This is a subject which many people initially, and wrongly, believe is timeshare. Nothing could be further from the truth.

 

There are two recognised meanings for this term, the first and most common is when a group of family or friends get together to purchase a property with a private agreement about usage and bills. These agreements need no regulation, however, for those of you who have considered this option; it is advisable to have some sort of written understanding which all parties have agreed to. This agreement should also have some regard to what would happen to the property in the event of divorce or bereavement of any of the parties concerned.

 

The second common usage of the term is a more formal one.  Co-Ownership is a legally recognised system where a maximum of four people form a registered company for the express purpose of buying a single property with the sole intention of receiving an equal share of any rental income the property generates.

 

As a registered company is formed with every purchase all the IVA (VAT) is reclaimable, which has an obvious and immediate benefit for the purchasers.

 

As partners of the formed company, there are standard rules about the disposal or re-distribution of shares, in most of these agreements there may also be an understanding that if property values reach a certain point, either up or down, the property will be placed on the market for disposal, this makes it much easier for each partner to make long-term plans.

 

It is important to realise that this scheme is designed purely for investment purposes; no member of the created company has any occupation rights to the purchased property unless they are paying the advertised open market rent! This is an ideal solution for those who can see the long-term potential in the property market in Spain but do not wish to commit a major portion of their capital to a single purchase.

 

In both cases the owners of the property, this means everybody who is listed on the deeds, are responsible for the maintenance and upkeep of the property. They are also responsible for ensuring that they submit their own tax returns as required by Spanish law.

 

As most of you will have realised these both types of agreement are going to require careful consideration and a degree of oversight, this is something that should properly be left to a reputable established independent agency.

 

The second option which is starting to take root is “rent-to-buy”.

This is a system whereby a seller and a purchaser form an agreement that the property will be purchased at current, or occasionally at future, market value. The purchaser pays, as is common, a holding no-refundable deposit and over an agreed period, a maximum of five years, rents the property at which point the sale is completed. Should the purchase not be completed the prospective purchaser loses all the monies they have paid. It should also be noted that during the rental period the prospective purchaser is responsible for the upkeep and maintenance of the property, as they would be if they had in fact purchased it!

 

This type of agreement has advantages for both parties. For the seller it generates an income from the property with the knowledge that a sale will take place at an agreed time, this can make negotiations with finance providers much simpler.

 For the prospective purchaser this time can be used to fully establish themselves in a new area and to create a pattern of payment and responsibility which may be useful if at the time of final purchase finance will be required.

 

This is not an ideal solution for those who need to generate immediate large funding from their property, it is however quite an attractive option for those who have the ability to wait with the knowledge the sale will proceed.

 

As ever these decisions will ultimately be based on each individual and their circumstances and at all times take advice and ask questions.  “There is no such thing as a stupid question; they are just the easiest to answer.”

 

 

 

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