Timeshares: common problems faced by UK owners

The Timeshare, Holiday Products, Resale and Exchange Contracts Regulations 2010 (SI 2010 No. 2960) (the “Timeshare Regulations”) came into force on 23 February 2011 and apply across the UK. They transposed into UK law EU Directive 2008/122/EC on the “protection of consumers in respect of certain aspects of timeshare, long-term holiday product, resale and exchange contracts” (replacing the previous 1994 directive). The directive was a response to the emergence of long term holiday products (LTHPs).

The Timeshare Regulations were amended by the Timeshare, Holiday Products, Resale and Exchange Contracts (Amendment etc) (EU Exit) Regulations 2018 (SI 2018 No. 1397). As far as possible, the amendments ensure that the protections available to UK consumers purchasing timeshares or related products remain the same following the UK’s departure from the EU.

The Timeshare Regulations extend consumer protection to new timeshare products appearing on the market, including LTHPs (such as holiday clubs), shorter term contracts (all purchases for a year or more), timeshare-like products, and resale and exchange timeshare schemes. Under the regulations, traders are required to provide consumers with key pre-contract information and the contract itself must comply with certain formalities. Importantly, consumers have a 14-day cooling-off period in which to withdraw from the timeshare contract without financial penalty.

The legal structure of timeshares varies from jurisdiction to jurisdiction. A further complication is that a timeshare might be located in one country, owned by a company based somewhere else, and managed from yet another country.

During the 1980s and 1990s, many timeshares located abroad were sold to British tourists who were on holiday and without access to independent legal advice. Some contracts were not written in English, others included an obligation to pay expensive annual management and maintenance fees. Often timeshare agreements were made “in-perpetuity” (that is, as everlasting contracts). Some owners would ideally like to sell on their timeshare, but there may be little demand.

More recently, there have been concerns about ‘fractional ownership' timeshares, a particular type of asset-backed timeshare package. It involves consumers buying, for a lump sum outlay, a share in the ownership of a single identified property in an accommodation portfolio. When the property is sold, at the end of the timeshare period, net proceeds are distributed pro-rata among the fractional owners. Some people believe they have suffered financial loss as a consequence of being mis-sold a fractional ownership product and have escalated their complaint to the Financial Ombudsman Service (FOS).

This briefing provides an overview of UK regulation of timeshares and LTHPs. Its focus is on the problems faced by some UK timeshare owners. It considers the exit problems associated with timeshares, “in-perpetuity” clauses, and fractional ownership. Finally, it suggests organisations that might be able to help timeshare owners.