A few important tips to keep in mind

Fractional ownership is becoming more and more popular in South Africa, boosted by the burgeoning costs of buying your own holiday home. Co-founder of fractionalownership.co.za and member of the Vacation Ownership Association South Africa (VOASA) Working Committee, Dirk Wilson, provides five expert tips to be aware of when looking at buying fractional ownership.

1. Check that the seller or promoter is VOASA approved

VOASA is the regulatory body that governs vacation ownership - including fractional ownership promoters, as well as service companies in South Africa, with strong consumer protection objectives. Approved VOASA  members have a strict Constitution and guidelines to adhere to. Ask your promoter or service company to provide you with proof of approved membership, and look out for the approved VOASA membership

2. Request a breakdown of the monthly levies for the first year

With all property purchases that are subject to a levy, you need to know what you are liable for each month - and what is being funded and covered by the collective levy. Typically, you are purchasing a share in one property that is looked after by the management company, and so your levy should comprise the management fee, housekeeping, insurances, DSTV, check-in procedures, and possibly a maintenance fund. (Most levies are reviewed at the shareholder AGM and subject to vote, so in essence you have a vote as to which services are rendered as well as the amount spent on them. Levy structure can vary, depending on what is included in the purchase price; for example, some include access to the golf course, so you need ask if that's for a life time or only for an initial period.

3. Make sure your deposit is held in a trust account

When you have decided on your fractional ownership purchase and are committing to the deal, possibly by making a deposit, make sure that the account you are submitting your deposit to is a legitimate account and held in trust. The last thing you want is to put a deposit down for your dream fractional unit in a resort yet to be competed, perhaps from a company you have never heard of before - and a few days later the company and your deposit disappear. Check the details, scrutinise the contact, ask questions - and if you are still hesitant contact your attorney for their opinion or perhaps VOASA for a reference.

4. Check the date of delivery of the actual unit you are purchasing

Many fractions are being sold in units, property or resorts still to be completed. While there is a return on investment upside to getting into your property investment early, you should be aware that the unit you have bought into could take longer to build or be delayed for some reason. Do some research on the resort or area that you are buying into to ensure you are going to get what you have been promised in terms of resort infrastructure and resort amenities, and that the quality of building and interior finishes will be as you have been shown or told. To avoid disappointment, scrutinise the sale of shares contract for the estimated transfer of shares date as well as the occupancy dates of your unit for usage. Beware of open-ended delivery dates. If planning to use the unit close to the transfer of shares date, be ready for possible delays before you book flights for you and your family!

5. Review the rental clauses in your contract

One of the benefits of a buying fractional ownership is that you can rent out your unused days or weeks and accrue the rental income. This is handy to off-set your levies or simply to deposit into your account. Should your allocated time be rented out on your behalf by a third party such as the managing agent, this income would possibly be subject to a handling fee or commissions. Make sure you are clear on these rates before you rent out your weeks. It is advisable to check your insurance liability should breakages or more serious damage arise in your absence, or while in occupancy of the unit. If you are unsure regarding liability, it may be worth getting your attorney's opinion on your contract or to discuss your queries with your insurance broker.

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Featured company

Seeff Fractional Ownership

Seeff Fractional Ownership offers the ultimate option -both in terms of cost, as well as upkeep and maintenance of owning luxurious holiday accommodation in the most desirable golf and leisure resorts in South Africa and abroad.

Via a rotational roster system each investor is entitled to 4 weeks exclusive use of the villa/lodge per annum - which is fully furnished, managed and maintained by Seeff. Seeff Fractional Ownership has exceptional vacation villas, lodges and apartments for sale in most of the best golf estates and locations in South Africa.

Fractional (or Joint) Ownership means that one does not own the entire property (with the corresponding responsibility for the entire property) but rather a portion (fraction) of that property that corresponds to the time that one want to spend on vacation.Unlike timeshare where you only own time, Fractional Ownership allows you to actually own the brick & mortar and the capital growth.

All our properties are registered in the name of a company (whose only asset is that property) which has 13 shareholders each share entitling the owner to either 2 or 4 weeks use of the villa, lodge or apartment per year.With a rotational roster in place, every shareholder is ensured of spending every week of the year (spread over 13 years) in his holiday home which means that everyone has a ...

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Q&A with Henry Greyling

When did SEEFF Fractional Ownership first open its doors?

[HG] I started fractional in 2003 but bought the Seeff licence in June 2005
 

Does SEEFF Fractional only market and sell all of your Fractional residencies, or does SFO get involved with the design and development of the residences?

[HG] SFO is intricately involved in purchasing the land, project management of the building, and controlling the quality of all the fittings and fixtures. We also make sure the villa is luxuriously furnished and manage the snag list.

To date - Which is the most successful resort you have sold fractional property?

[HG]Zimbali, Zebula, V&A, San Lameer, Pinnacle Point and Sparrebosch.

You have been in property for many years, what are your views regarding a Fractional ownership purchase over buying 100% of a holiday home?

[HG] If you spend R2 mil on a holiday home you will carry all the expenses and levies for that home. Even if you rent your property out to the public, your home will deteriorate. For only R400 000 for a fractional investment at Zimbali, you can be the co-owner of a R6 mil villa which is managed and maintained by us, with all the levies and costs being shared, making it even more affordable.
 

How many owners are there in a typical Fractional residence?

[HG] 13 or 26
 

How many days usage is an owner allocated each year?

[HG] 28 days for a 13 shareholder home, and 14 days for a 26 shareholder home.
 

Does the owner have to use the residence each year - for the full term of their ownership?

[HG] No, they can either rent out their unused weeks and the rental income accrue to the investor, or they can bank their unused weeks with Platinum Destinations and use the points towards a vacation at one of Platinum Destinations 900 locations worldwide.

Who looks after your owners once they have purchased shares?

[HG] In order to protect your investment, SFO manage and maintain all facets of your villa and holiday to make it a hassle-free investment. The cleaning, maintenance, audits, gardening and insurance are just a few of the functions that Seeff Fractional assist with. We have employed/outsourced Alpha Villa Management to do this on the investors behalf and through our Customer Service liason we ensure that Alpha Villa Management gives the investor the best service. Further, all auditing and accounting functions are outsourced to an accounting firm. They collect all levies, pay bills, manage accounts and organise AGM’s.

Does SEEFF fractional assist owners to re-sell their shares?

[HG] This exact question encompasses our total business case. As, should we protect your investment, we would hope to be the obvious choice in the future when an investor wants to resell their shares.