Timeshare vs Fractional Ownership: What’s The Difference?
The term ‘shared ownership’ has been increasingly used to describe both timeshare and fractional ownership. However, we are here to help you understand the difference.
What is Timeshare?
Timeshare offers the opportunity for multiple consumers to buy the rights to use a property, usually for one or two weeks each year. This is not an investment property as the consumer has no rights to the ownership of the property. Consumers pay a one-off fee for the use of their annual week, but they also must pay monthly or annual maintenance fees.
What is Fractional Ownership?
The main difference between a timeshare and fractional ownership is that fractional ownership allows each owner to hold part of the title deed on the property. It lets purchasers have their stake in a real asset without having to pay in full for the whole property themselves. When the value of the property goes up, so does the value of the ownership.
Number of Property Owners
With a timeshare, there can be as many as 50 owners per property, who all have their designated weeks to use the holiday home. With fractional ownership, it typically has fewer owners, from 4, to usually no more than 20. Since there are fewer owners, fractional ownership means that there are more weeks available to spend at the property.
How Equity is Distributed
With fractional ownership, the consumer actual owns partial equity of the property, meaning that any increase in value, will mean their stakes in the property increases. Owners can take advantage of this and sell their equity at the best time.
Since a timeshare does not grant the consumer any ownership of the property deed, only the ability to stay in the property for their designated weeks, the change in value with not benefit the consumer.
Timeshares are notoriously hard to resell, with many consumers listing their weeks for as little as pennies, just to try and get out of the contract.
Fractional ownership of a property is easier to resell because it is seen as a property investment and can, therefore, be resold through traditional real estate brokers.
Fractional ownership and timeshare can both be classed as ‘shared ownership’, so before you make the leap into partial ownership, make sure you know which ownership you are getting out of it. Both types of ownership have their benefits and pitfalls. If you would like any advice on the ownership you have or need clarification before you commit, please don’t hesitate to get in touch with us. We are happy to answer your questions.