Is co-ownership of a house a good idea?
If you are currently considering buying a home and are wondering whether co-ownership of a property might be a good option for you, this blog may clear up some doubts.
Co-ownership homes in France and Spain
The appeal of home ownership has historically been deeply embedded in the psyche of most cultures as an important life goal. By acquiring a home, families and individuals seek to achieve greater financial security through wealth creation as well as housing security and stability.
According to data from Eurostat, owning a home is not only a life dream but a reality for almost 70% of the European Union’s population.
Today, however, often traditional models of property acquisition do not meet the changing needs of a discerning generation of buyers that enjoy greater geographical mobility and flexibility.
There is no single model for home ownership
The economic expansion after the Second World War, together with the fiscal policies of the different countries, promoted a high homeownership rate, especially in developed countries. A trend that, according to Eurostat’s data, changed its upward trajectory and began a slight decline after the Great Recession.
Today, the mismatch between the demand for quality housing and the limited supply, the digital transformation and the access of new generations into the real estate market has accelerated the emergence of alternative home ownership models.
Millennials are already the largest group in the workforce, and their purchasing power is growing. This segment of the population has a different perception of the word “ownership” compared to what their parents used to have. Their needs and motivations include the importance of unique and genuine experiences.
Millennials, the lifestyle generation
Millennials are part of a world that offers them many choices, characterised by flexibility and mobility, so buying a home that confines them to a specific geographic location does not suit their needs. They are looking for flexible models that allow them to enjoy unique lifestyle experiences in their favourite places while still making economically intelligent decisions.
How does co-ownership of a house work?
Co-ownership of a property has become an attractive alternative for those who want to enjoy a home in an idyllic location on a part-time basis without making a large financial sacrifice.
This type of home ownership in Spain is regulated by article 392 of the Civil Code. It allows individuals, couples and families to own a home jointly with other like-minded co-owners rather than owning it alone. In France, an SCI-type of property company is used. SCIs have been used for a long time in France, typically between members of a same family.
Co-ownership of a house means full ownership of the share that is acquired and enjoying the benefits and expenses of the property in proportion. Often 100% of the property deed held in that company will be split into eight parts. Each property company has a minimum of two owners so technically, you can purchase between one and four parts, depending on how much occupancy you need (between an eighth and half of the year or 1.5 to 6 months each year).
The legal ownership of the acquired share allows you to get a mortgage or to sell your share accordingly, with what is agreed in the co-ownership contract.
To facilitate the acquisition and subsequent management and maintenance of the property, as well as the relationship between the co-owners, there are several companies specialising in managing this type of asset, usually actionable from an app on your phone.
What are the benefits of co-owning a house?
The advantages of co-ownership of a house, especially if you are thinking of acquiring a property to occupy for a few weeks or months a year are obvious: the initial investment to acquire the property is lower, and you share the running costs with the co-owners while enjoying the property and its appreciation over time.
Other benefits of co-ownership of a house:
The right to the exclusive use of luxury property for a much lower investment.
Co-ownership is a flexible model. Each share gives a proportional right of use of the property so that the number of shares to be acquired can be adapted according to the expected occupancy needs.
Some co-ownership management companies such as Everomes offer an accessible and equitable reservation system to ensure that each co-owner, depending on the number of co-ownership shares, can enjoy the property during high and low seasons.
The companies managing these types of assets are usually in charge of the whole process: from finding you the right property to managing the co-ownership contracts, the notary fees and transfer taxes, financing, and even home upgrading, if necessary.
In addition to the generation of wealth through asset appreciation, in some cases, there is also the possibility of generating cash flows by renting it out during the time the asset is not in use.
What type of house can I purchase via co-ownership?
Co-ownership of a house is a decision that has to be made considering your occupancy needs. Holiday homes are the perfect property type for co-ownership. The use of such properties is often fractional, while their acquisition involves a high investment, so co-ownership is an intelligent alternative in these cases.
Spain’s most sought-after holiday destinations have a range of exclusive properties ideal for co-ownership. We collaborate with the best co-ownership service companies to guarantee our clients the most exclusive holiday homes with optimal contractual conditions.
Are you interested in learning more about co-ownership?
Contact us and we will provide you with all the necessary details to become co-owners of a luxury property in France or Spain.