There is a misconception that timeshare is property investment.
There is a good reason for this. Over the past five years, fractional ownership has been sold as an investment vehicle by both Club La Costa and Diamond Resorts. While this has been the case, consumers will be pleased to learn that the Financial Ombudsman Service (FOS) have very recently ruled in favour of the consumer.
The FOS investigation and determination found that fractional timeshare is not an investment and should never have been sold as one.
Timeshare was once fashionable in the 1980s and saw a massive growth across mainland Europe. For British holidaymakers, Europe was a hotbed for timeshare selling and street touts, who would target holidaymakers enticing them into timeshare resort presentations with the offer of money and free gifts just to attend a short presentation.
However, times have now changed and we’re living in a time where timeshare is no longer fashionable – a result of tour operators giving people far more choice of holiday experiences, including at these once exclusive resorts, hotels, and apartments that timeshare owners are paying thousands of pounds for.
We are now in a situation where anyone – timeshare owners or not – can book a holiday with these once exclusive timeshare resorts, pay for their holiday on an ad hoc basis while timeshare owners continue to pay yearly maintenance fees and remain locked into a long-standing commitment that will continue for many years to come.
In short, timeshare is now cumbersome and, for too many long-term owners, a worry and a millstone around their necks.
Mercantile Claims, and its sister-company, Praetorian Legal, the UK’s leading FCA-approved timeshare claims companies, have helped more than 7,000 victims of mis-sold timeshare to escape their contracts and in many cases claim back all or most of the money back that timeshare owners thought they had lost.
Across most of those cases, there have been three common themes it comes to timeshare mis-selling.
1) Pressure selling
Let’s take a typical scenario. On a holiday abroad, a couple could be walking down the street and they would get approached by a friendly timeshare tout, who would start up friendly banter.
They would be invited to attend a presentation. They wouldn’t know what the presentation was about, but they would often be reassured that it wouldn’t involve parting with any money – therefore, they wouldn’t need to agree to anything.
Agreeing to such a proposition has now proven to have been a big mistake for many.
Holidaymakers who attended these two to three-hour presentations would often be kept on-site until they succumbed to the pressure selling tactics deployed by the timeshare resorts salespersons and agreed to sign a timeshare agreement merely to free themselves.
The majority of people we speak with say they never wanted, or intended, to purchase a timeshare.
2) There was no cooling off period
There was, in the majority of cases we hear of, indiscriminately mis-sold timeshare on the basis that the people signing had to do the deal on the day as the deal would not be available tomorrow.
This is typically a pressure selling tactic and in the early days of timeshare there was no such thing as a cooling-off period, which allowed people time to think and reflect on their experience and would, inevitably, lead to ‘buyer’s remorse’ and cancellation.
Cooling off provisions were first introduced into UK legislation via the Timeshare Bill, which enacted the Timeshare Act 1992 and received Royal Accent on 16 March 1992.
Prior to this major development, timeshare owners had no protection against the timeshare resorts mis-selling. However, the cooling off provision was in most cases never adhered to and while it was present within every timeshare contract after 1992, the reality is consumers we by and large ignorant to the clause or hoodwinked into signing agreements, regardless following a high pressured sales presentation.
3) There was no clear pricing structure
A further unexplained phenomenon of timeshare mis-selling is that there was no defined pricing structure.
Because all timeshare selling was done by commission-based sales representatives, pricing was done on the basis of what the salesperson could sell the timeshare for – the more the representative sold the timeshare for, the greater their commissions.
Timeshare selling in the early years often came with the assurance that timeshare was in demand and that demand would always outstrip supply, meaning that selling an unwanted timeshare into the future should never be a problem.
If there ever was a problem, timeshare owners were told that they could simply return it to the timeshare resort.
That has now proven to be a complete fallacy and the cause of thousands of timeshare owners being lumbered in their golden years with the worry of unwanted, unaffordable timeshares.
4) Maintenance fees became too hot to handle
Timeshare maintenance fees also add to the problem and is the one thing that most timeshare owners now want to rid themselves of.
In the early days of timeshare, these yearly fees were quite modest and were unforeseen as the burden they have now become 20 years on.
Maintenance fees, predominantly, rises year-on-year and often rise above the rate of inflation or at best are equal to, this for many is no longer affordable, hence the need to find a timeshare termination solution.
Mis-selling became systematic
The wider effect of this mis-selling is that timeshare owners have been enticed into purchasing timeshare time and again by resorts offering free week-long stays in their timeshare resorts on the condition that an already owner attends a further meeting with the resort’s sales representatives.
Within this meeting, the owners will learn that the previous sale is not fit for purpose and to gain the maximum benefit from their ownership they were advised that they must upgrade their ownership in order to derive the desired benefits and so the multiple timeshare buying cycles are in full swing.
Another tactic deployed by resorts is where a disgruntled owner complains about their timeshare agreement being mis-sold, the resort will then invite them to attend the resort to talk over their grievances with a view of resolving the problem.
The resort will pay for the owners to stay at the resort for a week and during that time the owners will meet with a resort representative, who is nothing more than another salesperson.
The owners will express their dissatisfaction and the resort representative will suggest a solution and this, generally, will inevitably lead to the owners parting with further monies to correct the things they are complaining about.
In essence, the purpose of the meeting is an opportunity for the resort to take more money from the owners while convincing them, once again, that the product they own is not fit for the purpose the owners intended to use it for. It is not uncommon for timeshare owners to have spent upwards of £250,000 on timeshare mis-selling over many years of riding the timeshare ‘upgrade merry go round’.
Timeshare owners can take back control
In February 2020, Mercantile Claims and Praetorian Legal received FOS determinations against timeshare resorts, Club La Costa and Diamond Resorts, which have been involved in the mis-selling of fractional timeshare.
They also received offers from Barclays Partner Finance to compensate Resort Properties/ Silverpoint owners for the mis-selling and liquidation of Silverpoint resorts.
The basis of these determinations is that the Financial Ombudsman Service has sided with us and determined that fractional timeshare has been mis-sold as an investment and that the product is ostensibly worthless.
The determination has resulted in the Financial Ombudsman Service ordering that timeshare owners be put back into the position they were in had they not have purchased the timeshare.
This means that all monies paid to date are returned to the timeshare owners with the addition of simple interest (8%). They also order that any maintenance fees are refunded to the timeshare owners also with the addition of simple interest (8%) and finally that the timeshare is terminated with immediate effect.
In summary, there is a way out of these contracts. There is no need for victims to be paying thousands of pounds as they are right now.
It was sold to them as paying for the equivalent of bricks and mortar and that has never been the case. With the choice of travel and accommodation offered now by the travel industry at large and access to the internet with consumers being able to make their own travel arrangements the demise of timeshare as a viable concept is set to further decline and the struggle between timeshare owners and timeshare resorts is set to continue for some years to come.