AUGUST 2010 |
www.opp.org.uk WORDS | Geoff Hadwick
EU body gets tough on fractional scams
Timeshare sharks are starting to mislead buyers into thinking that they are buying a deeded fractional property … when they’re not. The European Union’s consumer watchdog is watching closely. Geoff Hadwick reports on a series of misconceptions that could easily ruin the whole reputation of the industry.
hared fractional ownership - whether it is a group of people joining forces to buy a villa in Florida or a supercar in Italy - is a real phenomenon. And, as we all know, a lot of people think that it is about to change the overseas property sector. You can buy a fraction in anything from a yacht to a racehorse, from a piece of art to an executive jet. It seems to be a zeitgeist thing and the concept is booming.
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The problem for the overseas property sector is in meeting the expectations of its clients and making sure that the sector does not get the poor reputation that timeshare investments generated in the 1980s. “I just wish that we would all stop using the word fractional” says Brett Gregory-Peake, managing director of consultants Frank and Earnest. “I think that we should just talk about ownership. Simple as that.” Gregory-Peake argues that the majority of overseas property buyers rarely spend more than a fraction of the year at their holiday home anyway, so why make a big issue of the fact that you don’t own all of it for all of the time?
“I seriously doubt whether anyone really spends more than a quarter of the year in an overseas property that they have bought for leisure or recreational purposes” he says.
He would like to see the industry work much harder to emphasise the deeded ownership angle in as straightforward as way as possible and put some genuine distance between
the fractional offering and the much- maligned concept of timeshares. He is right. Several national newspapers in Europe have recently warned their readers to keep a careful eye on “hard-sell” fractional sales promotions following a push from the European Consumer Centre Network (ECCN.) They fear that there is the potential for confusion and mayhem out there.
The ECCN is made up of 29 centres throughout the EU and is designed to provide advice and support to
consumers who are shopping cross- border within the internal market. It advises consumers who have a dispute with a trader based in another
“There is the potential for confusion and mayhem out there.”
European country, and it has been warning holidaymakers to be careful this summer about approaches from timeshare sales people who are
muscling in on the fractional sector. ECCN adviser Laura Fergusson says “fractional ownership in itself is not wrong, but consumers can fall foul of those who misrepresent what is being offered and who indulge in unfair commercial practises. People just need to tread carefully.” “Take this scenario,” she says. “Someone who already owns a number of weeks timeshare is told that if they buy more, they can convert those weeks to ‘fractional ownership.’ A key element is that the transaction is
FRACTIONAL Developer profi le
BUSINESS Fractional report | 47
The European Parliament | Offi cials in Brussels are not amused as timeshare sharks misrepresent the fractional sector
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