How would you like to celebrate your birthday each year at a five-star cottage alongside the Gleneagles golf course? Or every wedding anniversary in an exclusive Tuscan hamlet surrounded by vineyards? Sounds lovely, doesn’t it? But holiday homes can be an expensive hassle — whereas ‘shared ownership is the smart way to access and use them’, says RCI, the world’s biggest timeshare exchange company.
They would say that, wouldn’t they? But it’s a sound argument. Why buy a second home outright just to enjoy it for a few weeks or months of the year, when you can buy the right to use one only when you want to?
That’s the view of some 600,000 UK timeshare owners and another 21 million across the world. Instead of taking on the commitment of buying a second home outright, with total responsibility for its upkeep, they prefer to pay for a specified amount of time at a favoured destination. They may simply acquire the right to use a property for a set period each year, or buy ‘holiday club’ membership of a resort that offers leisure amenities as well as accommodation. Or they may choose ‘fractional ownership’ of a property, sharing it with others.
Whatever the option, there are two elements to the cost. The first is an upfront charge for the holiday entitlement and the second is an annual charge for maintenance, staff, security and amenities. Confusingly, the three forms of holiday ownership — timeshare, holiday clubs and fractional ownership — are frequently all referred to as ‘timeshare’ because they all give the buyer the right to use a holiday home for a set period. And given the negative connotations attached to the word after historic cases of mis-selling and fraud, the holiday trade’s whole shared owner-ship sector has had to undergo a modern makeover.
The shackles that bound unhappy customers in the 1980s and 1990s — such as ‘perpetuity contracts’ that continued liabilities even after death, passing on the commitment to their heirs, have largely been cast off. The industry has evolved to meet customer demand for shorter-term lock-ins. Agreements lasting ten to 15 years are much more the norm now, according to Sue McNicol of RDO, a pan-European timeshare trade body.
But some big names still sell in perpetuity, such as the beautiful Hilton Grand Vacations Club at Borgo alle Vigne in Tuscany, currently offering memberships with upfront costs starting at £13,510.
The big difference today is that owners have much more flexibility. They can usually rent out their holiday entitlement if they can’t use the allocated time themselves. They can do this privately or by using their resort’s in-house rental service. If they have signed up with a holiday exchange company such as RCI or Interval, they can also swap their entitlement and visit other timeshare properties across the world. And if they want to end their ownership, they can sell through the developer’s resale programme, or privately via a specialist broker.
Experts warn that you should never expect to get all your money back. As with any market, the value of your ownership can fall as well as rise. ‘It is first and foremost a holiday product for most consumers and should not be sold as a financial investment,’ advises RCI. In fact, one regulation in the European Timeshare Directive actually bans anyone who sells timeshare using the word ‘investment’ in their sales patter.
In cases of hardship, such as ill health or the death of a spouse, owners can often surrender their interest back to the developer or the resort company at reasonable cost. These are standards all developer members of RDO sign up to, via a code of conduct that expands on the consumer rights provided by EU legislation.
Other strict restrictions imposed on developers by the European Timeshare Directive, which applies to all shared holiday ownership within the EU, include a ban on taking deposits from prospective customers on the day they attend sales presentations. There must be a 14-day cooling-off period before signature, and the contract must be written in the language of the buyer.
McNicol says that these days the level of customer complaints is low. Citizens Advice Bureaus in the UK dealt with only 11 timeshare issues this March, and all of them concerned resale, an area in which fraudsters still prey on unsuspecting victims by posing as legitimate brokers and agents.
Meanwhile, the industry continues to grow steadily, with worldwide shared holiday ownership sales increasing from around $15 billion in 2013 towards $20 billion this year according to RCI, which suggests two main reasons for the sector’s popularity. As well as offering a cheaper way to enjoy a holiday home than an outright purchase, shared ownership gives holidaymakers the opportunity to buy a lifetime of holidays at today’s prices. There’s also the confidence factor involved in repeat visits to destinations of reliable quality as opposed to individual trips that can sometimes disappoint.
If you’re considering shared ownership, it’s important to understand what you’re committing to before you hand over your cash. And cash it will be — there are no mortgages for this type of purchase, although some developers offer loans. Contracts can be complex and buyers should always proceed with caution.
Stephen Boyd, a timeshare complaints specialist at Athena Law, advises: ‘It’s all about the company. Do your research. Look for online reviews and complaints. And if [the company] claims to be a member of a trade body, check its credentials.’ He also warns that it’s important to find out how the maintenance fees will be set before you sign up. ‘Resorts generally have owner committees and the best committees are made up entirely of owners acting for owners,’ he says. So be wary of resorts that allow developers’ representatives on to these committees and give them voting rights that could skew the fees in the resort’s favour.
There’s something in this market to suit all pockets. So if, having taken note of all these warnings about how the shared ownership sector works, you’re eager to splash some cash on an upmarket option, here are three tempting opportunities.
The celebrated Perthshire golf complex of Gleneagles now offers ‘seasonal ownership’ of its 53 luxury Glenmor estate lodges. They come with use of the course and hotel facilities and can include extras such as a five-star concierge service — staff will even unpack your Waitrose delivery before you arrive.
There are two tenure options to choose from: week-long or half-week ownership, each letting you visit on the same dates annually until 2058. Low-season prices in a two-bedroom lodge start from £5,560 for short-break tenure and £10,110 for full-week. Annual maintenance charges vary according to property size, from £1,198 for two-bedroom lodges to £1,489 for four-bedroom homes.
Or you can holiday like the rich and famous by sailing the Med in a luxury catamaran with Club La Costa Yacht Club’s shared ownership offering. Here you can choose between five levels of membership, starting at £9,900 for eight sailing weeks over eight years, based on two people sharing. You also pay an on-board fee of £700 per person per week to cover crew, meals, port taxes and activities such as diving, plus an annual management fee of £600 per sailing week.
Finally, if you’re mixing London business with theatre and shopping trips, an apartment at 47 Park Street in Mayfair could be your ideal home- from-home. Members can stay for up to 31 days a year until 2050. Other perks include priority booking at the Royal Opera House, private dining at Morton’s and use of a nearby work space. Membership costs between £118,000 and £270,000, plus an annual maintenance fee of £7,000-8,000. 47 Park Street acts as a broker for re-sales but other agents also sell membership and it may be possible to find relative bargains: try the UK’s biggest timeshare re-sale agent, Worldwide Timeshare Hypermarket.
In summary, as long as you do your homework and understand what you’re getting into, there’s no reason why shared ownership should not be a stylish, trouble-free and affordable holiday experience.