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EU Timeshare Directive comes into force

The new Timeshare Directive came into force across Europe yesterday designed to improve consumer protection and ensure a level playing field across Europe’s timeshare market.

THE NEW EU Timeshare Directive (2008/122/EC) seeks to put right some of the concerns surrounding the 1994 directive. The headline elements are:

  • The cooling-off period will now extend to 14 days across the EU regardless of the country in which the Timeshare is purchased.
  • Long-term holiday products under 36 months (known as Holiday Clubs or Discount Travel Membership Clubs) will now be protected by legislation, as will resale and exchange. This will create a level playing field across Europe’s Timeshare market and ensure that consumers enjoy the same level of protection across the EU.
  • Sellers of ‘holiday clubs’ will also now have to comply with the 14 day cooling-off period rule and fully explain to the consumer what they are actually buying. The consumer will be able to pay the company in equal yearly instalments and have the opportunity to withdraw every year.
  • Buyers of trial packages will also benefit under the new directive.
  • Pre-contractual information will be subject to more detailed regulation.
  • The ban on deposits during the cooling off period will include any advance payment, provision of guarantees and reservation of money on accounts.
  • Member States will face penalties if traders fail to comply with the new directive.
  • Timeshare companies can sign up to new industry Codes of Conduct and Alternative Dispute Resolution (ADR) schemes.

The directive sparked fierce debate across the industry, and on opp.org.uk, with the general consensus being cautious optimism. Here are some of the views on people in the industry:

“With the European Timeshare Directive due to be implemented, it’s likely only committed fractional developers will enter the marketplace. Those bona fide fractional real estate operators who have invested in effective fractional legal documentation will achieve successful sales.”

Piers Brown – Fractional Life

“We believe that the regulation of our industry will bring some consistency and quality in the market, which will help improve consumer confidence. Moreover, the current regulations provide an opportunity for developers to structure products that will provide them with access to incredibly cheap finance. This is an exciting time for our industry.”

Brad Lincoln, CEO, The Best Group

“It will have an effect it will stop some schemes in their tracks … but I don’t think that it will stop serious and reputable developers from investing in a proper fractional project. In fact, over time, it could boost the sector. It will make things clearer in my view, and make the fractional sector feel more consumer friendly. It will make schemes more uniform and bring in concepts such as standard disclosure.”

Eric Gummers, International property lawyer

“There is a serious problem looming. The new directive will have a massive impact on the fractional sector. A lot of developers won’t want to take all of the upfront risk. But, the new regulations have been designed to protect consumers buying into fractional schemes of course, but I have long maintained that timeshare is a type of fractional, but fractional is not necessarily a type of timeshare. Both approaches give owners the right to use a property for a share of the year.”

Peter Esders, Chebsey & Co

Further reading

Directive 2008/122/EC of the European Parliament (English)

Directive 2008/122/EC of the European Parliament (Greek)

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