What is a timeshare?￼
Shared home ownership models offer the flexibility buyers need to split their time between a primary residence and a favorite second home destination. Timeshare was the pioneer in that, so we want to explain to you what exactly it is, how it works, and its main pros and cons.
After a long period of restrictions across the globe, the air is finally starting to clear and people are coming out to play. And to buy second homes. The Spanish real estate market for buying second property in Spain has been picking up in the last year and the fact lifestyles are becoming more flexible and mobile means people are looking for ways to split their time between a primary residence and a destination home.
According to idealista, the most important online property site in Spain, sales of homes to non-resident foreigners in Spain grew by 51% in 2021, with 43,827 transactions closed, as reported by the Ministry of Transport in Spain.
There are different options available in the market for buying a second home in Spain that focus on flexibility and profitability. Timeshare is one of them and has been around for a while, but people don’t usually understand their pros and cons.
Keep reading below to find out more about timeshares, as well as new second home ownership models available in the market these days.
What exactly is a timeshare?
The most common definition of a timeshare is a shared ownership model of vacation real estate where buyers purchase allotted periods of time to use the property, usually one week per year. The company owns the home or apartment, and you own the right to use it.
Timeshares can be bought from different types of properties such as resorts, condominiums, apartments or campsites.
Timeshares were introduced in Spain mainly in the 90s. They offered a good alternative to people who loved visiting the same destination every year, wanted to enjoy a full range of amenities during their stay and wanted to guarantee themselves a spot away from booking competition. Other benefits included switching destinations with other locations within the same resort chain.
The use of the property is usually divided among 52 shareholders, That means each buyer can enjoy a maximum of one week per year.
Let’s dive into the different types of timeshares.
Types of timeshare
Not all timeshares are the same, and it really depends on the type of contract you sign and the small letter included in it. The two main types of timeshares are the following:
- Deeded timeshare or “fee simple” contract: through this type of timeshare buyers can acquire ownership by means of a share. You can resell or rent your timeshare
- Non-deeded timeshare or “right to use contracts”: In this type of contract, buyers get the right to use the property for a number of years, but they don’t own the place. When the contract is finished, the property goes back to the original owners.
As far as the way the timeshare is used, the main difference lays in how you can use the time at the destination:
- Fixed week system: owners use the unit the same week every single year. Usually users can rent out their time or exchange it with other owners
- Floating week system: this system allows more flexibility, since you can choose the week you want to use during the year. As the same time it is more competitive, especially during high-season
- Right-to-use systems: As the name says, it is basically a lease that you sign with the developer, who maintains ownership of the property. You get the right to use the property for a fixed amount of years, which can go from 20 to 99 depending on the contract you sign.
- Points-based-system: in this system you buy a number of points, which you can exchange for reservations at timeshare properties. This type is especially used with resorts or hotels which have different locations worldwide. Depending on the type of property, number of days booked or the destination, you might need more or fewer points. This system is also called vacation clubs.
How much do timeshares cost
The typical entities that offer timeshares are big hotel chains and resorts. In Spain, the main types of entities that have been selling timeshares since the 90s are hotel and resort chains like Marriott or Hyatt, or specialized companies like RCI.
Usually you need to pay an upfront amount, which often starts at 10.000€ and can go higher, and then you need to pay annual fees for maintenance of the property. There are additional fees like any repairs that have to be done to the resort, or any damages to the property.
How timeshares became painful
The most controversial part of timeshares is the type of contracts that buyers have been signing in the past, which put them under an obligation to pay annual fees and other maintenance costs for up to 30 years or longer. They are also very hard to resell. Selling one week a year at a holiday destination to another person in exchange for maintenance fees is not that easy to do.
Last, a lot of criticism for this time of vacation home model is that there is little to no return on investment whatsoever. They often become a financial burden with no real resale value.
In Spain, the Supreme court passed a law in 2015 in which it was declared that most timeshares in Europe were illegally sold. Many timeshare holders were able to claim back their investment and that’s how the really bad reputation of the product was made official. Many timeshare companies became bankrupt.
Fractional ownership is a better alternative
VIVLA’s fractional ownership offers a true flexible alternative to buyers that is actually profitable to them. Its main value stems from the fact that buyers purchase unique homes and villas in Spain’s most beautiful locations, and they can own anywhere from ⅛ to ½ fraction of the home.
Each fraction gives owners 6 full weeks of use per year together with a full list of amenities. It is a more flexible way to own a second home while avoiding the burden of full ownership, since you split all related costs.
Homes come fully managed so owners can have the comfort of a hotel or resort, but the mindset of owning their own place and calling it home. We also have partnered with the best legal and real estate firms in Spain in order to serve our customers with ongoing support.
Contact VIVLA today and find out about a new way to fully own a property in a more flexible way, by paying only for the amount of home you need to use.