Ski property - fractional ownership
Discussion
Hopefully this fits in the Holidays & Travel forum rather than Finance!
I suspect I know the answer but wondered if anyone had looked into (or even bought) a fractional ownership ski property?
I am considering buying a ski apartment in France - still planning this at the moment but would be looking at a 1-2 bed apartment in La Plagne or Les Arcs. I would expect to be able to use the property for 3 weeks in the ski season and 1-2 weeks in the summer. Overall would work out no more expensive than paying to rent somewhere and I would have an asset at the end.
Whilst looking at potential properties, I keep being recommended fractional ownership properties. This would work out much cheaper but I would be co-owning the property with up to 5 other people - meaning that the property that would be partly owned by me would be a much larger overall property - say 4-6 bedrooms rather than 1-2 bedrooms. I would get use of it for a minimum of 45 days a year if I buy one sixth of the property.
Sounds logical in principle but also strikes me as similar to a timeshare - the only difference being that I would actually have partial ownership of the property itself. I can foresee potential issues with resale, getting use of the property at short notice, one of the other co-owners being unable to pay the mortgage etc. The benefit is that I get to use a much bigger and better positioned property, only pay for 1/6th of the running costs and the property can be let when it is not in use (although I suspect that this will be relatively minimal if all the owners use it for a week or two during the ski season).
My gut reaction is that it is too risky - if it seems too good to be true etc. However, if anyone has any direct experience, I would be grateful to hear - just in case I am being too sceptical and am potentially passing up a good opportunity to partially own a much better property than I could comfortably afford outright.
I suspect I know the answer but wondered if anyone had looked into (or even bought) a fractional ownership ski property?
I am considering buying a ski apartment in France - still planning this at the moment but would be looking at a 1-2 bed apartment in La Plagne or Les Arcs. I would expect to be able to use the property for 3 weeks in the ski season and 1-2 weeks in the summer. Overall would work out no more expensive than paying to rent somewhere and I would have an asset at the end.
Whilst looking at potential properties, I keep being recommended fractional ownership properties. This would work out much cheaper but I would be co-owning the property with up to 5 other people - meaning that the property that would be partly owned by me would be a much larger overall property - say 4-6 bedrooms rather than 1-2 bedrooms. I would get use of it for a minimum of 45 days a year if I buy one sixth of the property.
Sounds logical in principle but also strikes me as similar to a timeshare - the only difference being that I would actually have partial ownership of the property itself. I can foresee potential issues with resale, getting use of the property at short notice, one of the other co-owners being unable to pay the mortgage etc. The benefit is that I get to use a much bigger and better positioned property, only pay for 1/6th of the running costs and the property can be let when it is not in use (although I suspect that this will be relatively minimal if all the owners use it for a week or two during the ski season).
My gut reaction is that it is too risky - if it seems too good to be true etc. However, if anyone has any direct experience, I would be grateful to hear - just in case I am being too sceptical and am potentially passing up a good opportunity to partially own a much better property than I could comfortably afford outright.
Slightly different to your proposal but our experience might help. We had a long look at a co propriety deal about 20 years ago and got as far as the legal pack before deciding it wasn't for us. More recently have been in a position to buy a decent place outright and has been a long term ambition so have looked into it many times over the years.
French have a system whereby VAT/TVI on new builds is forgiven if the property is leased back so substantial discounts available. It's a way of getting accommodation built and available on someone else's money.
Tend to be in attractive complexes where there is reception and leisure facilities.
You own the property from the start but enter a contract where the apartment is leased back to the leaseholder.
For us, then, as young parents looking for a ski base, the dealbreaker was that Christmas, Feb half term and Easter were not available to us under the lease back contract. This issue would be the similar for you if you needed the peak times. I would expect you would be on a rota for half terms etc. and if in a co ownership of six could only expect one in six Christmases, half terms etc.
The other big unknown is what happens when the lease on the apartment complex expires. You and your co owners may have a big building and facilities to manage or a more rapacious leaseholder may come in and squeeze you. Even if you are not in a MGM type co prop, as well as your co ownership you are also likely to be in a residence committee with responsibilities for upkeep. French can be pretty strict on maintenance and major work will not be cheap. The best coops have a regular payment so when heating or roofing comes around there are tens of thousands of euros in the kitty to pay. The worst have difficulties arranging payment and work. Negotiating this will be difficult if you or one of your co owners are not fluent.
Know of people who are happy with the co prop set up - it wasn't for us. Our friends with wholly owned flats/chalets, tell us that it is very finely balanced between a pleasure and a massive PIA. Brexit and COVID have tipped the scales in direction of PIA. Selling can be very difficult. I think the people I know with ski property are going to sign their places over to their kids and make it their problem.
Our needs as a family in re ski facilities and resorts changed as the kids grew up. I would definitely look for somewhere that's nice in summer and not dead as many resorts are. Off season in a nice resort is a real bonus if you like cycling walking etc.. I think as close as possible within France and close to an airport is important which means Chamonix Valley and environs (any of the resorts from Le Tour to Grand Bornand); Grand Massif and PDS.
French have a system whereby VAT/TVI on new builds is forgiven if the property is leased back so substantial discounts available. It's a way of getting accommodation built and available on someone else's money.
Tend to be in attractive complexes where there is reception and leisure facilities.
You own the property from the start but enter a contract where the apartment is leased back to the leaseholder.
For us, then, as young parents looking for a ski base, the dealbreaker was that Christmas, Feb half term and Easter were not available to us under the lease back contract. This issue would be the similar for you if you needed the peak times. I would expect you would be on a rota for half terms etc. and if in a co ownership of six could only expect one in six Christmases, half terms etc.
The other big unknown is what happens when the lease on the apartment complex expires. You and your co owners may have a big building and facilities to manage or a more rapacious leaseholder may come in and squeeze you. Even if you are not in a MGM type co prop, as well as your co ownership you are also likely to be in a residence committee with responsibilities for upkeep. French can be pretty strict on maintenance and major work will not be cheap. The best coops have a regular payment so when heating or roofing comes around there are tens of thousands of euros in the kitty to pay. The worst have difficulties arranging payment and work. Negotiating this will be difficult if you or one of your co owners are not fluent.
Know of people who are happy with the co prop set up - it wasn't for us. Our friends with wholly owned flats/chalets, tell us that it is very finely balanced between a pleasure and a massive PIA. Brexit and COVID have tipped the scales in direction of PIA. Selling can be very difficult. I think the people I know with ski property are going to sign their places over to their kids and make it their problem.
Our needs as a family in re ski facilities and resorts changed as the kids grew up. I would definitely look for somewhere that's nice in summer and not dead as many resorts are. Off season in a nice resort is a real bonus if you like cycling walking etc.. I think as close as possible within France and close to an airport is important which means Chamonix Valley and environs (any of the resorts from Le Tour to Grand Bornand); Grand Massif and PDS.
Thanks oddman
I have looked at the French sale and leaseback arrangements in the past and discounted them - whilst you get the VAT back, you are restricted as to when you can use the property and have no control over the management charges. Also, I do not like the idea of having to commit to a 15 year leaseback - which seems to be able to be extended by the managing company - with very restricted options to exit the leaseback arrangement.
My impression is that the fractional ownership arrangement is designed to be an alternative to the leaseback schemes. Some are structured such that there is a managing company which lets the property when the owners do not want to use it, but others are arranged such that it is simple shared ownership.
On reflection, I think there are too many possibilities for problems - eg what happens if one person wants to sell but the others do not, who decides who can use the property on specific dates (Xmas/half term/Easter), who decides what is to be spent on maintenance, etc. I can see the attraction in owning part of a larger property in a better located development, but I suspect that the practicalities will outweigh such benefits.
I also take the point about resale and passing the property onto the next generation. I have been considering whether it is best to buy the property in the names of the kids (one over 18 already and the second will be fairly soon) - hopefully avoiding inheritance tax issues down the line.
I have looked at the French sale and leaseback arrangements in the past and discounted them - whilst you get the VAT back, you are restricted as to when you can use the property and have no control over the management charges. Also, I do not like the idea of having to commit to a 15 year leaseback - which seems to be able to be extended by the managing company - with very restricted options to exit the leaseback arrangement.
My impression is that the fractional ownership arrangement is designed to be an alternative to the leaseback schemes. Some are structured such that there is a managing company which lets the property when the owners do not want to use it, but others are arranged such that it is simple shared ownership.
On reflection, I think there are too many possibilities for problems - eg what happens if one person wants to sell but the others do not, who decides who can use the property on specific dates (Xmas/half term/Easter), who decides what is to be spent on maintenance, etc. I can see the attraction in owning part of a larger property in a better located development, but I suspect that the practicalities will outweigh such benefits.
I also take the point about resale and passing the property onto the next generation. I have been considering whether it is best to buy the property in the names of the kids (one over 18 already and the second will be fairly soon) - hopefully avoiding inheritance tax issues down the line.
It's essentially all the problems you face when buying and maintaining a property plus the potential hassle of dealing with the other co owners.
I can fall out with my own family easily enough without adding another five families into the bargain
I can see the desirability of wanting somewhere a bit bigger because once you're past the student/slumming it stage in life, it's no fun having one bathroom unless there are only two of you.
I'm thinking of a long term lease next season to finally kill off or resuscitate my long held ambition.
I can fall out with my own family easily enough without adding another five families into the bargain
I can see the desirability of wanting somewhere a bit bigger because once you're past the student/slumming it stage in life, it's no fun having one bathroom unless there are only two of you.I'm thinking of a long term lease next season to finally kill off or resuscitate my long held ambition.
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