It is where a group of shareholders (in our case 13, 25 or 52 people) purchase a share in a company that owns a residential leisure property.

Via a fair roster system, occupation of the property is shared.

A contribution is made by each shareholder towards the operating costs of the property/holiday home.

Owners of the share own the property (brick and mortar) as if it is their own, but share the cost infrastructure with others.

If a property is to be developed, each owner shares in the construction costs thereof.

The benefits to these shareholders (‘joint owners’) are numerous:

Better value for money – you only pay for your holiday and not for the remainder of the year.

No maintenance problems – Seeff Fractional Ownership ensures that you do not have to spend valuable holiday time fixing up your home before you start your holiday.

Holiday accommodation at exclusive destinations.

Unlike timeshare, any increase in the value of the property accrues to you, the owner as you own the brick and mortar.

The most exclusive addresses in South Africa and other holiday destinations – until joint ownership – was only available to the super-wealthy.

Ability to rent out your un-utilised weeks.

Lower monthly operating costs because they are shared between all shareholders.

Less concern about security because of higher year –round occupancy.

Monthly operating costs cover the following elements:

Home owners levy of the estate or apartment block.

Lights and water

Municipal rates

Property insurance

Housekeeping fee which includes: Domestic costs, cleaning of the premises, weekly laundry clean, bed linen and towels, cleaning of all window, maintenance of pool and pool chemical costs, basic garden maintenance and estate management.

Management fee of company running the villas

DSTV and TV licence costs

Basic repairs and maintenance levy

Bank charges

Monthly financial management and annual statutory returns

Annual audit fee and management of the audit.

Theoretically, there are countless ways to structure the shared ownership of a property. As Seeff Fractional Ownership we prefer to keep things simple and transparent.
Accordingly, until we are satisfied that a fractional ownership model is simple and transparent to investors, we choose not to offer it. The current ownership models on offer are:

A group of investors who will purchase shares in a company that owns either a luxury completed villa or purchases land on which they will develop a luxury unit according to the standards of the relevant estate. The latter has the advantage of Seeff being able to purchase the property at the best rate as they are in at pre-development costs. Seeff pay all municipal cost until the property is handed over for ownership.

In both of the above models, the property as well as the company that owns the property needs to be managed. At Seeff Fractional Ownership we cater for the management of the property through a professional outsourced company and the company in the following way:

For the first three years of ownership Seeff Fractional Ownership will manage both the property and the company that owns the property. This is vital as it demonstrates to new shareholders the range of administrative tasks necessary to offer a hassle-free holiday in a shared property. Also, new shareholders of a fractional ownership company often don’t know each other and thus prefer to outsource the management of their assets to a trusted name like Seeff.

Seeff Fractional Ownership is committed to not only providing a value-for-money property management service, but also to provide bulk discounts on administrative services – discounts which are passed on to all the fractional ownership member under Seeff Fractional Ownership management structure.

In respect of properties that are to be sold into a fractional-ownership company for the first time, the price that we advertise is an all-inclusive price, i.e. transfer duty is applicable upon the purchase of a property; it is paid from the funds invested by the shareholders when they pay the all-inclusive purchase price.

This of course is valid only if the buyer is a natural person. Should the buyer be a corporate (Pty, CC or Trust) the additional transfer duty at the prevailing rate will be payable by the buyer.

In respect of shares in fractional-ownership companies that come up for re-sale, the selling price of the share is set by the selling shareholder. The buyer is then responsible for payment of the prevailing transfer duty in addition to the purchase price of the share.

Seeff Fractional Ownership furnishes the homes to a high standard with superior furnishings that are normally between 10% - 15% of the final house value. This will generally include well appointed couches, carpentry, decoration-in-theme, TV’s, a dual view decoder, DVD player, all necessary ‘white goods’, linen in excess of 180 percale count, two sets of towels per person plus swimming towels, cooking utensils, cutlery, crockery and glassware to cater for the required number of people.

On signature of the documentation a minimum of a 20% deposit is required. Depending on the product , there are various payment options which our experienced sales executives will take you through.

There are three models that we work on :

1. An uncompleted villa which starts as a development project. These normally take at least twelve months to build depending on estate rules and regulations, but your investment normally gives you a better return, as once the villa is completed and the valuation is done, it is higher than the initial building cost.

2. A completed home which is built and ready to be occupied. You may pay a slight premium on this as it is normally at the ruling market price.

3. A resale, where there is a negotiation managed by Seeff between the potential purchaser and seller.

Each company has a TPFA (Third Party Fund Administration Account) which manages income and expenditure for the villa. This is done monthly and is managed by the administrator and regulated by the independent accounting and audit firm

Various roster systems have proved effective at different resorts. At Seeff Fractional Ownership, experience has taught us to determine a roster for each residence before we begin to sell shares in the fractional ownership company.

Through trial and error we have determined that our resorts close to metropolitan areas are best served by a 4 x 1 week rotating roster, while the other coastal resorts operate best with a 2 x 2 week rotating roster.

Each fractional-ownership company’s bank account is administered in terms of Standard Bank’s Third party Fund Administration (TPFA) Scheme by the Accountant of the fractional ownership company. The TPFA scheme obliges the Accountant to purchase fidelity insurance to cover claims in the event of any fraudulent misappropriation of company funds. TPFA scheme bank accounts are superior to regular bank accounts as they attract call rates of interest and lower than normal bank charges.

To ensure that your life is hassle-free, the Accountant of the fractional ownership company is authorised to make payments from the company bank account. It is important to note that the proceeds of your investment into the company’s bank account are managed by the accountant and are appropriated as per an approved appropriation plan unique to each individual fractional ownership company. This is particularly relevant when Seeff Fractional Ownership is managing a turn-key project to provide a fractional ownership company with a newly built home.

To be able to provide the maximum assurance to you the investor, Seeff Fractional Ownership insists that the services of a completely independent and registered auditing firm is employed. The independent auditing firm is responsible to check that the day to day running of the accounting and secretarial affairs of each fractional ownership company is correct by doing unannounced checks from time to time.

Our experience has shown us that the value of your share in a fractional-ownership company will probably increase significantly. As the purchase of this share is an investment, any increase in the value of this investment will constitute a taxable capital gain if you sell your share.

There are two main reasons for this. The obvious one is because investors enjoy a variety of leisure pursuits and hence will invest in a game farm and a golf estate residence for example. The second reason is more strategic – the value of a premium leisure property is highly dependent on the vagaries of the property market in the immediate vicinity. By investing in one property by mean of conventional, 100%, outright ownership and investor is subjecting his investment to these vagaries. By diversifying his leisure property investment into a portfolio of fractional-ownership shares, the investor is significantly reducing the risk of extreme vagaries in the value of his investment – something that only extremely wealthy people have been able to achieve in the past.

It is important to remember that your share is a portion of the property and is solely in your name. The shareholder’s agreement that all shareholders enter into upon investing in a fractional-ownership company stipulates that each shareholder has the right to let the weeks allotted to him, dependant on the estate rules. Accordingly, a shareholder can let their weeks in the property via Alpha Villa Management, who is the outsourced partner to Seeff Fractional Ownership , and they are experienced in the letting business and have a constant flow of renters requesting luxury rentals.

Rental administration charges levied by Alpha Villa Management are determined by the prevailing market. Alpha Villa Management’s only request is that shareholders provide them with reasonable notice of their intention to let their weeks. Alpha Villa Management also have a database of over a million people both national and internationally that we share with other companies to optimise your letting options.

The last point worth mentioning under this question is that if the shareholders of a fractional-ownership company are not comfortable with the letting of the property, the right of a shareholder to let his weeks could be withdrawn by the amendment of the shareholders agreement. Obviously, the shareholder’s agreement can only be amended by the shareholders themselves in the manner prescribed by the shareholders agreement, and by a majority vote.

Many affluent property investors have realised that they, on average, only utilise 4-6 weeks per year of their leisure property investment, yet they still incur the hassle and full maintenance costs of the property. This, coupled with the fact that premium leisure property investors prefer a range of experiences instead of being stuck with one property, as well as the general increased cost of outright ownership in exclusive destinations, has created enormous demand to participate in fractional ownership. To date, Seeff Fractional Ownership has project-managed over 40 fractional-ownership transactions of premium leisure residential properties.

The Fractional Ownership Division is made up of a strong team of professionals within the Seeff structure and is backed by the strong management of the Seeff executive team as well as the internationally renown Seeff brand.

Our key advantages are:

We have the integrity to manage your entire investment experience properly.

We have the credibility and expertise to secure premium property at the lowest possible purchase price on your behalf.

The Seeff brand has been operating for over 40 years and remains committed to first class property services.

We have successfully been offering this product to the public since 2003.