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 a company that will acquire a completed home, or group of investors who will purchase a company that will acquire a piece of ground on which a premium luxury home/villa/lodge will be built.

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.

After this period, shareholders normally know each other and are in a position to decide whether to continue with Seeff Fractional Ownership's model, or to appoint a new management company or to manage the property themselves.

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 costs between 10% - 15% of the final house value. This will generally include leather couches, wooden carpentry, decoration-in-theme, TV’s, a dual view decoder, DVD player, all necessary ‘white goods’ of linen, two sets of towels per person plus swimming towels, cooking utensils, cutlery, crockery and glassware to cater for the required number of people.

The timing of the payment of the purchase price depends on the fractional ownership model employed to acquire the property.

When a completed home is being acquired by a fractional-ownership company, a 205 deposit is payable upon the signing of the offer to purchase the shares in the fractional ownership company. The balance of the purchase price is payable before transfer of the property into the company.
Normally, this balance is payable 6-12 weeks after the payment of the deposit. When a fractional-ownership company is acquiring a piece of ground on which to build a luxury residence, a 20% deposit is payable upon the signing of the offer too purchase the shares in the fractional ownership company. Therefore, 5% of the purchase price is payable each month for 6 months after the deposit was paid. The remaining balance of 50% of the purchase price is payable 6 months after the date on which the deposit was paid. For example, a share costs R300 000,00: A deposit of R60 000,00 is paid on 1 January. R15 000,00 is paid at the end of each month from February-July. On 30 August, the outstanding balance of the purchase price, being R150 000,00 is paid.

Should you wish to arrange financing for the purchase of your share, Seeff Fractional Ownership has an in-house finance package to suite you. Each fractional ownership company has its own bank account. Your purchase price(as well as your monthly levies) is deposited into this account. This account is managed by an independent accountant and not by Seeff Fractional Ownership.

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. Accordingly, a shareholder could either let weeks in the property himself or request Seeff Fractional Ownership to let the weeks. Seeff is experienced in the letting business and has a constant flow of people requesting to let houses in leisure estates.

Rental administration charges levied by Alpha Villa Management are determined by the prevailing market. Seeff Fractionals Ownership's only request is that shareholders provide them with reasonable notice of their intention to let their weeks. Obviously if you do market and manage the letting of your weeks yourself, there will be a basic admin charge from our side. We 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 1st class property services.

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