There's a new fund launching in the UK that is bringing an established investment model to shared vacation home ownership. The company plans to buy luxury vacation homes around the world and balance its portfolio with UK based rental properties.
Safe Haven Property Investment Company is offering an investment in holiday homes, which you can use rent free with no annual charges, and you also receive the full benefit of any increases in values.
Business Model
The fund operates like a mutual fund (or unit trust in UK terminology) and charges an initial 5% sales fee and a 1.5% annual management fee on the funds gross assets. The plan is to buy two types of property, rental property to produce income and leisure property for the shareholders to use and enjoy. Nigel Gourlay the founder and chairman indicated that the company may take on debt of up to 25% of the value of the property and its Articles of Association limit the debt to no more than 50% of the property value. The fund is open ended with no finite lifetime, unlike some of the other funds.
Homes & Properties
The vacation homes will be a mix of large villas or chalets and smaller city center apartments. The villas will be large enough for families and friends, children and grandchildren and will average £1m in value. The target locations for the villas include the Caribbean, the Alps, Andalucia in Spain, Morocco, Croatia, the Greek Islands, Kenya and Thailand. The city center apartments will be in the £600k range and typically provide 2 bedrooms and 2 bathrooms in locations such as New York, Lisbon, Rome, Paris and Barcelona. The mix of these homes will be 75% long haul from the UK and 25% shot haul.
The portfolio will be balanced with UK based rental properties that are primarily aimed at young professionals and students. The net income from these will make a major contribution to Safe Haven's running costs. The average purchase price will be approximately £500k.
Using the Homes
Shareholders receive "Travel Points" to book time in the leisure properties, with the number of points depending on the number of shares bought. For instance 1,000 shares receive 1,000 points. Each vacation property will have a point value per week depending on the value of the property and time of year. So for example 1,000 points may get a larger property for one week in high season, or a smaller property for 3-4 weeks in the low season. Shareholders will also be able to take an unlimited number of short notice trips on a space available basis, booked within 35 days of travel. No points will be used to book these trips.
Shareholders can also give the points to friends and family or even sell them. When a shareholder stays in a home they pay a fee to cover the running costs. This varies from £275 to £750 per property per week.
As with other destination clubs and second home funds, Safe Haven shareholder services team will also help with any or all travel arrangements and local representatives will help with anything during an actual vacation.
Investment Levels
The minimum investment is £55,000 for 500 shares, and then is sold in increments of 250 shares at £110 per share. Larger shareholders get a small bonus of additional "Travel Points" and the fund is offering 50 extra points per year for the first 30 subscribers.
Editorial Update 2012: This fund never got fully going and quickly wound down. Launching in 2009 during the depths of the recession certainly made things harder.
There's now a wide variety of shared vacation home investment options, with a variety of different structures and offering homes in multiple locations at varying price points. The best place to start to compare the options is at our club comparison table and if you're seriously considering a club download our free 30-page Guide.
