Fractional ownership

Fractional ownership is where more than one investor owns defined shares in the same property or property portfolio, rather than a single private landlord holding the whole asset. Each fraction may be held directly (as co-owners on the title) or indirectly through a company or fund. Rental units are still let to residential tenants on private tenancies, usually an assured tenancy, in the Private Rented Sector (PRS).

From a landlord’s perspective, fractional ownership mainly affects who receives the profits and bears the risks, not the rights of the tenant. Rent is collected under the usual tenancy agreement, treated as rental income of the co-owners or vehicle, with tax reported via their rental business and Self Assessment. Day-to-day duties, including rental standards, fit for human habitation, Awaab’s Law, energy efficiency rules (including Minimum Energy Efficiency Standards (MEES) and Higher rate efficiency standards (HRAD)), lawful permitted payments, and handling of tenancy deposits, all still apply.

Internally, investors must agree how to fund capital improvements, share revenue expenses, appoint any managing agent, and decide on using possession grounds to regain possession if problems arise. Under the Renters’ Rights Act, the regulatory focus stays on the named landlord or management entity, not on how the ownership fractions are carved up behind the scenes.

Also see our landlord blog articles, including:

• How does shared property ownership work for UK landlords