What is co-ownership and how does it work in Spain?

Co-ownership is a business model that is revolutionizing the second home market in Spain. This model allows those interested in acquiring a second home to divide the property equally and buy a fraction of it. The fractions that a single buyer can acquire can never reach 50% of the total. Expenses are divided among co-owners and the right to enjoy the property is for six weeks per year, including one week during high season.

It is a formula imported directly from the United States and aims to offer second-home buyers the possibility of accessing luxury properties that can be up to 8 times above their available budget. It is based on the fact that, on average, a second home is enjoyed only 15% of the available time while remaining unoccupied for the rest of the year.

Co-ownership is not the same as a timeshare

Timeshare is a well-known formula in Spain, as it had a great boom during the 1990s and early 2000s; however, the numerous disadvantages and problems that this model entails made its demand plummet.

In the timeshare practice, one does not acquire ownership of a property but pays for the right to its temporary use. In most cases, it is a usufruct concession for X weeks per year for 50 years. However, in fractional ownership, the buyer becomes an owner from the beginning and can sell their share at any time. In summary, a timeshare bought a right to use for a limited period while in the co-ownership model, the buyer becomes the full owner of the fraction they acquire, perpetually, and can sell or transfer their shares at any time and at their price.

How is the purchase-sale process carried out?

The model, imported from the United States, has been adapted to Spanish legislation as follows: the purchase is made through an SL that conveys the co-ownership, and each owner can have a minimum of one share (an eighth of the home) and a maximum of four, as none can own more than half of the asset. That is, a LLC company is established that will be the real owner of the property, and the buyer acquires shares in that LLC company, which confer them previously stipulated rights and a percentage of the company's assets (in this case, the home). Most companies that manage this type of product offer the possibility of staying as administrators and managers of the SL to free owners from paperwork and bureaucracy.

What is the price range for this type of real estate purchase currently?

Regarding prices, there are companies that specialize in semi-luxury or high-end assets, such as houses or villas up to seven million euros, which, divided among eight, represents an investment of about 800,000 euros. There is also a middle segment of villas worth less than two million euros with a ticket per person between 150,000 and 300,000 euros, and a company that seeks middle-upper class owners who can pay between 50,000 and 100,000 euros for their participation in one of their homes.

Companies try to make a fair distribution of the weeks, guaranteeing at least one week during high season for each co-owner. It is essential to highlight that in some cases, the vehicle company's statutes may include limitations on the use of the property by its owners, such as renting the home or the possibility of enjoying it with their pets. It is crucial to have specialized advice on this type of operation, such as that offered by Valido Home, which ensures the buyer's interest and provides complete transparency about the operation's conditions.

Where are these types of properties located?

As they are focused on second homes, coastal areas are the main target for these companies, although there are also options in mountain locations for ski enthusiasts. This business model offers the owner the possibility of having a second home for only the time normally inhabited throughout the year, between six and eight weeks.

Can I sell my share whenever I want?

Regarding the sale of the house's share, it will depend on the company and the agreement among co-owners. In general, companies offer a way out, but co-owners interested in selling are recommended to contact the companies before making a decision.

In summary, co-ownership offers a flexible and economical alternative for those seeking a second home without having to buy a complete property.

Finally, although Proptech companies are known for their transparency, differences regarding rights and obligations compared to traditional buying and selling are significant. Therefore, having an expert team like Valido Home is essential to make informed decisions and ensuring the success of your investment. Contact us now and make your real estate investment a success!