As those who own timeshare will know that around this time of year the timeshare developers deliver their invoices for next year’s maintenance fees. Contained in a number of these bills we have seen is a monetary amount designated “sinking fund”. Before we go any further we thought it would be a good idea to ascertain what a sinking fund is.
The sinking fund
On consulting Mr Google there are several definitions of what constitutes a sinking fund, in simple terms it’s a savings scheme to either cover emergency contingencies or maybe a way of saving for a new purchase such as a car.
In business terms the definition may be different. A sinking fund is a fund containing money set aside or saved to pay off a debt or bond. A company that issues debt will need to pay that debt off in the future, and the sinking fund helps to soften the hardship of a large outlay of revenue. A sinking fund is established so the company can contribute to the fund in the years leading up to the bond’s maturity.
Questions that need answers
So, given the definitions above we ask why certain developers have introduced a sinking fund charge. In two examples we have seen, Diamond Resorts have introduced this additional charge on their latest invoices. So far we have seen this apply to Woodford Bridge Country Club and also Sunset Harbour Club.
In the case of Woodbridge we saw that the management fee is £590.89 and the sinking fund is £119.29 this represents a 20% hike in the base management fee. To add insult to injury, the VAT is also added to the sinking fund increasing the bill by £142.04 so the total demanded becomes £852.22. In the case of Sunset Harbour, the rise is similar at 19%. At the time of writing we are unaware of how the base maintenance fee has risen since the last invoice but are of the opinion that this too will have risen.
Thus far we have seen no explanation from Diamond for the introduction of this “fund” we hope to find some explanation in the near future, which naturally we will share.
TCA Comment
We predicted in articles recently that we felt most, if not all developers will be applying substantial rises in the 2023 maintenance fees. First off the blocks were Macdonald Resorts with an estimated 30% plus hike. MacDonald simply raised the fee to cover rising expenses, in other words they didn’t create a sinking fund.
Realistically it doesn’t matter what name you give it, the writing is on the wall regards rises. When one of the largest developers, Diamond, raise fees then it can almost be taken as red that others will follow suit. Once again we point out that whilst owning a timeshare there is a contractual liability to pay whatever is demanded by way of the annual fee, no negotiation, no wriggle room, just accept it and pay it.
As we are in the full swing of maintenance fee season we would be interested in hearing from timeshare owners who are experiencing inflated bills.
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