Barbados’ fractional or shared ownership opportunities that we know and enjoy today have their roots in the timeshare industry which began over 50 years ago.
Sold as an alternative to full ownership of a vacation property, timeshare was the first opportunity for many to own a holiday home with access to hotel-style facilities that would otherwise be financially out of reach.
Owners would buy either a fixed or floating week and return to their resort every year or use the exchange services of companies such as RCI and Interval International. And it was very popular. By the 1990s, timeshare had grown into a $10.2 billion industry with thousands of resorts and owners worldwide.
The fractional ownership industry began in the US in the Rocky Mountains in the early 1990s. Resort developers recognised that visitors did not want to purchase a property which would only be used for a few weeks a year, but the timeshare model did not provide a suitable alternative.
Today, fractional ownership is synonymous with luxury developments offering vacation homes in high-end resort destinations in desirable locations. Often, they include groups of individual houses or condominiums, beautifully designed and furnished with access to a range of amenities. As a result, every aspect of the development emanates exclusivity, luxury and desirability.
By 2021, there were 319 fractional developments in the US alone (source: Ragatz). It is expected that the industry will be on a growth track as the economy improves and people begin travelling again after the pandemic.
What is fractional ownership?
Fractional ownership, like a timeshare, is ultimately a sharing model that provides the owner with access to luxury properties at prices lower than full ownership. These properties are typically located in exclusive holiday resorts or fashionable city-centre locations. They appeal to those who currently do not have the leisure time to enjoy a whole ownership property.
As you would expect, fractional ownership comes in many forms, but it involves a luxury property divided into portions of time. In some cases, fractional owners own fixed weeks within the property, such as weeks 10 and 11 every year.
In others, the owners have access to a set number of weeks every year, and there is a revolving calendar to ensure fair access among the owners. For example, owners might have a quarter share of the property and have 13 weeks each year to vacation. Or they could own a one-twelfth share and have access to four weeks each year.
With some fractional ownership developments, you own a piece of the real estate and are given a deed for the property.
In other examples, it is an exclusive right-of-use and occupation contract set over a defined period or in perpetuity. This is the model followed in Barbados.
Is fractional ownership a wise financial decision?
Yes, in many cases, your share of the real estate could rise as the property’s value increases with the market, just like whole ownership could do. However, fractional ownership should not be considered an investment product. When you compare owning versus renting, it is a wise financial alternative.
Is it possible to finance fractional ownership?
Yes, the fractional resort developers offer finance options here in Barbados, and the Residence Barbados team will assist with introductions.
What you should consider before purchasing
- Make sure the resort’s location, accommodation and amenities suit your needs and requirements.
- Read the sales agreement and understand the legal structure, your obligations and management costs.
- Find out what extra services the package includes and whether there is a charge for them.
- Look at any other properties that the developer has in its portfolio.
- Learn how the reservation system works, especially during peak times.
Pros and Cons of Fractional Ownership
1 Ownership is less expensive
If you dream of owning a luxury property in Barbados, but a US$1 million villa is out of reach, or you don’t have time to make the most of a whole ownership property, fractional ownership is the ideal solution.
With fractional ownership, you purchase access to the property you want, for the time that you need, in the most desirable location for a price you can afford.
This also applies to home upkeep and maintenance costs which are shared between the other owners of the property. Fractional ownership makes long-term ownership much more feasible by splitting upkeep costs.
2 The property will always be maintained
No home should be empty for more than 48 weeks in a year, especially in the Tropics! The fractional ownership property will be regularly lived in, cleaned, and professionally maintained. And it will be fully furnished and equipped, ready for you to enjoy. There is no need to worry about maintenance, gardening, paying bills, organising security, or handling issues. This is all covered by an annual fee and the management company.
Opening and closing windows and doors, running water, turning on the air conditioner and heater, and using facilities like the pool are all necessary for home maintenance. It allows for early detection of problems and preserving the home’s long-term worth.
3 Peace of mind
With fractional ownership, you effectively have a group that shares accountability, schedules upkeep, checks on the home, and splits the work and responsibilities that would otherwise be left to a single owner. This means you can fly into Barbados and begin your holiday as soon as you arrive.
4 Selling can be a time-consuming process
Selling your fractional ownership can be more complicated than selling a whole ownership property. While it isn’t as difficult as selling a timeshare, it’s best to work with a local agent like Residence Barbados, who has experience selling these types of ownership.
5 Your ownership is protected
Many fractional ownership developments are held in trust to protect owners should anything happen at the resort, community or location. For example, the fractional ownership at Royal Westmoreland is held in trust by First National Trustee Company Ltd., an experienced Trustee based on the Isle of Man.
The function of an independent trustee is to hold the legal ownership of each property for the benefit of the owners. They will ensure the property is free from any mortgage, lien or encumbrance and ensure nothing happens that might prejudice the ownership until the termination date.
6 A stepping stone to full ownership
Here in Barbados, fractional ownership is used by many as a stepping stone to full property ownership.
While enjoying vacations on the weeks they own every year, they can explore the island and the resort community. Then, when they are ready, they can move to full ownership. And the good news is that the developers allow you to trade in your fractional product. So, you are simply stepping from one level of ownership to another with minimum risk.
If fractional ownership is something that might suit you and your family at this time, give the Residence Barbados team a call today at +1 246 230 4982 or email at email@example.com. We’ll explain how the concept works in greater detail, introduce the resort communities and show you around the properties.
The information contained above about fractional or shared ownership is provided for information purposes only. The contents of this blog post are not intended to amount to advice and you should not rely on any of the contents of this post. Professional advice should be obtained before taking or refraining from taking any action as a result of the contents of this post. Residence Barbados disclaims all liability and responsibility arising from any reliance placed on any of the contents of this newsletter.