Timeshare steps out of the shadows

Respectable names such as Butlins and Marriott are helping a tainted industry to revamp its image. But buyer beware is still the golden rule

"If you want to clear a room, don't shout 'Fire!' - holler 'Timeshare!' instead," says Sandy Grey, chairman of the Timeshare Consumers Association (TCA).

But this is no laughing matter. Even though six million people around the world own one, timeshares have a poor image, dating from the 1980s, when lax marketing rules and the lack of any "cooling-off" period allowed unscrupulous salesmen to use high-pressure tactics to win business. Worse still, the industry was plagued with fraudsters, who made off with their victims' deposits, never to be seen again. Such stories haven't faded from the public memory.

Perhaps the most infamous timeshare villain was John "Goldfinger" Palmer, who served four years in jail for his part in a £30m scam. In January this year, eight people, including four Britons, were arrested in Spain for running fraudulent timeshare operations.

"As far as the public is concerned, very little has changed since then," Mr Grey adds.

In fact, following EU regulation in the 1990s, there has been a crackdown on the mis-selling of timeshare schemes, and the market is slowly repairing its image.

To recap, a timeshare lets you own the right to stay for a week (or more) in an apartment or villa for many years, or "in perpetuity". Generally, there are two types of scheme. The first involves buying the same, fixed week each year, which can then be swapped for other weeks with timeshare owners around the world. Alternatively, a more flexible "floating" or "points" system lets you pick a week within a set period of time.

You start by paying a one-off sum, from around £3,000. All timeshares carry annual fees for insurance and maintenance, in the region of £200 to £700. For the right to exchange the original property for one in another country or resort, add at least another £200.

New developments in the timeshare industry are being led in Europe and further afield - mostly at the upper end of the market - by hotel chains such as Marriott and Hilton.

Marriott Vacation Club International (MVCI) owns several, mostly purpose-built blocks of apartments on the island of Majorca and in Marbella and Estepona on Spain's Costa del Sol. Prices for life ownership - including title deeds - of one week a year in these apartments range from £9,000 to £29,000.

The US is currently home to the two biggest timeshare locations in the world: Orlando, in Florida, and Las Vegas. On this side of the Atlantic, though, the market is growing only slowly. "As far as consumer acceptance of timeshares is concerned, Europe is about 10 years behind America," says Ed Kinney of MVCI.

But that situation could gradually change. Butlins, the holiday resorts operator, will next year launch a luxury timeshare scheme called Blue Skies, starting with a 24-roomed apartment block in Minehead, Somerset.

"Within a week of the announcement, some 12,000 people registered their interest," says Mike Crowther, Blue Skies' project director.

The scheme works on a points system, and the £6,000 starting price will buy the equivalent of a week's holiday in Minehead in mid-season for 30 years. On top, there are annual fees of £300-£350 a year.

"This timeshare model is perfect for guests because they are already the loyal kind: seven out of 10 come back to Butlins year after year," adds Mr Crowther.

However, at present, there remain many pitfalls for potential buyers of timeshares. Buy a timeshare outside the EU, for example, and you could find yourself unable to get your deposit back; and even in the UK, bad practice persists (see box below for legal and consumer advice). The general rule is always to ask as many questions of the sales person as you can, and if you feel uncomfortable, don't go any further.

Consumer Advice: Cool off for a fortnight before you buy a week in the sun

The sale of timeshares in the UK is regulated by the Timeshare Act 1992 (amended in 2001) and enforced by local trading standards officers.

Buyers must be given a 14-day "cooling-off" period; it is illegal for sellers to take a deposit during this time.

Reputable agents, even within the UK, can be hard to find. And anyone contemplating buying a timeshare abroad should tread with utmost caution.

Buyers must make sure their money and the certificate of ownership are held in an independent, third-party account, and that the purchased "week" is free of all debt. Be aware, too, that there are no regulations about the ownership - rather than the sale - of timeshares. The Organisation for Timeshare in Europe (OTE), the industry body, has a limited arbitration scheme for consumers. There is no clear-cut compensation scheme.

For the UK Government's current advice, go to www.dti.gov.uk/consumers/fact-sheets/. The Timeshare Consumers Association website ( www.timeshare.org.uk) lists just five agents that comply with its own code of conduct. Note, however, that this is a voluntary code only.

Citizens Advice has specialists who can help you to check that a timeshare agent is complying with UK rules.