Is There a Turning Point with the New Timeshare Directive?

On the 22nd of October 2008 the European Parliament adopted a new Directive for the protection of consumers in respect of certain aspects of the timeshare industry and how it is sold. The new legislation will focus on several areas that inform and protect consumers and will give them more confidence when investing in timeshare in the future.

The initial benefits of Timeshare ownership seem to have been lost in a fog of misrepresentation. The loopholes and omissions in the 1994 Timeshare Directive quickly became apparent and were subsequesntly exploited by unscrupulous companies working around the detail and content of the Directive.

The major problems facing the timeshare industry and its consumers were the lack of comprehensive pre-contractual information, so consumers could not make an informed choice. The new contracts will have to contain information covering the purchaser’s rights to cancel the contract at any time during their ownership and the legal and financial consequences of doing so.

This will avoid cases like the one that happened to Mrs Brown. Her husband passed away and she tried to dispose of their timeshare only to find the contract they had signed wouldn’t allow her to do so. Furthermore she was forced to keep paying the annual maintenance fees which were increasing year on year. Unfortunate and unfair as it may seem, timeshare owners are often trapped in their ownership till the end of their days.

The new rules will also require companies to provide a detailed disclosure statement describing all features, amenities, and rules of operation of the timeshare, including an explanation of the consequences of non payment of annual fees. In the past, timeshares were repossessed in the event of non payment, whereas nowadays the defaulting client is more likely to be taken to court to enforce these payments.

The nightmare of annually increasing management fees would be prevented and timeshare owners could just relinquish their “right of use” without fear of harassment and threats over unpaid management fees.

The new directive will also clamp down on the up-front fees being charged by alleged resale companies. Fees for selling a vendor’s timeshare will now only be payable on the completion of the sale. Hopefully this will put an end to the fraudulent activity of the resale predators and allow people to genuinely dispose of their timeshare.

Could this new regulation be a way to get back to the real significance of Timeshare? Then perhaps people could start enjoying the “luxury lifestyle at affordable prices” concept once more as they do in the USA.

Historically the enforcement of legislation in protecting timeshare consumers has been very poor; however the Directive is not to become law across Europe until the 23rd of February 2011, although some Member States may have it in place before this (The UK expects it to be passed into law by June 2010).

Perhaps this time the legislation will be successful and will help to polish the tarnished reputation of the European timeshare industry.

Is there really a timeshare re-sale market?

Most people think that there is a resale market available to dispose of their unwanted timeshare. Let’s face it - the real estate market is as bad as it has been in many years - why would it be any different with timeshare? The timeshare property isn’t even really an investment just a pre-paid holiday, so it is not attractive or beneficial to investors.

How many possibilities do owners realistically have to dispose of their timeshare? What is the effective formula of timeshare owners that successfully disposed of their timeshare?

While a few developers offer buy-back programs, the majority does not, leaving timeshare owners to come up with their own ways to dispose of their timeshare, that they no longer wish to own.

Selling a timeshare is very difficult. The main reason is supply and demand. The supply of timeshare resale greatly exceeds the demand. Due to the clinch with high maintenance fees and tough economical times - plenty of timeshare owners want to dispose of their timeshare creating an excess of supply.

You must price your unit competitively if you really want to dispose of it. There should be no need for an appraisal to sell your timeshare, as we have the internet to gather the necessary information to make a comparison.

Bear in mind that you are competing against all those other sales listings. Think about it from the buyer’s point of view, they are looking for the best deal and if you want to sell your timeshare it has to be a bargain. Price them more realistically and increase your avenues of more low cost exposure. Auctions shouldn’t therefore be considered as a lack of respect to the owners, but rather as possibilities to dispose of their timeshare – particularly when it comes to increasing annual maintenance fees which sometimes reach up to over £2000!

Due to the high pressure sales tactics timeshare owners misleadingly paid over inflated prices, but it isn’t realistic to expect to get anywhere near the buying price. If you don’t price your unit right the chances are really small that you will attract any buyers.

It all goes back to choices and a fair amount of information. There are companies that do provide real opportunities to generate high quality holidays and dispose of unwanted timeshare property. It is indeed a bit of a “mine-field”, so to ‘play safe’ make sure you avoid up-front fees of any kind. Why would you pay for something that didn’t yet happen? In the real estate industry you only pay a provision after a deal has been closed.

As in any industry, including those that involve the sale of real estate and those that involve the sale of timeshare, there are good services and bad ones; there are services that work well for one person and maybe not for another. Choose companies that you think best serve your individual needs. Things sell for what the market will bear.