Investing in a home-from-home is an aspiration for so many, and the opportunity to buy property in the beautiful Mediterranean climate can provide a real transformative lifestyle.
There are countless factors to consider when reviewing the available options, from exposure to property tax to investment capital required, and ongoing service charges. The Arrilo team has reviewed the pros and cons of co-ownership vs purchasing a Spanish second home independently, for a more informed choice.
The Cost of Property Ownership and Fractional Ownership in Spain
When thinking about a second home or spending a proportion of time relaxing in a peaceful, warm environment, often finances and taxes are not always considered, but are a crucial consideration.
One way to view fractional ownership is the initial cost of investing in an idyllic prime location property is split equally, with reduced ongoing costs and tax liabilities. Fractional ownership allows purchase of a property anywhere in the world with a group of fellow owners, sharing out all the associated costs in a manageable way.
There are some incredible benefits, but one consideration is the ability to acquire multiple part-ownerships - a proportion of a gorgeous villa on a tranquil golf resort, a city apartment in a vibrant metropolitan area, and even a share in a peaceful country retreat, all for less than the cost of one second home.
The Benefits of Second Home Co-Ownership in Spain
The core advantages of fractional second home ownership include:
- Affordability: a million-pound villa isn't accessible to many, but buying an eighth of the property to use for six weeks of the year would cost Pound 140,000 - a far more achievable investment.
- Value: sharing ownership deeds with other owners provides access to luxury homes in prestigious locations that wouldn't be available within an individual budget.
- Usage rights: access to your shared property is equivalent to your share, so for example each eighth of ownership provides a six weeks per year. If you bought a 3/8, you could stay at the property for four and a half months per year.
- Legal ownership: fractional ownership means real estate ownership, which can be sold if needed.
- Property Management: you can rely on the property being maintained and managed, so your second home is ready whenever you'd like to visit.
Foreign Property Fractional Ownership as an Investment
Property has long been regarded as one of the most stable long-term investments, with gradual appreciations that can tie into a retirement plan. Fractional ownership is significantly lower risk than full property ownership and more profitable than a timeshare.
Fractional ownership is not the same thing as a timeshare. Primarily partial owners legally own a proportion of the property and will be formally named on the deeds. A timeshare is not an investment - you might be allowed to sell, depending on the terms, but the rights to use a property for an allotted time will not appreciate, so you're very unlikely to get more than you paid. Buying a property share works differently, legally registering the owners asset. Portfolios will increase as the property market grows in each location.
As an investment, there are several points to be aware of if you're weighing up full vs fractional ownership, as buying a property overseas can be expensive with Spain's taxes and fees, including:
- Notary fees to record the deed of sale.
- Land Registry charges to file those deeds.
- VAT for buying a new build.
- Property Transfer Tax (ITP) on existing homes.
When choosing co-ownership, the purchase process is fully managed. Ongoing costs are also split, so co-owners pay a fraction of the maintenance costs and own a home in a premium location without heavy charges for utilities, landscaping and cleaning that are associated with full property ownership.
Explore the Fractional Second Home Opportunity
Arrilo specialises in fractional ownership agreements in some of Spain's most stunning areas, with amenities such as private pools, panoramic ocean views, contemporary decor, and sought-after villas close to eminent golf courses.
Arrilo promotes fractional home ownership as a reliable, accessible investment allowing clients to experience Mediterranean living without the high costs.
Egle KlemenyteHead of MarketingArrilo.com
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