A piece of the action

Dreaming of owning a sprawling Tuscan farmhouse? If you haven't got £5m to spare, you might want to think about fractional ownership, writes Jessie Hewitson

What kind of person owns a villa in Tuscany? Someone who is cultured and appreciates fine architecture, certainly, and who knows their Montepulciano from their Sangiovese. But crucially, it's a person with lots of euros in the bank. Villas and farmhouses in this part of Italy do not come cheap. Large, historic piles in the Florentine hills regularly fetch more than £5m.

For those of us whose pockets aren't that deep, but who don't want to skimp on luxury either, there's a solution: buying a share of a villa. Fractional ownership offers just that—it's a framework whereby strangers can club together and buy a percentage of a property, usually between a quarter and a 10th. Already well established in the US, in the past few years the model has crossed the Atlantic and schemes of this kind are spreading throughout Europe.

It's a particularly popular option in Tuscany, where property prices are high. Castello di Casole is the most lavish fractional-ownership scheme in the region, with 14,000 acres of prime Tuscan real estate near the hill town of Casole d'Elsa. When finished, the scheme will be home to 26 farmhouses, both old and new, 10 of which have already been built or converted.

A 20-minute drive from Siena and 45 minutes from Florence, the landscape here is one of apple-green grass, gently sloping hills and slender, elegant Cypress trees. Sting has a villa close by, in Chianti, and the Blairs like to holiday in nearby San Gimignano.

It may be less expensive than buying a whole property, but a fraction of a Tuscan farmhouse still costs serious money. And even by Tuscan standards, the Castello di Casole scheme does not come cheap. Prices for a one-10th share start at €345,000 (about £270,000) and go up to €590,000 (about £462,000), and there is an annual service charge of €12,000 (about £9,400), which includes utility bills, taxes, property insurance, maintenance and housekeeping. For this, you get a minimum of four weeks in your villa per year, as well as use of the concierge service and the run of the development's five-star hotel and restaurant (yet to be built).

Of course, there is also the cachet of serving guests your own wine, courtesy of the onsite vineyard, and the benefit of basking in the glory of the infinity pools, marble kitchens and traditional fireplaces. The farmhouses themselves are huge, with glorious views of the surrounding countryside.

So far, the majority of buyers have been time-poor Americans, who know and trust the fractional concept. "They're mainly entrepreneurs," says Marina Palmerio, the sales agent. "Chairmen, CEOs, people in banking and finance. Some people worked on the boards of banks and have retired in their 40s." For most buyers, she adds, this will be a third, fourth or fifth home, and no buyer so far has needed a mortgage.
"Most of our owners are looking to enjoy their vacation and lifestyle the moment they arrive," says Gary Moore, project director of Timbers Resorts, the American developer behind the project. "We provide an opportunity to own a €7m [£5.5m] villa for a fraction of the cost, while enjoying the benefits of a concierge and maintenance staff."

Castello di Casole is top of the range, and there are, of course, cheaper options. Borgo di Vagli is a 14th century hamlet in the Niccone Valley, on the border of Umbria and Tuscany. It's home to 10 one- and two-bedroom residences set in 32 acres with a swimming pool. Prices start at €60,000 (about £50,000) for a 10th share of a one-bed property, and €92,500 (about £72,500) for a two-bed.

Brenda Brady, who develops scripts and screenplays, bought a two-bed share in Borgo di Vagli last September. "Buying fractionally made it possible for us to own a part of a property in this part of Italy," she says. "A rota system allows you to book your favoured dates, and if there's a clash, you get preference for next year. We've already got our four weeks booked. We know a lot of people who own property outright and they seem to spend more time and money on maintaining their property than they do using it. It seems a bit of a waste buying a whole house if you're going to use it for five weeks a year."

While some clearly love it, fractional ownership also has its critics. But one complaint levelled at the scheme arises from a misunderstanding-it isn't timeshare. With fractional ownership, you don't simply buy the right to stay—you actually own a slice of the property. If you decide to sell, you make a percentage of the capital appreciation.

Another concern rests on the resale value of your fraction, and whether this kind of purchase makes sense as an investment. "Resale is an issue," says Eric Gummers, a partner at London-based law firm Howard Kennedy. "One problem is that if you decide to sell, to what extent is the original developer—who may also be selling his or her property—in competition with you? Reputable developers will have a first-refusal programme so their clients can sell in a sensible market. Like all property-related assets, if the resort and product are good, and the project well managed, it ought to be able to sell, as other people will want to buy it."

Bill Blevins, an investment and tax advisor, is unconvinced. "My own experience with clients is that after a few years, the novelty wears off and there isn't the same enthusiasm to return. It's human nature—you don't want to keep returning to the same place so you don't get the full value. Mostly people farm off their weeks to children and friends. I also think there is a bit of a delusion about the resale opportunity—you have to find someone to buy it. If you're forced to sell to the developer, there are often considerable fees."

Despite misgivings from professionals, two owners at Castello di Casole have so far sold on their properties and have benefited from a strong capital appreciation. Three years after buying their shares, they have sold for £150,000 more than the purchase price.

"Selling fractional ownership to the UK is an educational process" says Castello di Casole's Moore. "People are very sceptical and rightfully so. Europe suffered the same problem with timeshare that we did in the US. But ours is a transparent process, and one that works. The fact is that if you spend £1m here, it's a fifth of what you would have to spend if you wanted to buy a villa outright. And that is convincing people to buy."