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How does a timeshare work?
A timeshare scheme or club provides a way for a number of people to share ownership of a holiday property unit (such as an apartment or townhouse) within a resort area. Each buyer purchases, and therefore owns, for the duration of their contract, a certain period of time (usually 1-2 week periods) in a particular unit.
Most timeshares have been purchased by being invited to a resort (usually through ‘winning’ a free holiday) on the condition that you attend a one-off presentation for a couple of hours. The presentation, which in most cases lasts for longer than you were led to believe, results in you being impressed by the charm and facilities of a resort and everything else that owning a timeshare can provide.
Many people have been so blindsided by the presentation and the impressiveness of a resort that they don’t fully understand or realise what they have bought and agreed to until they take the time to go through their documents when they get home.
With the invention of new schemes as timeshare has evolved, it can be confusing to know the difference between the different types of timeshare ownerships.
The following information aims to provide an overview of the basic concept of what timeshares are and the advantages and disadvantages of owning one.
What are the different types of timeshare products?
- Fixed weeks
- Floating weeks
- Points ownerships
- Fractional ownerships
Fixed weeks is the original timeshare product and therefore the most traditional,
When a fixed week product is purchased, you pay for the right-to-use one particular unit, in one particular resort, for one particular week (or weeks) of the year. This arrangement continues for as long as your contract lasts, which can legally be anything up to 50 years.
You know what to expect year in, year out.
Plus, an owner can rent out their week or weeks or trade with owners of other properties.
Little flexibility meaning it has the potential to become tedious in the long term. Plus, there is no absolute guarantee that the maintenance and upkeep of the resort will sustain constant standards, especially if a new management company takes over the running of a resort. Maintenance fees in many cases tend to increase on a yearly basis and can reach the point of becoming unaffordable for many owners.
Owners have the right to book their preferred dates during a set period of the year, with cost dependent on the season that they have selected. Generally speaking a calendar year is broken up into coloured seasons, typically red (high), blue (mid), white (low). The general concept of floating weeks is that an owner is, theoretically, able to book use of the unit at any time during the year, subject to availability.
Less rigid than ‘fixed’ term and allows owners to freely choose a week or weeks that suit them in any given year.
There is no guarantee that you will be able to book your preferred dates. This will be due to lack of availability which commonly can be because a resort may prioritise non-member bookings at a higher cost.
This is similar to a floating timeshare product, but with the added bonus of being able to book at a variety of resorts depending on the amount of points accumulated by the owner. This is usually from buying into a specific property or from purchasing additional points from the club.
The points are basically used as a currency substitute. Under a traditional points system, each unit/week of time is specifically valued in the form of a number of points. The points are ascertained according to the timeshare’s location, size, popularity, time of year, etc. These points are then exchanged to reserve a unit for your next holiday. The number of points you own determines what, where and when you can go.
Points can be ‘traded in’, as so to speak, to stay at a variety of resorts therefore, providing a wider variety of holidays. This system can also give an owner the opportunity to holiday more than once a year while only paying one set of maintenance fees.
Booking your preferred week or weeks is only available on a first come first serve basis thus, not guaranteeing your preferred holiday dates. In order to safeguard your preferred dates, planning and booking usually has to be done years in advance.
In fractional timeshare, the purchaser actually owns a piece of equity in the property.
This type of scheme allows an individual to take part of a valuable asset without having to purchase the asset outright.
If property increases in value then so does the fractional owner’s share therefore making more financial sense compared to a regular timeshare.
As you actually are part deeded to the property you are therefore responsible for all maintenance, insurance and taxes etc associated with the property.
Now that you know the various types of timeshare products, you may still be contemplating what works best for you or even wondering if a timeshare will work for you at all.
To help you decide, we have put together the following pointers which should be useful in your
- Decide what types of holiday you actually enjoy. Does visiting the same place at the same time every year really excite you? Or, do you prefer a mix of activities and experiences such as camping adventures, cruises, road trips or city breaks? If it’s a case of the latter, then a timeshare really isn’t right for you.
- Never view purchasing a timeshare as the ‘investment’ that you are sometimes led to believe. Timeshare ownership is nothing more than a lifestyle purchase. When you factor in depreciation, travel costs and maintenance fees — not forgetting that this is on top of the initial purchase price PLUS the unpredictability of use when you want it — ‘prepaying’ for your holidays is far removed from being cost effective.
- If you must borrow money to purchase a timeshare, you really should steer clear from buying one. Timeshares very rarely gain value, so any reputable bank will not provide lending to buy one. More times than often, the resort will arrange in-house financing, but at a much higher interest rate than average high street banks. What’s more, if monies are owed for unpaid maintenance fees for example, then, lenders can go after your other assets.
- Take caution when dealing with timeshare sales people who generally aren’t transparent about the true costs involved. They can also have a tendency to gloss over the cooling-off period which you are legally entitled to. This period, which has to be a minimum of 14 days, allows you to change your mind and cancel. They may also push to take some form of a payment (for example a deposit) before this period expires which is deemed illegal. Furthermore, you should never make any deposit payment before identifying and inspecting the unit you are actually agreeing to.
- Always fully understand how long you are bound to your timeshare contract. In many instances, contracts have been sold in perpetuity meaning there is no end date or the contract has a duration of over 50 years.
- Contrary to popular belief and the existence of many resale companies, timeshares are not actually that re-sellable. There are many cautionary tales and warnings about timeshare reselling schemes that defraud owners out of thousands of pounds
- Bear in mind the other costs involved in using your timeshare such as travel and check that you and any other family members can actually afford this additional cost.
If you have already purchased a timeshare and are now having second thoughts about it for whatever reason, please call one of our expert team on 0203 885 2719 or email email@example.com for some free no-obligation advice about your contract.