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According to Australian Timeshare and Holiday Owners Council (ATHOC) , more than 180,000 Australians have signed up to time-sharing schemes at popular holiday destinations.
Ne Ne (pronounced as “NEI-NEI”) loved the idea of an ongoing ‘home away from home’ with her family. Timeshare made sense to her when her children were still young. Ne Ne enjoyed the experience so much that she bought a second timeshare in New South Wales just five years after her first purchase in the late eighties.
“When your kids are growing up, if you have the right time for time share, it’s good. The school holiday is much more expensive but the thing is my kids used to go to a private school so their school holiday is a week before the public school. So I picked up those weeks.”
How does the system work?
Laura Younger is the general manager of ATHOC she explains timeshare:
“It’s a shared ownership in an asset or titled deed that relates to a property or a collection of properties so you have sort of an ownership right or usage depending on what you buy and what you buy into. The current timeshare schemes are more points-based so they give a lot more flexibility. So instead of having to have a week at a property, you might have a couple of days here and five days there or you might in fact use your points to buy flights or to hire cars."
Younger says part of the appeal is the flexibility to exchange your holiday program with other owners.
However, having been a timeshare owner for about thirty years, Ne Ne says trading your timeshare isn’t actually all that flexible, and that sometimes it is very difficult to find the booking that you're after.
A recent qualitative report on the experiences of timeshare owners commissioned by the Australian Securities and Investment Commission (ASIC) found a high level of discontent overall from timeshare owners.
Gerard Brody from the Consumer Action Law Centre isn’t surprised as the organisation often receives complaints from timeshare owners.
“The purchase price might seem a lot of money and then later on they decide they don’t want their timeshare scheme anymore and they try and sell it but the resale value is much less than the purchase price so they might have felt that they were investing in a property, but, in fact, they are likely to make a loss.”
Costs and contract length
According to data from the Australian Timeshare Holiday Owners Council, timeshare membership costs $23,000 on average with ongoing annual membership costs of $800.
The ASIC report found that the average length of a timeshare contract varies from 20 to 99 years.
Brody says the long-term nature of timeshare agreements is a common complaint from owners.
“We’ve had complaints where people are signed up to very long-term arrangements,
80-plus years and they find that they can’t actually get out of it without losing a lot of money.”
Brody says retirees are struggling in particular to fund their ongoing timeshare costs.
Findings from the ASIC report on the experiences of timeshare owners found that consumers are often pressured into signing an agreement within two to three hours of attending their first seminar – almost half (48%) of those who purchased or upgraded their package took a loan to do so paying a loan interest of 13.5% on average.
Brody is concerned that timeshare is often sold by operators who aren’t necessarily qualified financial advisors with a duty of care to act in the best interest of consumers.
From April 2021, timeshare operators are required to take a more consumer-centric approach to financial product design and distribution in compliance with the Corporation Act.
In the meantime, it’s up to the individuals whether they sign an agreement or not, according to Laura Younger.
Gerard Brody says consumers still have an early window of opportunity to cancel their contract if they change their mind. Although, it may be hard to opt out once you’ve missed the cooling off period, consumers may still be able to find a remedy by making an official complaint.
"One of things people can do is make a complaint. Timeshare operators are required to be members of the Australian Financial Complaints Authority and so you can make a complaint if you’re dissatisfied with how these timeshare scheme has treated you or with some requirement associated with the scheme.”