The topic being discussed is typically the most contentious area in timeshare as many consumers believe the fees levied are excessive. By way of draconian and downright illogical estimates, some resorts punitively charge high levels of maintenance fees each year and every year without any justification into how these fees were arrived at.
Further, when you consider your own household budgets and he sums you allow for maintaining your own home each year and apply those sum to your timeshare, it can become “stonkingly” obvious that something is not right.
In coming to this conclusion, I do discount the consumer controlled clubs, as these clubs are run by consumers, for consumers and they constantly do obtain and levy substantially lower costs for maintaining their resorts. The lower cost charge can occur as it is the committee will (in part) be paying part of the overall cost themselves, whereas resort led clubs might not.
Consider your own home and the costs you incur on maintaining it. Using an independent assessor like the Inland Revenue, they are quite happy to grant a maintenance allowance of 10% from the rentable value of a property you let out to others. They determine the 10 % is a reasonable sum to “offset” the cost of maintaining the rented property. Now in most cases, a timeshare is a “right to occupy” just like a rented house. When renting a house, you occupy it for 52 weeks out of the year, however, in respect to timeshare, you acquire with others the same “right to occupy” but that occupation is collective with others. In your case, you can occupy 1/52 of a year (i.e 1 week). When you factor in others then, of course, the whole cost is divided among all the owners.
So it’s simply about maths and you can determine whether or not the maintenance charges claimed by the resort are reasonable or indeed real.
First, let’s get some of the qualifications out of the way. Some weeks are prized like “red weeks”, other not so prized like “green weeks”. However, in considering the maintenance costs associated with each week, this prized or un-prized consideration is moot, Each week cost the same as we are not dealing with any differential or meaningful variation. In any event, the resort will charge a premium for “red week” (when sold) whereas the “green week” and indeed the “runt weeks” they will not. Therefore, the polarization has been accounted for and when you acquired the timeshare in the first place. The baseline cost of maintenance, therefore, is the same in each case.
Taking a 1 bedroom apartments as an arithmetic indicator. This type of holiday apartment rents out in Spain and the UK for say “£500.00 per week” (note I don’t include prized week uplift as they-as explained-have been accounted for) over a 12-month period. That sum amounts To a rental income of £25,000 per year. Therefore, by using the “Inland Revenues” assessment the claimed reasonable maintenance allowance is 10%, accords to £2,500 per year or in segments of weeks, £50.00 per week.
Now clearly in such cases as “holiday resorts” there will be service costs, heating lighting etc, therefore they too, must be factored in, as a reception, must be maintained, laundry service provided and amenities, heating, lighting, rates and other departmental costs will follow, to ensure the holiday experience is delivered. Therefore to obtain a fair assessment of maintenance cost we are required to make further allowances. What is a variable and sometimes significant is the particular cost attracted and attributable to unidentifiable costs associated from resort to resort and from location to location?
But let’s simply take some known costs first. Heating lighting rates laundry etc.
Allowing say £10 a week for electricity and water, £5 for internal apartment amenities and £15 pounds for apartment equipment (fridges, air-con cooker and the like) rates local taxes and water of £30 we consider a further £60 is more than reasonable.
In respect to maintaining the pool, gardens ground, communal areas and reception (let’s go wild), say a further £60.00 per week per apartment.
Therefore, the total costs are £170.00 per week per apartment. Quantifying a yearly cost, you need to multiply the individual cost of £170 by 50 (I mention 50 knowing there are 52 weeks in the year but clearly if maintenance was undertaken it would interfere with “quite” enjoyment so the apartment could not be occupied all the time). The annual cost is therefore £8,500.
On top of this cost will be overheads and head office costs which generally work out at 25% of onsite costs, therefore a further £2,125 can be added which accumulates to £10,625. Then profit (and let’s be generous) 15 % a further £328.75.
Therefore, the annual cost should not exceed £10,943.75 divide by the 5o lettable weeks £218.85 per week. Again, some resort will cost more, some less and be factoring a contingency of say a further 25% the maintenance fee costs should not be more than £300.00 per week. I have a friend who has 10 week’s timeshare and he claims he only pays £150.00 for each week, so I believe I have been quite generous in my calculation.
In a resort with 50 accommodation units, there is 2,500 weeks’ timeshare at £300.00 per week, therefore, the club gets £750,000 per year each and every year.
How much do you pay? Has the resort obtained a pipeline of lifelong profits and are you paying for it?
Now some legal facts
When you receive an invoice (a claim) you can pay it or question it. If you are happy to pay it then a problem does not exist, should you elect to question it, it’s wise to be reasonable at all times.
So, pay what you think is reasonable and ask that the resort permit you to take the holiday until your issues have been settled. If they refuse your offer do not pay them anything at all. The reasoning behind this is, if you are prepared to act reasonable and they are not, you should counter their unreasonableness and take the money off them using it to secure a holiday elsewhere, as they have deprived you of your contractual entitlement. In doing just so, you might incur more cost, but those costs can be recovered if the club elects to pursue you which on many occasions they don’t.
You are entitled to be treated fairly, you are entitling to understand what you are paying for and those costs are required to be constructed with correct business efficacy. The clubs which imparts the maintenance fees are also not permitted to fleece you. You are entitled to be provided with all the “check and balances” and a warranty from an accountant that the accounts have been performed correctly, that the cost included in the evaluation are accurate, pertinent to your contractual obligations, have been checked by them and all costs have been reasonably applied (taking into account “best practice and value for money”). If you are not provided with the substantiation and you ask for then, clearly something is being hidden from you.
Should the case appear before the courts as a claim is being made by the club, you are absolutely entitled to disclosure of all the relevant documents in the club’s possession and control which you asked for in pre-action correspondence. Therefore, its reasonable for the resort to disclose them before the action, not after it. If they refuse, again they are being mischievous and will attract the dissent of the court, which in turn will put them to costs risk even if the club wins.
One must understand these issues have never been fully tested in court as no resort (to my knowledge) has ever obtained from the court a judgement for non-payment of maintenance which has been assessed by the court.
Further, if the truth is being asked for and not freely given, then, of course, one can only assume that someone has something to hide and the courts will see through this.
TESS is a timeshare exit company and offers service and support to all consumers and independently controlled Timeshare clubs.
If a consumer required a termination of the timeshare obligations, TESS will be happy to help. We do not “cold call” and we are licensed to do what we do.
Posted on: 9th December 2016