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The UK government is now consulting on new plans to outlaw new ‘leaseholds’ and to ban ‘ground rents’. So, what this got to do with Timeshares?

When considering the ‘Fixed weeks’ Timeshare model, the timeshares sold were a form of lease and by way of an example in the Slaley Hall it states: –

‘A lease (is described as) a part of the Slaley Hall Estate known as Timeshare Development Phase 4 dated 14th of July 2005 between De Vere Hotels & Leisure Limited (Now Q Hotels) (1) and Dickinson’s Dee (Trust Cooperation) Limited (2)’

‘And subsequent lease and subsequent Lease shall mean such one or more leases of Phases subsequent to these phases made on similia terms.

‘The Resort’ means the Timeshare Resort let to the trustee on behalf of the Club by the leases and any subsequent leases.

Therefore, when you buy a fixed week Timeshare you probably entered into a lease or Quasi-Lease and your membership in the Club maintains the rights, you bought.

Accordingly, it can be argued the timeshare is a lease and the purpose of the club is to deliver maintenance fees to maintain the rights that were conveyed to you. Therefore, any disputes regarding the lease and the related fees (Section 176A of the Commonhold and Leasehold Reform Act 2002) can be transferred to an appropriate tribunal where matters fall within its jurisdiction. In these matters, the appropriate tribunal in England will be the First-tier Tribunal (Property Chamber) (“Tribunal”) and in Wales, it is the Leasehold Valuation Tribunal.
At the time the constitutions were drafted, fundamental rights were solidified and what was sold, was described as a lease with the expressed intention of, having all disputes determined by way of the statutory jurisdiction under section 27A of the Landlord and Tenant Act 1985
In support of this proposition, I refer to Woodfall: Landlord and Tenant, Volume 1 where it states in relation to Timeshare Agreements

The period of letting granted by a lease need not be continuous. Thus, an agreement granting the right of occupation of premises for three successive Bank Holidays was held to be an agreement for a single letting, although the periods of occupation by the tenant were discontinuous. Likewise, a lease is not invalid merely because it prohibits the tenant from being in personal occupation of (say) office premises at (say) weekends.
On principle, therefore, a time-sharing agreement granting a right to occupy a holiday cottage in England or Wales for one specific week in each year for a specific number of continuous years will constitute a lease if on its true construction, that is the inference which ought to be drawn.

Many such agreements are expressed at least for 80 years (or in perpetuity), and in such a case whilst the lease may be said to continue for 80 years, the interest created by it does not because it is discontinuous.
What is granted is the right to occupy for 80 holiday periods.

Section 149(3) of the Law of Property Act 1925 provides that with certain exceptions not relevant for present purposes a term, at a rent or granted in consideration of a fine, limited to take effect more than 21 years from the date of the instrument creating it is void.

It would seem that in the case of an 80-year agreement the right to a holiday week is void in each year after the 21st year.

See Smallwood v. Sheppards [1895] 2 Q.B 627, per Wright, J. Cottage Holiday Associates v. Customs and Excise Commissioners [1983] 2 W.L.R 861. There the question was whether the lease was zero-rated for VAT purposes as being for a period excluding 21 years. The agreement with the holidaymaker was expressed to be a lease and the lessor covenanted to keep the property in full repair throughout the 80 years’ duration of the agreement. Woolf J. held that the agreement, through a lease, was not for a period exceeding 21 years, but for 80 separate and discontinuous periods.

The reason for the choice of an 80-year period is no doubt because that is the maximum perpetuity period under the Perpetuities and Accumulations Act 1964. However, if each holiday period were vested in possession of the date of the lease (i.e. if the interest created were truly for more than 21 years) the rule against perpetuities would be inappropriate and a period greater than 80 years would be valid.

In Cottage Holiday Association v. Customs and Excise Commissioners, ante, at 866, per Woolf J referred to s149(3) of the Act of 1925 but found it unnecessary to decide whether the subsection applied. The subsection could not be avoided unless each holiday period were regarded as vested in possession at the date of the lease, but the consequence of drawing that inference would be that the interest created would be for more than 21 years, a consequence which would contradict the decision of Woolf J.

In respect to the Scottish timeshare
If the Timeshare rights conveyed are leases in 2012 a fundamental change in the law (regarding leases) came into existence by way of the Long Leases (Scotland) Act 2012 (“Act”). The Timesharing interests in the new act, grants a right to consumers in those long Leasehold titles (perpetuity) to convert the lease into ‘Ownership interests and the interests of the Land-Owning Resort developer will be extinguished after the 28th of November 2015.
The Act also operates to extinguish the interest of tenants under any leases superior to the leases which convert to ownership.
The leases which are affected by the Act are those: – a) whose original duration was for more than 100 years and with an annual rent of £100 or less.

As Timeshare leases are in perpetuity and the consumers were awarded the rights of ownership after the 28th of November 2015 some clubs began to alter the Clubs constitutions and/or the withdraw the leases which may have extinguished the rights conveyed in the Act 2012.

It can be considered, if not inferred that if a resort or a Club knew that changes in the Law would come into effect on the 28th of November 2015 and the committee avoided the rights that would be conveyed, ‘bad faith’ might have been deployed thus, damages might well flow, including the termination of the contract.
In the case of MRL and its conversion in 2014-15 Mr Webber claimed that the conversion was a ‘land grab’ and this eminent man’s insight might well have ‘Bang on the button’ as MRL may have (with the aid of its committees) thwarted/or avoided your rights, by converting the lease into property into points.

As the committee was required to preserve and protect its member’s rights, it could be averred they have been neglectful. Because of the changes in the Scottish laws, the English Government conducted a 6-week consultation on the issue and have now set out more details regarding its proposals to ban the sale of houses whereby that sale grants the buyer a long lease.

The proposals will not affect existing leases of houses or flats as the ‘Major changes that are proposed are regarding new houses and flats are sold in England’


Posted on: 25th October 2018