Can’t afford a full-fledged cottage? By opting for shared ownership, you can buy only part of it. But the price is not the only factor to consider.
For many Canadians, the ideal vacation is escaping to a second home located in a dream location or conducive to rest. But having another home can be very expensive because it means more bills and property taxes to pay and more maintenance to do, and this, for a place that you could only use for a few weeks per year. To avoid some of these disadvantages while offering themselves a little corner of paradise, some opt for shared ownership.
Don Cruikshank, a retired consulting engineer, decided some years ago after spending some time in a relative’s cottage that it was time to buy a country home. But instead of purchasing the entire property, Mr Cruikshank opted for what he calls “hassle-free cottage living” and purchased a second home in shared ownership in a new housing project two hours away. North of Toronto.
Mr Cruikshank’s cabin sits on 43 acres of trail-strewn land, including 4,000 square feet of waterfront. In addition, you can play tennis and go canoeing. He shares the place with nine other people (each co-owner is entitled to five weeks per year at the cottage).
“When the opportunity presented itself, we were ready to seize it. I liked the idea of just having to go there and have a good time, without having to deal with maintenance,” he says.
Unlike timeshare, where you pay to live in a property for a certain number of weeks per year, each owner owns a fraction of the property with a timeshare. You get a title or deed that gives you the right to use the property for a certain number of weeks a year, says Sue Coleman, a Greater Toronto Area real estate broker who has a particular interest in the market. International and shared ownership.
Here are, according to Ms Coleman, the advantages of shared ownership:
Five-star hotel lifestyle. “In many cases, people could not afford to buy the type of property in question. There’s a certain prestige attached to owning a cottage in the Muskoka region,” continues Ms Coleman. Whether in Ontario or the Bahamas, timeshares are generally offered on a turnkey basis, with a property management company taking care of the maintenance for you. “So you can take full advantage of your property without having to make any repairs.”
Possibility to exchange. Ms Coleman explains that many timeshares offer the option of trading or selling the weeks you can’t use. The purchase cost varies but can start from just $20,000. This low cost allows young professionals to access the second home market.
Pay per use only. “With shared ownership, you can buy only the services that will be used, which in many cases is extremely convenient for a second home,” says Chris Stephan, CEO of Shared Homes. International and certified specialist in the field.
Possible disadvantages of fractional ownership:
Ongoing charges. Consider the cost of purchasing the property and ongoing expenses such as maintenance fees and taxes.
Funding. It may be more challenging to obtain a second home in shared ownership than a traditional second home. Stephan adds that the homeowner makes a cash payment in most cases instead of taking out a mortgage.
Resale value. Even though the resale value is higher than that of a timeshare property, it is still lower than that of a full-fledged property. Mr Stephan cautions buyers and advises them to view shared ownership as a lifestyle choice, not an investment.
Time of use of the property. Because you’re sharing the property with others, you may not be able to enjoy it whenever you want, adds Mr Stephan.
Interior decoration. Mr Cruikshank points out that a timeshare residence cannot be decorated as one pleases, unlike a freehold residence.
