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It's time to share
Tourism makes a substantial contribution to the UK economy, and timeshare arrangements constitute a significant portion of the revenue raised. Given its growing popularity over the last 30 years, the timeshare phenomenon has enjoyed rapid expansion in Scotland, and now could be the time to take advantage of the benefits of shared-ownership properties.
Malcolm Holmes lifts the lid on the timeshare industry…
The concept of timeshare – essentially shared ownership – has been around in the UK since the mid-1970s. The priority back then was to devise a structure that would give buyers long-term security for their purchase, and at the same time ensuring that such an arrangement could not be dismantled at the whim of any individual purchaser or their creditors. The result was the establishment of the now well-recognised Club Trustee structure, where the title to the property was vested in a trust to protect it against the bankruptcy of the developer. Providing that all purchasers became members of a club, a mechanism was established for the sharing and administration of the rights in the property.
While the Club Trustee structure is to this day still widely used to secure owners' rights, the variety of the timeshare products available to consumers, both in the UK and beyond, has evolved considerably. The most common product used to be fixed weeks, whereby an owner's occupancy period in each year was pre-determined by a specified calendar date.
However, as the industry has developed, other concepts have been devised; floating time for example, denotes occupancy periods that are restricted by season as opposed to specific dates, so owners can reserve a different week each year providing it is within the season they have purchased. This may be as simple as low and high seasons, with a week in the latter naturally costing more to buy.
Points are a further variation on the product. Perhaps best described as a timeshare 'currency,' points are used to establish a value for a length of stay, chosen season, property types and resort locations. The flexibility of the points system allows owners to choose how their currency is 'spent' each year, meaning they can holiday all over the world, even though they may own a fixed week at a particular resort.
Perhaps the most significant recent developments are the emergence of fractional ownership and private residence clubs (PRCs). Fractional ownership operates on a similar basis to that of the traditional seven-day system, but rather than purchasing an individual week, the consumer is able to purchase the right to occupy a particular property in various multiples, usually from three to 12 weeks a year. As a result, 'fractionals' have emerged as a viable alternative to second home ownership, featuring the privileges of a luxury holiday residence but at a fraction of the capital outlay. The same holds true for PRCs, which are generally aimed at the top end of the fractional market, where the priority for both developer and member is exclusivity and the availability of the highest class facilities and services.
Few would doubt that timeshare is a robust business. Some of the biggest names in the hospitality and leisure sector are involved in the industry, and growing confidence coupled with new products and services has spurred the growth of quality resorts in the UK. This is good news for developers, consumers, and local shops and service outlets who profit from the business that timeshare ownership brings to a given area.
Specialising in timeshare-related legal issues, Tods Murray LLP advised on the first UK timeshare development at Loch Rannoch in Perthshire, in 1976. For more information on this and other legal issues for the hospitality and tourism industry, contact Malcolm Holmes at Tods Murray LLP, on 0131 656 2276.
Malcolm Holmes is a Partner in Tods Murray LLP
This article has been edited from its original version. For the complete feature, please see Catering in Scotland magazine September/October 2007.
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