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Timeshares

A long-term commitment in shared holiday time

Page reading time: 5 minutes

Timeshare schemes are a form of ownership or right to use a particular property or properties for holidays.

They may seem like a good alternative to paying for a holiday, but it’s important to understand how they work before you sign up. They are a long-term commitment and can be hard to sell.

How timeshares work

There are two types of timeshare schemes.

Timeshares vary in price depending on the:

Timeshare use can cost more in peak periods, such as school holidays or around public holidays. You may be able to rent your timeshare property out if you don't plan to use it. Depending on the type of timeshare, you can also 'swap' or 'bank' your timeshares through a timeshare website.

Timeshares are a financial product

Timeshare schemes are a type of managed fund. This means that the scheme operator must:

Before you buy into a timeshare, check the company has an AFS licence on ASIC's Professional Registers Search. If they don't have one, don't deal with them.

What to be aware of with timeshares

Before you sign up to a timeshare membership, fully understand what you're getting. It’s important to be aware of each stage of the process and what your rights are.

The process outlined below is based on ASIC research into the consumer experience of timeshares and ongoing monitoring of the industry.

The approach

  • You may be approached on the street and offered a gift to attend a seminar.
  • You’re caught unprepared and may have little awareness of what timeshares are.
  • Alternatively, you may see an advertisement online, or receive a targeted invitation.

The sales presentation

  • You attend a sales seminar, with incentives to buy and easy access to finance. There are strong, persuasive sales techniques.
  • You are not given time to understand the product and make sure it’s suitable for you.
  • You may have been given financial advice, but it’s disguised as ‘general information’.

The purchase

  • You’re encouraged to make a quick decision and buy a timeshare on the day.
  • Timeshares can be a large sum of money. The upfront cost of a timeshare can be over $20,000.
  • Banks don't generally lend money to buy into timeshare schemes. Scheme operators may offer credit to help you buy a timeshare, but interest rates can be high.
  • The Product Disclosure Statement (PDS) explains the ongoing fees and costs of a timeshare.
  • The contracts are long-term and can be over 60 years long. They are often sold as investments you can pass on to your family.
  • Consider if your family would want or could afford the ongoing costs of a timeshare.

You have a cooling off period!

You have the right to a 7-day cooling off period, or 14 days if they are not a member of the Australian Timeshare and Holiday Ownership Council. If you change your mind, tell them in the way described in the PDS, usually in writing within this time – via email or letter.

You may miss the cooling-off period because:

  • It’s too short
  • It ends before you return from a holiday
  • You don’t know it exists

Timeshare memberships

  • Timeshare memberships can have complex rules and limits.
  • You might not be able to use the timeshare how you want, or there are restrictions on what you can do.
  • There’s an annual maintenance fee for the property, even if you don't use it, which may increase over time.
  • There’s also a membership fee each year.
  • There are limited options if your circumstances change.

Difficulties with timeshare use

  • Timeshare investors may have difficulty accessing properties.
  • The timeshare membership may not meet expectations and needs.
  • Operators encourage you to upgrade and purchase more points.
  • Spending more may not be suitable for your situation or resolve the issues.

Getting out of a timeshare

  • Membership is long or indefinite. The main way to get out of a timeshare is to sell or transfer it.
  • Timeshares can be hard to sell.
  • Until you exit a timeshare, you still must meet the ongoing costs. If you stop paying, you may be in breach of contract and could face legal action.

Family transfer

  • Membership term of a timeshare is expected to outlast the life of the member.
  • You will transfer financial liability to your estate and perhaps risk transferring it to someone who may not be able to afford it.

Things to do if you are looking at a timeshare

If you’re considering a timeshare, here’s a list of things you can do to make sure you understand the approach and your options.

  1. Be ready for a persuasive sales pitch – Spot the signs of high-pressure sales techniques so you know what to expect.
  2. Take your time – There is no rush to make a decision on a timeshare. Give yourself time to think about the decision and discuss it with someone you trust before you commit.
  3. Change of mind – If you change your mind during the cooling-off period, tell them in the way described in the PDS, usually in writing via email or letter, before the end of the period.
  4. Add up the costs – Take time to consider the costs. Add them up and compare these against other holiday options. Weigh up if you will use the holiday property enough to justify what you pay.
  5. Borrowing money to buy – If you are borrowing from the timeshare provider, be sure to read and understand all the terms of the credit contract. Before you sign, check the interest rate, all fees, cost of repayments and the cooling-off period. Check they're licensed to provide credit by searching ASIC's Professional Registers Search.
  6. Getting out of a timeshare – Consider what you would do if your circumstances change or timeshare membership fees increase. If you decide to sell, make sure you sell through reputable brokers or resellers and be careful of scam websites.

If you’re in financial hardship, ask your provider to let you out of the scheme. Each provider will assess the owner's situation and will require evidence of hardship. They are under no obligation to release you from the contract.

If you have a timeshare complaint

Timeshare operators must be members of an external dispute resolution scheme.

If you have a dispute that involves a timeshare operator, contact the Australian Financial Complaints Authority (AFCA) to make a complaint and get free, independent dispute resolution.