What is fractional ownership? And is it the new buy to let?

Georgian house for sale in Castle Street in Farnham, Surrey, England, UK.
As a method of buying property fractional ownership has gone from being something just for the very wealthy to becoming more mainstream. Photo: PA/Alamy (Julia Gavin)

What is fractional ownership?

Fractional ownership, where you split the costs of an asset, is gaining traction in the UK.

“[It’s] a way of investing in real estate which involves buying a percentage share of a property, resulting in investors owning a small part of that property along with other investors,” says Stuart Law, CEO of the Assetz Group.

“Therefore, instead of having one owner, a property that is owned by fractional investors will usually have around four to 12 owners.”

Unlike a timeshare, with fractional ownership, you own a right to the deeds and a proportion of the asset rather than just a right to use the property.


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Traditionally, this form of ownership has been used by the very wealthy for expensive assets such as yachts, private jets, works of art and holiday homes, but it’s becoming more commonplace.

“It’s now becoming more mainstream and middle-class families are opting to buy into this method, allowing them to retain more of their money long term,” says Emma Morby, The Female Property Expert.

What are the benefits?

Fractional ownership allows you to invest in property in smaller amounts, so it's possible for people who couldn't afford to finance a second property otherwise.

Melie Dunod is the founder of fractional ownership company August, which allows people to invest in property from places as diverse as the Cotswolds to Cannes. “It’s hassle-free and makes buying abroad simpler,” she says. “Because it’s a liquid asset, it’s easier to sell.”

“Investing in a property without other investors could cost tens of thousands of pounds as a minimum, plus the owner would have sole financial responsibility for expensive mortgage repayments, maintenance costs, and other expenses,” says Law.

“With fractional investing, you could invest as little as £100.”

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It also has the advantage that any management responsibilities are spread across the investors and usually arranged via a management company. This allows investors to enjoy the financial benefits of owning a property, without the bureaucratic headaches.

“You can deduct the costs used to manage and maintain the investment property as well as property depreciation to offset your taxable income,” says Morby. “You can also take fractional dividends should the asset achieve a rental income which generates profit.”

But it’s a double-edged sword as you will also need to pay the additional stamp duty land tax because it’s viewed as a second home.

Family Photos on Side Table in Home Surrey England
One downside it that 'you can’t personalise your property with decorations' in the same way you would somewhere you owned in its entirety, one expert said. Photo: PA/Alamy (Helene Rogers, Art Directors & TRIP)

What are the disadvantages?

Inevitably, there are other downsides.

Dunod points to the fact that “you can’t personalise your property with decorations” in the same way you would somewhere you owned in its entirety.

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And, while the sharing of maintenance costs and decisions could be seen as a bonus, it can also be a disadvantage if you prefer to be in control of things. “Shared decisions such as maintenance, repairs and décor costs must go through all partners and be agreed,” adds Morby.

“Ultimately, as with all investments, capital can be at risk. Investments could still be impacted by factors like property market changes over time and tenant defaults,” says Law.

Is fractional ownership the new buy to let?

While fractional ownership has been around for decades within the elite, it’s slowly increasing in popularity among ordinary buyers.

“There is an increase in fractional ownership homes where a family have clubbed money together to buy a rental property as a long-term asset which will hopefully increase in value and give the family a rental income,” says Morby. “This strategy has become talked about and utilised more in the last five years.”

“The pandemic, buy to let tax increases, inflation and interest rate rises have prompted investors to re-think investments in traditional property opportunities, like buy to let, and look to alternatives,” says Law. “We have seen this to be true as interest in our fractional property investment services has been very popular since the pandemic.”

With fractional ownership moving away from wealthy, cash-rich buyers, it is now possible — although not commonplace — to buy fractional ownership with a mortgage.

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“These are often specialist mortgage providers, and they will require a more vigorous stress testing and background checks which can take time,” says Morby.

While it might not be about to replace the buy to let market as a form of investment, fractional ownership’s increased reach means that the types of properties funded this way is diversifying.

“Assetz Exchange gives investors the option to fractionally invest in rental housing for vulnerable groups, managed by charities, care providers and housing associations,” says Law. “These types of alternative property investments are growing in popularity as people look for new ways to supplement their income, fund their retirement or make their money work harder, while supporting positive social outcomes, like more housing for people that need it the most.”

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