Owning a share in an expensive asset like a jet is a fast-growing trend in the states as an affordable way to buy into the celebrity lifestyle without having to amass a fortune like P Diddy.
A small group of investors can pool their money and share an asset, which would normally be out of their financial reach. This could be a jet, or a designer handbag - but more often it is a holiday home.
With a contract set up by a solicitor, fractional ownership can be both an investment and an opportunity to spend a few weeks every year in a home from home.
Unlike timeshare schemes, which have been much maligned in the media following tales of consumer rip-offs, fractional ownership gives each investor a stake in the home, which can be sold at any point.
John Howell, senior partner at The International Law Partnership, says: "I think fractional ownership is a great idea and I think, for many people, it is the best way of owning a holiday home.
"For example, having 80 per cent of the houses empty at any time, which is common in many resort destinations, is wasteful and bad for everybody.
"With a small group of owners you can furnish the property as you please and even make arrangements to leave your clothes there in a lock-up zone.
"In other words, it feels like your house. You do not need to worry about letting it to cover the time when you are not going to be there and it doesn't cost you nearly as much as buying 100 per cent of a house yourself."
There are a few ways of going about fractional ownership. You can simply pool your cash with friends and family and buy a property together, or you can partner with a stranger. This could be through a fractional developer or you could advertise for like-minded investors.
FractionalLife, a website dedicated to fractional ownership, provides information on the concept and links to fractional ownership developments around the world.
Founder Piers Brown says there are several advantages to buying a share in a property rather than paying for a holiday home outright.
"If you are only going to use it for three months a year, you can pay for 25 per cent of the property."
Some people use fractional ownership to buy stakes in homes all over the world, so instead of choosing between a second home on the coast of Spain or the slopes of Switzerland, you can have access to both, Mr Brown explains.
Although FractionalLife promotes fractional ownership as a lifestyle choice rather than an investment, it can have its benefits, Mr Brown adds.
"It is also good for spreading your risk - you don't have to put all of your eggs in one basket."
Mr Howell agrees.
"For an investor who has a limited amount to invest it can be more attractive having a 1/6 share of six properties around the world than full ownership of one property," he says.
"It spreads the risk and gives you more potential holiday destinations. It will generally allow you to rent out your unused weeks to your family and friends who are likely to use the facility more often than if you only had one house."
Yours2share was set up by Sophie Garrett two years ago and posts adverts for people advertising a share of their asset, be it a boat, a house or even a dog.
Featured on the website's pages are adverts ranging from a share in an 18th century farmhouse in Tuscany to a stake in a private game lodge in South Africa.
"I speak to a lot of people who come to yours2share who can afford to buy the property or boat but can't justify it," she says.
Buying a partial share of a property makes sense if you are only going to use for a few weeks of the year, Ms Garrett adds.
The most important thing is to find like-minded partners and make sure you are compatible - there is no point sharing a cottage with four people who all want to use it at Christmas.
"The contract is your written proof of like-mindedness and compatibility," says Ms Garrett.
The value of a fractional ownership scheme is in its contract.
"If you are thinking of setting up a fractional ownership scheme, the legal and correct documentation is desperately important," Mr Howell warns.
In addition, there is a risk of developers trying to sell products that have not sold easily through this route without having the systems and procedures to provide the services to look after them, according to Best Group , a company that specialises in fractional ownership.
"There is very soon to be a trade association that assess the sellers and developers and awards a quality stamp in order to make the process of assessing pitfalls a lot easier for the consumer - FSOTA - (Fractional and Shared Ownership Trade Association), so I would definitely recommend looking for the logo in the near future," says spokesperson Jeff Hankin.
In the meantime, it is best to research the market and take independent advice if you are unsure.
However, questions do still stand as while it may be easy to buy into fractional ownership scheme, it is unsure what markets exist to see on your shares.
There is always the risk that when you do come to sell, there will not be anyone interested in buying your share.
There is also the question of finance - at the moment, loans for part ownership are usually treated as unsecured, with rates to reflect this.
Best Group said it is in process of arranging mortgages for one of it's products through a "regular high street bank that has a globally recognised name" - so if it is successful, it may become available on more products and locations.
September 19, 2009 | myfinances.co.uk