UK Second Home Tax Is Now 5%: Why British Buyers Are Switching to Co-Ownership in Europe

The dream of owning a sun-drenched villa in Spain or a ski chalet in the French Alps has always held a special place in the British imagination. But in 2025 and 2026, that dream comes with a significantly higher price tag — not because property prices have soared beyond reach, but because the UK tax landscape has shifted dramatically against second-home buyers. The stamp duty surcharge on additional properties jumped to 5% in April 2025, adding tens of thousands of pounds to any purchase. For British buyers eyeing European property, the numbers no longer add up the way they once did.

Enter co-ownership — a model that is quietly reshaping how affluent British families access luxury holiday homes across Europe and the USA. Rather than shouldering the full purchase price, the full tax burden, and the full maintenance headache of a property that sits empty 90% of the year, co-ownership lets you buy a deeded share — typically one-eighth — in a fully managed luxury home. The result? A holiday property you actually use, at a fraction of the cost, with none of the hassle. Here is why thousands of British buyers are making the switch.

From 1 April 2025, the UK government raised the stamp duty surcharge on second homes and additional properties from 3% to 5%. At the same time, the nil-rate band dropped from £250,000 back to £125,000, and the first-time buyer threshold fell from £425,000 to £300,000. For anyone purchasing a second property — whether in the UK or abroad — the tax hit is now severe.

Consider a British buyer purchasing a €500,000 holiday apartment in Spain. If they already own a UK home, they face up to 5% stamp duty on the notional UK equivalent, plus Spanish transfer tax of 6–10% depending on the region. On a full purchase, that could mean €50,000–€75,000 in taxes alone before a single night is spent in the property. According to Hamptons research, the average second-home buyer in 2025 is paying £12,000 more in stamp duty than they would have paid in 2024.

With co-ownership, the maths changes entirely. Buying a one-eighth share means the purchase price — and therefore the tax liability — is divided by eight. A €500,000 property becomes a €62,500 share. The stamp duty exposure shrinks proportionally, and so do ongoing costs like council tax equivalents, maintenance, and insurance. For tax-conscious British buyers, this is not just convenient — it is financially transformative.

Brexit fundamentally changed the equation for British second-home owners in Europe. Since January 2021, UK citizens are limited to 90 days within any 180-day period in the Schengen Area — without a local visa or residence permit. That means even if you own a €1 million villa on the Costa del Sol, you legally cannot spend more than three months a year there without navigating complex residency applications.

This 90-day cap makes full ownership look increasingly irrational. According to Knight Frank’s 2025 Global Buyer Survey, British buyers are the leading foreign nationality purchasing property in Spain, with 5,731 homes bought in the first half of 2025 alone — yet the majority of these buyers will use their property for fewer than 45 days per year. That is a vast amount of capital tied up in a property sitting empty more than 85% of the time.

Co-ownership aligns perfectly with the post-Brexit reality. A co-ownership share of one-eighth gives you approximately 45 days of use per year — which is essentially the maximum most British owners can realistically spend at a European property anyway. You get the same amount of holiday time, the same luxury experience, but at one-eighth of the price and without the guilt of an empty house gathering dust.

Despite the tax headwinds and residency restrictions, British appetite for European property remains voracious. Data from Spain’s National Statistics Institute (INE) shows that UK buyers accounted for 8.1% of all foreign property transactions in Spain in the first half of 2025 — the highest share of any nationality. In total, 145,370 foreign purchases were recorded in Spain in 2025, up 4.2% from 2024, with prices rising 7.5% year-on-year.

In France, British buyers remain among the top three foreign nationalities purchasing property, particularly in the French Alps, the South of France, and Paris. Portugal has also seen a surge, with British purchasers making up roughly 11% of luxury market sales in early 2025 according to Global Citizen Solutions.

What is shifting is not the demand — it is the structure of ownership. Two decades ago, 77% of British buyers in Spain were pure second-home owners. Today that figure has dropped to 60%, with the remaining 40% now resident. The discretionary holiday-home buyer is increasingly questioning whether full ownership is the right model — and co-ownership is emerging as the answer.

Let us examine the real-world economics for a British buyer considering a luxury holiday home. Take a €600,000 three-bedroom villa on the Costa del Sol — a typical property in the co-ownership market. Under full ownership, the buyer pays the entire purchase price, plus Spanish transfer tax (around 7% in Andalusia), legal fees, notary costs, and ongoing annual expenses including IBI property tax, community fees, insurance, maintenance, and management. All-in first-year costs can easily exceed €660,000.

With co-ownership properties, that same buyer purchases a one-eighth share for around €75,000. All taxes, fees, and running costs are split proportionately among the eight co-owners. Annual running costs — which might total €12,000–€18,000 for a full owner — become €1,500–€2,250 per share. The property is fully managed: cleaning, maintenance, rental coordination, and even the transition between owners’ stays is handled for you. When you arrive, your personal belongings are taken out of storage and the home is prepared exactly as you left it.

For a British buyer paying the 5% UK stamp duty surcharge on top of Spanish taxes, co-ownership does not just save money — it fundamentally changes which tier of property is accessible. The buyer who could afford a modest apartment under full ownership can now access a luxury villa with designer interiors, private pool, and panoramic views through co-ownership villas and chalets.

One of the most common questions from British buyers is about the legal structure. Co-ownership through Co-Ownership Property is not a timeshare. Each property is held within a registered LLC (or equivalent local legal entity such as a French SCI), and each co-owner holds a deeded share in that entity. This means you own actual real estate — an appreciating asset that you can sell on the open market at market value, at any time.

The LLC structure has been specifically designed and optimised by specialist tax and property law firms for holding holiday properties both domestically and internationally. For British buyers, this means the ownership structure is transparent, legally robust, and tax-efficient. There are no points systems, no fixed weeks, and no rotation schedules. Booking is flexible — owners use an app to reserve stays from two days to two years in advance.

Crucially, you never need to interact with the other co-owners. Everything — from running costs to maintenance scheduling to rental management — is handled by the professional management team. This is a key differentiator from older models: co-ownership delivers the benefits of property ownership without any of the operational burden that makes second homes so frustrating.

British buyers are not adopting co-ownership in isolation — they are part of a global shift. The fractional ownership market for premium residential assets is currently valued at approximately $10 billion and is projected to reach nearly $30 billion by 2033, according to industry analysis. At least 20 new platforms have entered the co-ownership space since 2020, targeting luxury individual homes rather than resort-style developments.

What is driving this growth? Three converging forces: rising property prices that make full ownership of luxury homes increasingly exclusive; a generational shift toward access over ownership that values flexibility and experiences; and post-pandemic lifestyle changes that have made remote work and extended holidays a permanent feature of professional life. For British buyers specifically, the post-Brexit 90-day rule and the stamp duty surcharge have added two powerful additional catalysts.

The UK market is particularly fertile ground. According to Sojourn8’s European market analysis, interest in fractional ownership in Europe has been growing primarily amongst buyers from the UK. The staycation trend has also boosted domestic co-ownership in Cornwall, Devon, and Scotland, but the real growth story is in cross-border European properties — exactly the segment where Co-Ownership Property specialises.

British co-ownership buyers show strong preferences that mirror — but also diverge from — traditional full-ownership patterns. Spain remains the number-one destination, with the Costa del Sol, Balearic Islands, and Costa Blanca leading demand. The appeal is obvious: reliable sunshine, excellent flight connections from UK airports, and a well-established British community.

The French Alps represent the fastest-growing segment among British co-owners. Resorts like Courchevel, Méribel, and La Plagne offer dual-season appeal — world-class skiing in winter and hiking, cycling, and lake swimming in summer. A co-ownership share in a luxury Alpine chalet typically starts from around €100,000, compared to full-ownership prices of €800,000 and above for equivalent properties.

Italy’s Lake Como and the broader Italian Lakes region are attracting growing interest, as is Portugal — particularly the Algarve and Lisbon coast. In the USA, British buyers are increasingly looking at Colorado ski properties and California wine country estates. The beauty of co-ownership is that at one-eighth of the price, buyers can access destinations they might never have considered under full ownership — or even own shares in two or three properties across different countries for less than the cost of a single full purchase.

A critical concern for any British property investor is the exit strategy — and co-ownership delivers strongly here. Unlike timeshares, which notoriously lose value and are difficult to sell, co-ownership shares are deeded real estate that track the underlying property market. If the property appreciates, your share appreciates proportionally.

When an owner decides to sell their co-ownership share, the management company first offers it to existing co-owners in the same property — who often snap it up. If not, it is listed for sale on the open market. Average resale time is approximately one month or less, which is dramatically faster than selling a full European property, where transactions routinely take six to twelve months. For British owners navigating post-Brexit bureaucracy, currency fluctuations, and cross-border legal complexity, this speed and simplicity is enormously valuable.

The buying process is designed to be as straightforward as possible, with full legal support provided throughout. Every buyer receives independent legal advice, and the LLC operating agreement clearly sets out each owner’s rights, responsibilities, and exit provisions. This is institutional-grade property ownership, made accessible to individual buyers.