Is co-ownership of a house a good idea?

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, 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 rate of home ownership, 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 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, and allows individuals, couples and families to own a home jointly with other like-minded co-owners, rather than owning it alone.

Co-ownership of a house means full ownership of the share that is acquired, and being able to enjoy the benefits and expenses of the property in proportion. 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 specialised in the management of this type of asset.  

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 a luxury property for a considerably 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 easy 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 season.
• The companies managing these types of assets are usually in charge of the whole process: from finding you the right property to the management of 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 the 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 taking into account 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 a smart alternative in these cases. 

Spain’s most sought-after holiday destinations have a range of exclusive properties that are ideal for co-ownership. At Lucas Fox, we collaborate with the best co-ownership service companies to guarantee our clients the most exclusive holiday homes with optimal contractual conditions. 

Check out this new build villa in co-ownership located in San José, Ibiza

Check out this fantastic renovated house in co-ownership in Santa Eulalia, Ibiza

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 Spain.