Can A Timeshare Be A Good Investment?

Timeshares are frequently linked with tales of disreputable firms who employ aggressive sales tactics and charge extortionate maintenance fees to consumers. Can timeshares ever be a good investment in 2016?

 Can A Timeshare Be A Good Investment?
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The History Of The Timeshare

It is thought that the concept of the timeshare investment began in the 1960s when a French Alps developer came up with the idea of selling shares in his property instead of attempting to rent rooms out on an individual basis. However, the timeshare movement really gathered pace during the 1980s and 1990s, particularly in Brit-popular resorts such as the Costa Del Sol and Costa Brava in Spain.

There are now in excess of 9 million timeshare owners worldwide who have access to over 6,000 resorts in 95 countries. In the UK there are currently approximately 600,000 timeshare owners, of which 250,000 are actively trying to sell their timeshare because they’ve simply had enough – just over 40% of timeshare owners want to sell!

Maintenance Costs

Timeshare owners typically purchase a 1/52 fraction of the ownership of the property, allowing them to vacation there for one week of the year. Legal contracts were vague when drawn up in the ‘80s and ‘90s. Unfortunately, those who signed on the dotted line were unaware that the minimal maintenance fees that they would be charged could increase to ridiculous levels. Some timeshare owners are now paying in excess of £1000 a year in maintenance costs. This situation has become worse with the value of the weakened pound following the global economic crash.

Selling Your Timeshare

In addition, it is notoriously hard to get out of a timeshare contract as many of them have a lifetime duration. Some customers who purchased timeshares several decades ago have now reached a stage in life where they’re not well enough to take overseas flights due to medical conditions. Even though they’re not using the accommodation, they still have to pay the maintenance costs and are unable to sell the timeshare back to the owners. Some do manage to sell privately and those that are particularly desperate are listing their timeshares on eBay for as little as 99p.

Another concern of timeshare owners is that their children will be saddled with the rising annual costs of the arrangement once they have died. To combat this, owners are choosing to bequeath the timeshares in their wills back to the companies that sold it to them.

Timeshare Positives

As the timeshare industry has evolved and legal problems have come to light, there have been some improvements to good practice in the industry. For instance, a recent EU law change now requires a 14 day cooling off period before any money can change hands.

Some timeshare owners are quite content with the deal that they have negotiated. Fractional occupation is perfect for the type of people that have a particular holiday pattern and enjoy returning to the same place each year. There are also timeshare exchange programs available so that owners are able to swap properties with another family, although there will be a transfer fee which is applicable for this type of deal.

Those who are looking to invest in a fractional occupation deal should always consult a lawyer before they sign a timeshare contract. Timeshares are often cheaper than the cost of an annual package holiday. Therefore, timeshares can potentially offer good value for money so long as there is an option to return the timeshare to the company whenever they wish.

If you’re looking forward to your timeshare vacation this year, then don’t forget that although it may seem like a home from home, you still need to treat it as a holiday and take out valid travel insurance to protect you against any unforeseen circumstances.

Laura Reeve is the Marketing Executive for Avanti Travel Insurance, which specialises in travel insurance for those with pre-existing medical conditions, and are one of very few that have no upper age limit on their policies.

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