How timeshares work; Buying a holiday home

MoneySmart
(ASIC)

Timeshares are a form of ownership or right to use a particular property or properties, such as a holiday villa, apartment or cabin for a set period of time. You can buy timeshares in Australia or overseas but be aware they are a long term commitment and can be difficult to sell.

High pressure sales techniques can sometimes be used by promoters to get you to sign up on the spot. Here are some tips on what to look out for when buying and selling timeshares.

How timeshares work

There are two types of timeshare schemes.

  1. Specific time period schemes – These give you the use of a specific property for a given time period such as one week a year.
  2. Points-based schemes – Where you buy points (or credits) that you can redeem at a number of resorts or holiday accommodation properties in various locations.

Timeshare schemes, also known as ‘vacation or holiday clubs’ or ‘timeshare intervals’, vary in price depending on the amount of time or points purchased and other factors such as the location and standard of available accommodation.

With points-based schemes, the number of days you can redeem each year will depend on how many points you have, the time of the year you use them and the location and type of accommodation. Some points-based timeshares let you redeem points for other travel services.

It may cost you more to buy time or use points in peak periods such as school holidays or around public holidays. Most timeshares have a calendar, suggesting the best times to buy, and any special offers.

2019 ASIC report on timeshares showed many consumers felt that they were not getting the expected value from their membership. Consumers had experienced financial stress because of unexpected changes to timeshare membership fees, or in some cases, to their personal circumstances.

Swapping or banking time

If you buy a timeshare but don’t plan to use the property within the specified period, you may be able to rent your timeshare to others. You can also ‘swap’ or ‘bank’ your timeshare through timeshare websites.

Licensing

Timeshare schemes are a type of managed fund. Generally this means that the scheme operator must hold an Australian financial services (AFS) licence, register the scheme with ASIC and must give you a product disclosure statement.

Before you buy into a timeshare program or scheme, check ASIC Connect’s Professional Registers to find out if the company managing the timeshare holds an AFS licence.

Cost

You will be required to pay a maintenance fee (usually annually) toward the upkeep of the property even if you don’t use the property. You may also have to pay a membership fee each year.

You need to pay these fees for the whole time you have a timeshare so check how long this is, it may be a very long time. If you don’t keep up with your