The Difference Between Fractional Ownership and Timeshare

Country:  Florida, United States; Greece; Portugal; Spain; Turkey

Fractional ownership is an increasingly visible and popular way of buying overseas property, especially with the recession scaring people away from buying full freehold properties. But there is still confusion surrounding the difference between fractional ownership and timeshare, and it is important for potential buyers to establish the differences between the two.

Nick Turner, vice president of business development at The Registry Collection says: “Both of these business models are a form of shared ownership in leisure properties or holiday homes. The similarities end there because in every other aspect, fractional ownership and timeshare properties are worlds apart.

“Timeshare involves the purchase of, typically, one or two weeks per annum use share and it is not a deeded purchase. Fractional properties have to offer a minimum 1/13th ownership share to qualify as a fractional purchase, while having a maximum of ¼ ownership share, and the purchase is often a deeded ownership – fee simple or a deed of entitlement to the purchased share of real estate at a single location.”

Piers Brown, founder of The Fractional Life says: “Timeshare is simply buying the right to spend a specific amount of time in a property, while fractional ownership is an actual deeded interest, in that you own an equity stake in the property.”

Turner says that the two options usually have very different buyer profiles too: “A timeshare will often be bought by a middle income family or couple looking for a holiday home they can enjoy a couple of weeks each year, with the advantage of being able to exchange it for others of commensurate quality around the world through an exchange network. A fractional property is an asset-linked real estate purchase bought by someone who could probably afford to buy the property as whole ownership, but who doesn’t want the hassle of servicing the swimming pool, looking after the property and gardens year-round and is savvy enough to appreciate the value of only paying for the period they are able to use it – buying a luxury lifestyle at a fraction of the cost.”

Timeshare, as most people are aware, has become something of a dirty word in the media, thanks to the unscrupulous practices of a minority of practitioners. So how can fractional ownership establish a separate “brand” from timeshare?

Steve Last of Owner Groups says: “For fractional ownership organisations the problem is to position themselves closer to the “real ownership” end of the scale. This means emphasising the economic benefits and things that an owner can do and a renter can’t. The key one, of course, is the ability to participate in any growth in value, but in general fractional resorts also provide far more facilities to owners than timeshare does, with a more exclusive, lower volume market.”

Piers Brown says it’s worth checking whether any fractional seller is a member of The Fractional and Shared Ownership Trade Association (FSOTA). He adds that reputable sellers will be completely transparent throughout the sales process and, like any property transaction, always recommend the buyer uses a legal representative prior to purchase.

As for timeshare, opinion is divided as to whether the industry can recover from the negative publicity it has received.

Steve Last says: “Timeshare operators who are open about the real advantages of what they offer, but do not claim things that are dubious, should flourish because for some of the holiday accommodation market they do have big benefits. The public today is probably inclined to make much smaller “investments” in personal long-term leisure facilities than in recent years.

But Piers Brown does not think recovery is possible: “In the UK and European marketplace, unfortunately not. The mis-selling that went on in the late 80’s and early 90’s has seen to that. There are however thousands of very happy timeshare owners, and the Organisation for Timeshare in Europe (OTE) does work hard to ensure standards are upheld within the industry.”

According to OTE, the governing trade body for the industry, the industry is working hard to clean up its act. Complaints about OTE member timeshare resorts and operators have been reducing steadily year on year, falling by a third between 2004 and 2007. In 2007, OTE’s consumer desk received less than 125 complaints about OTE member resorts.

Whatever option you decide to take, the huge range of various fractional ownership and timeshare schemes on offer means that one thing is absolutely vital: Do your research and make sure you have good legal advice.

First published in April 2009.
Some information contained within this article may have changed since it was first published. Homes Overseas strongly advises you to seek current legal and financial advise from a qualified professional.

See Also:   Fractional ownership

See all properties in Spain

Some properties in Spain

	Ref PW110304Offer, Polaris World, Spain
	Price: €72,543 Type: Apartment Bedrooms: 2
	UNIQUE OFFER. Upper floor, two bed one bath maisonette with 54 metres solarium, in Condado de Alhama, Murcia.
	View details | Enquire further

	Ref RM5100917, Riomar, Spain
	Price: €75,000 Type: Bungalow Bedrooms: 1
	South-facing, furnished, upper floor, large (50m²) 1 bedroom maisonette with spectacular views over the pool and gardens, in excellent condition and in a very beautiful complex.
	View details | Enquire further

	RLE103, Turquia, Spain
	Price: €76,740 Type: House/Apartment Bedrooms: 1
	Crisp clean lines are the inspiration behind this project with each property meticulously designed by leading architects Eren Talu, renowned for the superb Hillside Su Hotel in Antalya.
	View details | Enquire further

	Ref PL5091011, Pueblo Latino, Spain
	Price: €79,000 Type: Apartment Bedrooms: 2
	Very attractive, furnished, 2 bedroom, second-floor apartment with a sunny, south-facing terrace with a seaview.
	View details | Enquire further

	Ref RM5090306, Riomar, Spain
	Price: €79,000 Type: Apartment Bedrooms: 1
	Quite recently-built, fully furnished and equipped, east-facing, 1 bedroom, third floor, apartment with beautiful pool and gardens, and storage-room. A delightful, quiet location with panoramic views over the surrounding area and to the sea.
	View details | Enquire further

	Ref PWAL110304(OFFER), Polaris World, Spain
	Price: €79,710 Type: Apartment Bedrooms: 2
	UNIQUE OFFER. Ground floor, three bed one bath maisonette with 44 m² of terrace and garden, in Condado de Alhama, Murcia.
	View details | Enquire further

	RLE102, Turquia, Spain
	Price: €80,658 Type: House/Apartment Bedrooms: 1
	Turkeys first residential golf resort. An 18 hole golf course just outside the popular holiday town of Kusadasi with stunning sea and mountain views.
	View details | Enquire further

	Ref RM5080313, Riomar, Spain
	Price: €82,000 Type: Bungalow Bedrooms: 1
	Extremely well maintained and very nicely furnished upper floor maisonette in a very attractive and popular development close to Mil Palmeras, with fantastic sandy beaches and all amenities close-by.
	View details | Enquire further

	Ref CA5100511, Campoamor, Spain
	Price: €90,000 Type: Apartment Bedrooms: 2
	SPECIAL OFFER AT A BARGAIN PRICE!! SPACIOUS, UNFURNISHED, LUXURY 2 BEDROOM, 2 BATHROOM APARTMENT ON THE REAL CLUB DE GOLF CAMPOAMOR.
	View details | Enquire further

	Ref RM5060926, Riomar, Spain
	Price: €95,000 Type: Bungalow Bedrooms: 1
	Extremely well maintained and nicely furnished 1 bedroom (+ attic room) upper floor maisonette in a very attractive and popular development close to Mil Palmeras, with fine sandy beaches and all amenities close-by.
	View details | Enquire further

See all properties in Spain