|Council ponders fractional ownership laws|
|Thursday, 14 October 2010 16:50|
Seeking ways to help the economy, the governor’s Advisory Council is gathering information on the growing fractional ownership market.
“The objective would be to help boost real estate sales, repeat visitor numbers and public revenues,” the council said in an Oct. 8 press release for its Oct. 5 meeting. Council meetings are not open to the public.
In fractional ownership, small groups of people buy equity shares in a property. Unlike a time share, investors own a share of the property, so if the property goes up in value, so does the value of their share, if and when they decide to sell.
A number of fractional ownership properties already are being offered on Providenciales, from large luxury residences on Sapodilla Bay to condominiums on Grace Bay.
The council said it was discussing fractional ownership legislation “against the background of a significant excess supply of unsold high-end and middle market condominium properties in TCI and more competitive market conditions regionally.”
“The council welcomed the concept, but indicated that more work was needed to assess international experience, the local market and administration costs and on the detailed design of the legislation.”
Jim Brown, a sales agent for ERA Coralie Real Estate who has been offering fractionals for a year, says there has been little interest in them so far.
“It is a great concept and works very well in some destinations,” Brown said. “However, it seems to have little appeal to potential buyers here who say they do not like the concept of sharing a home.”
“Fractional makes a lot of sense, and when well run would suit many buyers in the mid-career age group, as they can use the property several times a year for a couple of weeks,” Brown said. “However, it is not for retirees, as they do not have the property for the entire winter season, for example.”
Brown thinks any new laws designed to tax fractionals won’t raise much revenue.
“To produce revenue here, we need sales, and the best way to increase sales is to encourage high net worth investors to come and reside here and invest in the economy,” Brown said.
“The single most productive action the council could undertake is a system to give residency permits with investor work rights to parties investing significantly here — something like $2 million.”
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