The article being discussed is typically the most argumentative area in timeshare as many consumers believe the fees levied are excessive and increasing every year. By way of draconian and downright unfounded estimates, some resorts severely charge high levels of maintenance fees each year and every year without any justification to how these fees were arrived at. Consumers are informed and expected to pay without any questions being asked.

If consumers considered their own household annual budget for general repairs and upkeep paired with the maintenance fees of their timeshare it becomes pretty obvious that something is not right.

After taking into account the amount it costs property owners each year maintaining their homes and using an independent assessor like the Inland Revenue, they are quite happy to grant a maintenance allowance of 10% from the rentable value of a property which you may let out to others. They determine the 10% is a reasonable sum to offset the cost of maintaining the rented property. Nowadays in most cases a timeshare is a right to occupy, just like a rented house. When renting a house, you occupy it for 52 weeks out of the year, however, in respect to timeshare, you attain this right with others, the same right to occupy, but that occupation is collectively owned with others. Therefore, you can occupy 1/52 of a year, i.e. 1 week. When you factor in others then of course the whole cost is divided between all the owners.

So, it’s simply about the maths and that way consumers can determine whether or not the maintenance charges claimed by the resort are reasonable or indeed real.

We are going to use a 1-bedroom apartment to show you how the maths work. This type of holiday apartment rents out in Spain and the UK typically for £500.00 per week over a 12month period. That sum amounts to a rental income of £25,000 per year. Therefore, by using the let’s say the Inland Revenues assessment guide, the claimed reasonable maintenance allowance is 10%, this accords to £2,500 per year or in segments of weeks, £50.00 per week.

In such cases as resorts there will be service costs such as, heating lighting etc., therefore they too, must be added in, a reception will need to be maintained, a laundry service provided and amenities, like heating, lighting, rates and other departmental costs will follow, to ensure the holiday experience is delivered. So, in order to obtain a fair assessment of maintenance cost we are required to make further allowances. What is a variable and sometimes significant is the particular cost attracted and attributable to unidentifiable costs associated from resort to resort and from location to location.

Firstly, let’s simply take some known costs such as lighting, heating, laundry, rates etc.

Allowing around £20 a week for electricity and water, £10 for internal apartment amenities and £20 pounds for apartment equipment such as, fridges, air-con cooker, including local council tax rates which are around £10, we agree this is more than a reasonable estimate.

In respect to maintaining the pool, gardens ground, communal areas and reception an   additional £60.00 per week per apartment is more than generous too.

Therefore, the total costs are £120.00 per week per apartment. Calculating a yearly cost, you need to multiply the individual cost of £120 by 50, we only mention 50 knowing there are 52 weeks in the year but clearly if maintenance was undertaken it would interfere with enjoyment, so the apartment could not be occupied all the time, bringing the total running cost to £6000 per year.

On top of this cost will be overheads and head office costs which generally work out at 25% of onsite costs, therefore a further £2,125 can be added which accrues to £8,125 per year. In addition to profit, again around 15 % this is a further £328.75.

ABC Lawyers have looked into this and see that therefore, the annual cost should not exceed £8,453.75 divide this by 50 occupied weeks £169.07 per week. Again, some resorts will cost more, some less and factoring a contingency of say a further 25% the maintenance fee cost should no more that £200.00 per week.

How much do you pay? Has the resort obtained a pipeline of lifelong profits and are you paying for it?

See our recent post regarding timeshare exit.