BLB have established a strong niche in the development of fractional ownership schemes both in the UK and abroad for developers and investors.  Led by Stephen Bishop, the firm also advises individuals looking to purchase UK and foreign property on a fractional basis.

What is fractional ownership? 

Fractional ownership allows a property to be sold in shares rather than as a whole.  It is very different to timeshare which only gives buyers the right to occupy a property for certain specified weeks.  With fractional ownership, buyers own a share in the property and so benefit from the upsides of property ownership including usage, capital appreciation (in a rising market) and the potential for rental income. 

What is involved?

Central to any fractional ownership scheme is the legal documentation.  For most schemes, there will be several documents including a fractional agreement, a management agreement together with service level agreements with a management company and a fractional administrator. 

BLB have developed a comprehensive range of documents relating to a number of difference fractional structures including ownership via a limited liability company and ownership in individual names. 

Can a “fraction” be sold?

A fractional agreement will set out in detail the procedure for an owner to sell his or her fraction.  Normally, the fraction must be offered to the other owners first before it is made available on the open market. 

How many fractions can a property be split into?

Although there are schemes that divide a property into as many as 52 shares, this is in essence little more than a timeshare arrangement.  It is recommended that properties are split into either quarter or sixth shares.  BLB have developed a comprehensive and, most importantly fair rotating usage calendar.  The calendar depends on the type and location of property – UK, beach, ski etc.

How is a property managed under a fractional ownership scheme?

One of the benefits of fractional ownership is that owners do not have the usual concern of having a property unoccupied for significant parts of the year. How the property is managed will vary from scheme to scheme and will depend on whether the property forms part of a development or is a “stand alone” property.  Owners will want to be sure that the property is fully maintained and cleaned.  An obvious benefit of fractional ownership is that maintenance costs are split between the owners. 

There are only a handful of law firms in the UK with expertise in fractional ownership issues. BLB are able to offer a cost effective service to investors, developers and prospective buyers.  Contact Stephen Bishop for further information.