48 | BUSINESS Fractional report
FRACTIONAL
normally conducted on the resort’s own premises.” “The person buys more weeks, completes the paperwork, but gets nothing back to show for it – the deeds etc – just a week’s extra timeshare ownership.” In other words, the client has
been duped into thinking that he or she now owns a chunk of a property with full deed entitlement, but has in fact the have only extended the timeshare contract. According to Fergusson, ECCN will be “monitoring this situation over the coming months … it’s something we have noticed already - particularly with regard to a resort in Spain, where timeshare owners are sometimes being told that they will become part-owners of the resort.” “The summer holiday season
is her now and we often find that people tend to sign into such agreements when they’re on their summer holidays. This is why we want to urge people to treat these offers with caution.” A recent article in Guardian Money reports on a couple who feel they were mis-sold fractional ownership. “The couple,” says the fi nancial newsletter, “who declined to be named because
they are about to go into arbitration with the resort concerned, paid £20,500 for an extra week’s timeshare in Tenerife on the basis that this would convert their investment from timeshare into fractional ownership. The salesman told them that it would consequently be worth more and be easier to sell on – but no paperwork has been supplied, and it now looks as though they have simply been sold a further week’s holiday access at the resort.’ “We were told we were upgrading our investment to fractional ownership, but it wasn’t true. We’ve been duped and we are desperate to get our money back,” says the woman concerned. Piers Brown of
FractionalLife.com advises the industry to insist that clients use a proper lawyer who will ensure that a deeded interest in the property is being transacted.
ECCN can be contacted at ecc@
tsi.org.uk if you would like more information on their campaign. Sue McNicol, who runs the timeshare committee of the RDO (the Resort Development Organisation) says “complaints like these are very rare indeed. It does not make sense that timeshare salesmen would have ‘switched tactic’ to sell fractionals, particularly as there’s new legislation
coming in next February that will cover timeshare and fractional ownership, meaning that a 14 day cooling off period plus a ban on deposits will be mandatory. Fractional ownership has an excellent reputation and I have no doubt this will continue.” “If I was on holiday,” she adds, “I’d be more worried about being pressured into signing up to a holiday club. You’re not buying into anything other than a bit of fresh air and many of these companies use a wide variety of underhand methods to persuade you to part with your money.” A word of warning here though. These schemes must not be confused with “Private Residence” or “Destination Clubs,” run by big hotel groups such as Ritz-Carlton, Hyatt, Marriott or Four Seasons.
They have been hugely popular in the US for decades. Members pay a one-off membership fee and then an annual maintenance fee in return for between four and six weeks in various properties around the world. These clubs offer equity and non-equity models – the key difference being whether or not members actually own a stake in the properties.
Property professionals should deal with these sort of companies
www.opp.org.uk | AUGUST 2010
exclusively. One of the fi rst such clubs to come to Europe was London’s 47 Park Street – a town-house property in Mayfair that has been converted into 49 one- and two-bedroom residences. Owned by Marriott and launched in 2003, the property has 637 fractions, with each individual residence split into 13 fractions. Members pay a one-off fee of between £111,000 for a one-bedroom residence and £255,000 for a top two-bedroom residence, plus an annual maintenance fee of between £5,400 and £5,800.
And two companies that offer fractional ownership, in its true sense, in Europe are Rocksure and Timbers Resorts. Rocksure Property was launched in 2006 and offers ‘A House for All Seasons’. Members subscribe to a fund for eight years, paying a one-off membership fee at the start and an annual maintenance fee for the following seven years. The fund then buys six four- and
fi ve-bedroom houses in select locations around the world, where each member can spend four rent-free weeks a year. After eight years, the properties are sold and the members get their membership fee back, plus interest.
Rocksure takes a 17.5% share of the
profi t … but only when each member has achieved a 20 per cent return on their investment.Rocksure’s fi rst fund, Alpha, closed in July 2007 with £5.7 million, 36 units and six properties – in the Algarve, Morocco, Brazil, Thailand, New York and the Rockies, each worth £800,000. Currently the Bravo Fund has sold 21 units at £189,000 each out of a possible 40. Timbers Resorts has moved into Europe for the fi rst time with Castello di Casole, a 4,200-acre estate in Tuscany. The Castello has been converted into a 41-suite hotel and the old farmhouses and outbuildings into villas for both whole and fractional ownership. In total there will be 26 villas, ten of which will be owned outright and the rest divided into ten fractions, each costing between €345,000 and €590,000.
There are numerous fractional sessions at the OPPLive conference in October. For more details please go to
www.propertyinvestor.co.uk/london/
Beware | Make sure that your client does not fi nd any skeletons in the closet when doing a fractional deal overseas
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