It is where a group of shareholders purchase a share in a company that owns a residential leisure property. Via a fair roster system, occupation of the property is shared and each shareholder makes a contribution towards the maintenance of the property.

The benefits to these shareholders are numerous:

• Better value for money – you only pay for your holiday and not for the remainder of the year.
• No maintenance problems – Addo Afrique Fractional Ownership ensures that you do not have to spend valuable holiday time fixing leaky taps!
• Holiday accommodation at exclusive destinations.
• Unlike timeshare, any increase in the value of the property accrues to you, the owner.
• The most exclusive addresses in South Africa normally increase in value faster than the average – until joint-ownership, enjoyment of this growth was only available to the super-wealthy.
• Ability to rent out your un-utilised weeks.
• Lower maintenance costs because they are shared between all shareholders.

Theoretically, there are countless ways to structure the shared ownership of a property. At Addo Afrique 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
• a 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.

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

• Addo Afrique Property Management (Pty) Ltd will insist on managing 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 asset.

The purchaser will be responsible for the payment of the secretarial costs pertaining to the registration in the Purchasers name of the share. Accounting costs shall amount to R5 700,00 (VAT included) and shall be paid to the auditors prior to the effective date.

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.

Addo Afrique Fractional Ownership furnishes the homes to a high standard with superior furnishings that normally cost between R300,000.00 and R400,000.00 This will generally include leather sofas, solid wood carpentry, decoration-in-theme, TV’s, Decoder, DVD player, all necessary “white goods” etc.

The monthly levy varies from one leisure estate to the next and also according to the size of the residence.

The amount includes: Home Owners Association Levy, Building & short-term insurance, General maintenance and provision for future maintenance, Bank Charges, Maid or Cleaning Service, Pool and garden maintenance, Annual Tax Returns, Cleaning Consumables, Accounting, and secretarial services, Water, Lights, Addo Afrique Management Services

This sum will naturally be reviewed at the end of the year when the auditor presents his accounts for the property company and you, as shareholders, vote on the level of the levy for the following 12 month period.

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 20% 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 to Purchase the shares in the fractional ownership company. Thereafter, 8% of the purchase price is payable each month for 10 months after the deposit was paid.

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 Addo Afrique Fractional Ownership.

Each shareholder will be entitled to 2 weeks in the first 6 months of the year and two weeks in the last six months of the year rotating annually.

When purchasing any fractional ownership options from Addo Afrique, for extra piece of mind, all payments will be made to Leask & Partners Chartered Accountants, auditors to fractional homeowners of Zimbali, Fancourt, Pinnacle Point and San Lameer.

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 means of conventional, 100%, outright ownership an 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 the property is owned by the fractional-ownership company in which you own a share. 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 through Addo Afrique Estate Rental Pool with our extensive marketing and advertising campaigns. We will also expose your fraction to 50 million consumers worldwide through Platinum Destinations.

Rental administration charges levied by Addo Afrique are generally in the region of 10% -15%. Addo Afrique Fractional 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 no charge from our side.

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.