Co-Ownership is a model where multiple people jointly own a property. Instead of purchasing a holiday home alone, 2 to 8 co-owners share both the acquisition costs and ongoing maintenance costs. Each co-owner acquires a share of the property and can use it during designated periods. Unlike timesharing, Co-Ownership involves real property ownership, which is registered in the land registry and can be sold later.

This model is gaining popularity, particularly in the luxury and holiday property sector, as it makes access to properties in prime locations more affordable without sacrificing comfort and flexibility.

How is Co-Ownership of a Holiday Home Financed?

Financing Co-Ownership works similarly to purchasing sole ownership, but with specific benefits and options that make the model even more attractive.

a) Equity Financing
A common way to finance Co-Ownership is through equity. Co-owners can pay for their share of the property directly from their own funds, which avoids financing costs and results in immediate ownership.

b) Bank Financing
Another popular option is bank financing. In this case, a share of the property is financed through a mortgage, much like a traditional property purchase. Depending on the bank and financing model, co-owners can obtain financing to acquire their share. Many banks now offer specialised financing products for fractional or co-ownership models.

c) Third-Party Financing
Independent financial advisors or specialised providers also offer financing solutions for Co-Ownership. These providers often have experience with co-ownership structures and can provide tailored financing models to suit the co-owners’ needs.

d) "Buy now, pay later" Models
Some Co-Ownership providers, such as MYNE, offer flexible financing models that allow for a smaller initial investment. In these cases, a share can be acquired with the option to pay the full purchase price at a later date but interest has to be paid for the payment plan.

What are the Financial Benefits of Co-Ownership?

Co-Ownership offers several financial advantages that make it an attractive alternative to sole ownership, particularly for holiday properties.

a) Lower Acquisition Costs

The biggest advantage of Co-Ownership is the shared acquisition costs. Instead of paying the full purchase price, co-owners only pay a fraction of the costs based on their share, making access to prime properties more affordable.

b) Optimised Use and Reduced Vacancy

Holiday properties are often only used for a few weeks a year, but remain vacant most of the time. Co-Ownership reduces this vacancy. According to an EY study, Co-Ownership could reduce the vacancy rate of holiday homes from the current 80% to 40%, as the property is used by several owners throughout the year. This leads to a better return on the property and contributes to its value appreciation.

c) Shared Maintenance Costs

In addition to acquisition costs, co-owners also share the ongoing costs of maintenance, insurance, taxes, and other expenses. This means that the financial burden on each owner is significantly lower than with sole ownership.

d) Potential for Property Value Appreciation

Since Co-Ownership involves real property ownership, co-owners benefit from the appreciation of the property's value. As the property value increases, so does the value of each individual share, offering an attractive investment opportunity alongside usage benefits.

e) Flexibility in Use

Unlike traditional timesharing, where only a right to use is purchased, Co-Ownership offers the flexibility to use the property based on the agreement or rent it out. This provides financial advantages as the property can generate income when the owner is not using it.

Conclusion

Co-Ownership not only offers more affordable access to high-quality holiday properties but also provides an efficient and flexible way to finance and enjoy holiday homes. The shared costs and flexibility in usage make this model increasingly attractive, especially in times of rising property prices in popular holiday regions. With the right financing models and potential for value appreciation, Co-Ownership is a worthwhile option for property buyers.