Leaving aside the high pressure sales techniques, timeshare is an emotive purchase. With the relatively easy financing schemes offered by resorts, even if buyers don’t have the ready cash they can still buy a timeshare. Whether the purchase is paid for outright or financed, the decision to buy was made based on current personal circumstances, but what happens when life takes a change and suddenly everything in place previously goes off the rails?
In general, owning a timeshare is a long term commitment but for now we will forget the original purchase and focus on the ongoing costs involved.
Contractual maintenance fees
Whether called maintenance fees or resort fees it all adds up to a contractual liability to make annual payments when owning a timeshare. Whether you use your timeshare or not these fees must be paid. A further facet of annual fees is that they only ever seem to go up. There are no upper limits to the percentage rises that may be imposed. Remember these fees are payable for the entire period of ownership.
It must also be remembered that if a developer or Management Company chooses to increase annual maintenance fees by 5%, 10% or more they can do so, there is no legal requirement to peg fees at any specific rate, and rise they will.
Life changes
There can be numerous changes in life, many of which are unforeseen at the time of purchase; these changes can rapidly mean that the once cherished and affordable timeshare ownership becomes a financial disaster, second guessing these changes at the time of purchase never happens. The euphoria of buying a slice of affordable luxury holidays blurs all other logical and rational reasoning, the “what if” scenario is never considered.
Over the years we have spoken to literally thousands of timeshare owners where changes in circumstances have turned their once dream into a nightmare. Below we look at some of the more common causes:
- Unemployment.
- Redundancy.
- Health issues.
- Divorce.
- Retirement.
- Death.
All the above have one thing in common, a potentially a substantial effect on net disposable income. Things that were once affordable become a financial burden. Living within reduced means involves adjusting expenditure to match income, much of which is doable but a long term timeshare contract, together with the associated expense is one that can prove a serious problem to solve.
The lock in
A common trait of timeshare ownership, as we have stated on many occasions, is not just the long term nature of the product but in many cases ownership could go on after the current owners dies, this is known as the “perpetuity clause” often sold as a benefit but more often than not the reality is quite the opposite. On average timeshare developers are pretty unsympathetic to your life changes “you signed the contract so you’re stuck with it”.
When you’re in your 40s, earning well and life is under control, signing a long term contract seemingly presents no problems. Loan repayments and maintenance fees are all affordable, looking at the most common life change, what happens when retirement looms?
Average retirement income and expenditure in the UK
Naturally figures vary quite dramatically; however, figures from the Pensions and Lifetime Savings Association (PSLA), whose members include more than 1300 pension schemes with 20 million members, put the UK average retirement expenditure at £12,000 pa.
The Organisation for Economic Co-operation and Development (OECD) said people in the UK earning average wages and relying solely on mandatory pension schemes, such as the state pension, could see their retirement income fall to just 29 per cent of in-work earnings, compared with an OECD average of 63 per cent.
In the year 2021 a married couple can expect a maximum basic state pension of £14,700 pa. If, as quoted by the PSLA above, the expenditure average is £12,000 this hardly leaves much left. The UK Government takes a snapshot of inflation in September each year; the resultant figure is used for the following years increase in the old age pension. For 2022 this has been set at 3.1% which, for most, means a pay rise of just £5.55 per week.
We think it can be demonstrated that long term financial commitments after retirement can be, or are, expenses that are ill affordable. The annual maintenance fee is one such example.
Getting out
These are two simple words that present no simple answer. On average most resorts and developers have no published or structured exit strategy. In some cases they may offer a number of possible solutions but will skirt round the actual desire to simply get out. Pass it to a relative, put it up for sale with a resale broker are some of the “helpful” but practically useless suggestions.
In a recent enquiry we spoke to a 75 year old who purchased GVC (now Diamond Resorts) points in 1996 and has dutifully paid the annual maintenance fees ever since, which incidentally for 2021 was £1,300. When contacting Diamond he stated that he and his 70 year old wife could no longer travel abroad. The very helpful advisor suggested that they use UK resorts instead!
With new timeshare sales in Europe at an all time low it becomes apparent that there is a greater reliance on annual maintenance fees for developers to balance the books. With this in mind it becomes easy to see that the placing obstacles or offering useless suggestions rather than simply allowing exits have become the normal.
Comment
Our first comment is don’t expect a sympathetic audience from your resort or developer. Whilst in insular cases letting one person exit their ownership would appear to be of no significance but when hundreds wish to jump ship then the cost and resultant profit loss start to become considerable.
In the heady days, getting rid of your ownership would have been easy because the resorts and developers knew they could sell it on rapidly. Nowadays most developers and resorts have an excess of inventory which is one of the primary reasons why virtually all resorts can be found on the online booking sites such as booking.com. Less buyers and more inventory is not a good business model so keeping owners tied in is the order of the day.
If life changes are affecting you and you are experiencing difficulties in getting rid of your timeshare we would like to hear from you. Remember, for everyone who makes a lock, someone will make a key. Being locked in forever is not an option, there are specialists who can “use the key” to get you out.
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