A piece of the action
Property is now being divided up and sold in bits. Andrea Kirkby investigates fractional ownership.
F
ractional ownership is one of the new buzz-words in property. It is – at least for some developers – one of the few growth areas in the property market right now.
It’s also a concept that struggles against
confusion with timeshare. David Rogers, director of Rocksure Property, says, “I have some issues when I’m marketing our funds, because the market here was so scarred by the timeshare scandal, even though that was now 30 years ago – timeshares were so aggressively sold and there was so much marketing cost in the price.” Piers Brown, founder of FractionalLife.
com, points out that timeshare did, in the end, clean up its act, and, “there are a lot of timeshare owners who are very happy with their timeshares.” But he also explains that fractional ownership is a very different matter. “While with timeshares all you buy is a slice of time, with fractions you have a deeded interest in the property, or sometimes a share certificate if you’re buying into a fund.”
14 MARCH 2010 PROPERTYdrum
Explaining thE sums
At its simplest, fractional ownership splits the interests in a property. “You are an owner, you have a title deed just like owning a whole property,” says David Burden, CEO of Timbers Resorts. Other models give shares in a fund, such as Rocksure’s and the fund holds the properties directly. Rocksure is rewarded for its stewardship by a 17.5 per cent share of any capital gains made at the end of the fund’s life – the same sort of success fee that hedge funds charge. So it is a simple concept – but one that
still isn’t well known in the UK. David Burden says that while it’s not understood well here, “In the US it’s been around for a dozen years or so and people are much more familiar with it.” Most developers offer between one
quarter and one twelfth fractions. Piers Brown says, “I’ve seen one week fractions, which to me is very close to timeshare – however the standard is twelve fractions, that’s four weeks.”
The market here was so scarred... timeshares were so aggressively sold and there was so much marketing cost
in the price.’
david rogErs dirEctor rocksurE propErty
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