There are various types of timeshare. Fixed week, points, floating time but in recent years, timeshare fractional ownership’s have grown in popularity over the classic way of purchasing.
What is Fractional Ownership?
Fractional Ownership is essentially a “re-branding” of timeshare, this ownership entitles you to a stake in the actual real estate value of the property, a property that is usually situated on a resort. This is different to a previously more common way to timeshare where you purchase the right of use.
A fractional ownership may only have up to 12 owners, whereas a fixed week timeshare may have up to 50 owners. As a fractional owner you will likely have a higher financial commitment both with the initial purchase cost and annual maintenance as you have more weeks of annual use of the property whereas with a fixed week timeshare you might only get one week a year.
The length of time you have the property for in a year will depend on how many owners there are in total on that property, you may own a 1/6th fraction which would be 8.6 weeks. Usually, these ownership’s will be done through a lease; time period decided by the resort or management company but is usually around 19-25 years.
Is it really an investment?
Fractional Ownership may be described as an “investment”. This is because owners of this kind of timeshare have equity in the property.
Timeshare salespeople will sell this as an “investment” concept however the reality is that it is very unlikely the property will hold its value let alone increase. This is because there is no exclusivity to the owners to what they have paid for. Anyone could go onto Booking.com and book the same thing for whenever you want without being dragged into the ownership scheme.
You may have been promised that the assets will be sold at the end of the ownership period with the proceeds of sale being distributed according to the fractional share owned, many consumers find only too late that this was a false promise.
What are the pros of Fractional Ownership?
- Owners have incentive to maintain the quality of the property as they are part owners.
- You can technically own a holiday home without having to pay the full cost of a property and know somebody will be taking care of the place or at least the property will be occupied while you’re not there.
- Longer time period of annual access.
What are the cons of Fractional Ownership?
- Much more expensive than other timeshare products. You may have an issue with securing finance if you are not a cash buyer.
- Unlikely to hold or accrue value, contrary to what salespeople may tell you.
- Post purchasing a property in “development” the project could be abandoned and you will have a lot of difficulty with getting your money back.
- Not enough availability for what is being sold.
Are maintenance fees still involved?
As with most timeshare products, the property is situated on a resort, therefore maintenance fees still have to be paid to cover the upkeep of amenities and services you receive on your stay, such as administration. The problem is that owners are likely to all be paying huge variations in fees for essentially receiving the same product.
Often this type of ownership is more expensive as owners not only still have to pay maintenance fees but also pay taxes on the property.
Is a timeshare fractional ownership a good deal?
Although most fractional ownership’s and classic timeshare products do not share similar characteristics that can make timeshares bad deals, it does not necessarily make all fractional ownership’s good deals.
For more information regarding this article or assistance in any other timeshare related issues please contact the TCA on 01908 881058 or email: info@TimeshareConsumerAssociation.org.uk