Timeshare Consumers Association

Fractional Holiday Ownership

Fractional Ownership is Timeshare in Disguise

“In essence there is little difference between timeshare and factional other than a fractional purchase is usually of a longer usage period each year, although owning a fractional may include owning a share in the legal title whereas timeshare does not. Both are within the same laws and guidelines” Richard Mackintosh, RDO Chairman, February 2010.

The total absence of any agreed, approved, definition of fractional and the increasing practice of many timeshare traders to “re-badge” their timeshare products as fractional, means that all the caveats that apply to timeshare also apply to fractional.
A number of traders promote their fractional product with claims of high resale values in the future based on the sale of the underlying real estate which would be shared amongst the fractional owners. But the few contracts so far inspected give little comfort that the share of the resale value will be any greater than 20% of the original purchase price – which is about the same residual value as peak season weeks in top quality timeshare resorts.
Fractional comes in a number of flavours, some of which may not provide any legal interest in the bricks and mortar of the accommodation. “Destination Clubs” or “ Group Ownership” are but two, although further names are expected to appear as traders attempt to distance themselves from “timeshare”.
A number of real estate brokers, from outside the timeshare industry, would like to see fractional given credibility as a balanced mix of “investment” and low cost, high quality, holiday usage. Whether they will be able to influence a market already dominated by the timeshare industry is open to question.
A major concern for consumers is that fractional purchases cost much more than timeshare. Sometimes ten times more. If the sales promises fail to materialise – as they have substantially failed to do in the timeshare business – then the resultant loss to the consumer will be much greater.
TCA advice:-

It is essential that prospective purchasers of a fractional take professional advice - covering both legal and taxation issues - before concluding an agreement. The potential loss if the sales promises fail could be enormous
Updated: March 2010