With Lazazu, you now have someone who sources beautiful homes, finds like-minded co-owners, professionally manages your home, and serves as your single point of contact on your carefree ownership journey.
Fractional ownership or co-ownership is often mistaken for timeshare so we asked André Berger fractional-ownership expert at Lazazu about the differences and just about everything else that you need to know so you can decide if it’s the right type of ownership for you.
When you consider the average holiday home is used for only 30 days a year, co-owning a fully managed, hassle-free home with a small group of other like-minded owners sounds sensible. Owning a share instead of 100% of the home means a huge saving on the running costs (these are split pro rata) and makes your money go so much further by either spending only 1/8th of what you would have spent or using the same budget to upgrade your purchase.
A: Fractional ownership a.k.a co-ownership has always existed on a DIY basis (between friends and family). It has recently become more widely available as a service and is a legal relationship where you own a share of a home via a dedicated company (1 company:1 home) and use it pro rata to your ownership. Ownership can be anywhere from 1/8th (45 nights a year) through to 4/8ths (half a year's usage).
A: Co-ownership sees you as a deeded owner of the property and there are only a maximum of seven other owners, and on average five. Fractional ownership means you own a portion of the home, and not just a number of nights like in timeshare, and if the property (your asset) increases in value so does the value of your share.
A: When you are engaging in co-ownership as a service, there will be a company that will handle sourcing exceptional properties, match owners who share the same criteria, manage the purchasing process and the legal work, refresh, upgrade and decorate the home and manage the booking system and home maintenance.
Ownership is split into shares of 1/8th, offering 45 days exclusive use of the home, up to a maximum of 4 shares (50%) of the home. Similar to owning a home outright you can choose to sell at any point after the first 12 months of ownership.
A: Probably the most attractive benefit is that you are getting more property for less of a capital outlay. You can own a more valuable asset with the same amount of money or spend a lot less than you would have for owning a home outright.
Lower running costs are also appealing as the costs, such as gardening services and home maintenance are split pro-rata between owners instead of having to shoulder them alone.
The experience is hassle-free as the homes are fully managed for a “check-in-check-out experience”, with the company handling administration and serving as a single contact point for all the owners.
Many owners view Fractional ownership as a more conscious ownership. Making better use of existing assets and resources compared to everyone owning their 2nd (or 3rd) homes outright.
A: Owners may have to compromise on specific dates but will be able to use the home every year in every season (including peak).
The maximum share any one owner can hold is 50% (4/8ths). So an owner can’t use the property for more than 6 months in a year and the stay length is typically capped at three weeks per stay (per 1/8th share).
Also, although owners are welcome to share their thoughts on the design of the home, they don't have full design control. However, Lazazu sets a very high standard when it comes to this and tools like mock-ups give a real sense of what the property will look like so it’s easy to imagine yourself holidaying there.
A: Ownership is calculated on 1/8th of shares offering 45 days exclusive use of the home, two shares (25% ownership) would give 90 days exclusive use and so on. A simple set of reservation rules ensures owners have access to every season every year, including peak season.
There is an algorithm that allocates between owners who want the same peak dates and the following year the owner who got their second choice would receive priority. Peak season is often not as sought after as assumed as many owners who are not constrained by school holidays prefer the shoulder seasons.
A: There is usually a nominal flat fee per share for managing the home, the booking system, the administration, the accounts and for assisting owners. Lazazu currently charges €125 per share per month. Costs to run the home including maintenance, repairs, utilities and taxes are shared pro-rata between the owners.
A: Yes they are similar but the debt is usually a bit more expensive (c. 20%) and the equity portion typically needs to be between 30-50%. Most of our buyers are cash buyers avoiding the cost and admin of financing but it is possible if needed.
A: There is significant overlap but there are also a number of key differences. The main differences relate to 1) The number of homes the purchases buy into: one home or a package of multiple homes, 2) The legal structure that they use: a local property company structure or foreign property company/holding company structure in a jurisdiction that is different from the location of the home, 3) Whether owners can rent out the home when they are not using it 4) Whether owners can leave personal belonging in the home and 5) lastly but importantly the countries and types of homes they focus on as well as the composition of their buyers’ nationalities. There are also important nuances around legal agreements, how the calendar is operated and the freedom owners have to do certain things.
A: There should be a natural match between what the customer is looking for and what the company offers. Transparency around the company's fee structure, the legal structure and the freedom they have in selling their share and who can do this for them is key.
It’s also important that a company has a clear way to address any pitfalls that can arise. A lot of it really comes down to the people behind the company and their experience, including experience owning and working with second homes.
A: To get a sense of the market and what is on offer as if you were going to buy the home outright.This will give you more confidence when the time comes to purchase a co-ownership home.
Actively engage and converse with the providers in the market. It is important that the teams know what buyers really want and for buyers to get a sense of who is behind the company.
Know your “must have” criteria but have an open mind on the less important factors, people rarely find everything they are looking for even as outright buyers and this helps with matching co-owners with one another.
