developments popping up all over the country, there is an increased demand for people to purchase these properties. But with the cost of living increasing on a nearly daily basis, there is only a small pool of people who can purchase a second or third ‘home for the holidays’.
Fractional ownership is a rather complicated legal matter as we found out from property lawyer Taryn Murphy. She says that many people for affordability reasons elect to purchase property with their parents, boyfriends, girlfriends, family or friends. Since the implementation of the National Credit Act (34 of 2005), the banks have become far stricter in assessing client’s affordability and granting them a second bond. Fractional ownership always seems to be a great idea at the time; however what people fail to factor in is that relationships sour, people’s financial situations change and sadly people die. “When you buy a property, it is a legal requirement that the person/people who co-sign your loan agreement at the bank also needs to be the co-owner of the property,” Murphy said. She also added, “If anything happens to the person or the relationship with the person falls apart – then you are stuck with someone who owns a portion of your property.”
Even if they did not contribute to it, they could hinder you selling the property or dealing with the property as you wish to. If someone dies then their share in the property becomes an asset in their estate, and if they leave their assets to someone other than you, you could end up owning a property with someone you never intended to own it with. Partnership agreements can be signed to try and regulate the intended “property-purchasing” relationship, but if the relationship sours then the agreement will need to be enforced in a court and litigation is extremely expensive.
Because of the complications, it’s generally best to speak to an expert before making any kind of purchase of a share in a leisure property. Some companies, like Legacy Private Residencies, offer you an opportunity to purchase a share in a luxury property and then they manage the property and its rental for you when you are not using it. This eliminates the personal nature of the purchase and can remove all complications.
The Private Property website showed that some of the best estates in the country offer buyers a chance at fractional ownership and these are the ones we thought were worth a look:
If you are looking for something close to home in Gauteng, you can purchase a share in a house in the magnificent Parys Golf and Country Estate. Only a short drive from Johannesburg, a place on the Vaal River offers you an easy escape from life, without the need to take a long road trip or pay for flights. Also, a stone’s throw from the hustle and bustle of Gauteng is the beautiful Zebula Golf, Spa and Wildlife Estate. This estate has some great amenities, and there is plenty for the whole family to do.
Venturing a little further from Gauteng; Kwazulu-Natal and the Western Cape are home to some of, if not all the best estates in the country. Whether you love golf, wildlife or just the beach, there are fractional ownership opportunities all along South Africa’s rich and diverse coastlines.
Estates like Atlantic Beach in Blouberg, Fancourt near George, Pezula in Knysna and Zimbali in Kwazulu-Natal all offer the best quality homes, the highest ranked golf courses and exceptional access to the most popular tourist attraction throughout the country.