Timeshare complexes (national scheme)
This publication is intended for Valuation Officers. It may contain links to internal resources that are not available through this version.
The concept of timeshare in England and Wales is now well established with a large number of developments, both conversion and new build across the country, but with concentrations in favoured tourist locations. Additionally the Timeshare concept has spread to other forms of leisure such as boating and fishing.
The basic concept is that a development company provides dwelling units and periods of time are sold to purchasers who acquire rights to occupy, sell, let, exchange and bequeath. The occupation period normally sold is one week in one accommodation unit with purchasers buying weekly certificates for one or more weeks.
The week purchased will be identified by a number from 1 to 52 and the exact dates for each week are shown on a yearly calendar giving the dates for each particular week for a number of years in advance. Normally 1 or 2 weeks are set aside for maintenance.
The Timeshare purchaser will be sold the right to occupy the same week over a period of years which in practice varies from 25 to 200 years but the majority of Timeshares fall in the 40 to 80 year bracket.
Normally the Timeshare owners’ rights are protected by a Trustee, usually a financial institution, to whom the developer has transferred either the freehold or long lease in the Timeshare accommodation.
On purchase, an owner will normally become a member of the property’s Timeshare Owners Club (Members Club) and it is by virtue of this membership that the Timeshare purchaser secures his right of occupation. The Club will normally have a committee comprising a representative of the developer and of the management company, as founder members, and additional members appointed at the AGM by the Timeshare owners.
The day to day management, maintenance and repair of the Timeshare accommodation will usually be conducted by a management company. Often this company will be appointed by the developer at the outset. In recent years, where developers have gone into liquidation, there are examples of the Members Club buying out the developer or the Management Company and running the complex themselves. The purpose of the Management Company is to carry out management and maintenance on behalf of the Club and its members, but it is often a creature of the developer/operator and sometimes Timeshare Clubs have no right to dismiss the company and appoint another.
The purchase of each week brings with it an obligation to pay the management charge for that week. The management charge for a particular unit of accommodation will normally be the same for any week throughout the year. This is payable whether or not the timeshare holder actually uses the accommodation for the week that they own in any particular year.
There are several schemes by which Timeshare owners may exchange weeks with other Timeshare owners at other developments, either in this country or abroad, the most well-known one being that of RCI (http://www.rci.com/). As an aid to exchange, weeks are normally described as being red, white or blue in descending order of popularity.
List Description: Timeshare Complex and Premises
Primary Description Code: CC7
SCAT Code: 281 Suffix N
This class of property is valued by the National Valuation Unit.
The Class Co-ordination Team has overall responsibility for the co-ordination of this class. Contact details are in VP and CCT Members . The team is responsible for approach, accuracy and consistency of valuations. The team will deliver Practice Notes describing the valuation basis for revaluation and provide advice as necessary during the life of the rating lists. Caseworkers and referencers have a responsibility to:
-
follow the advice given at all times
-
not depart from the guidance given on appeals or maintenance work, without approval from the co-ordination team
-
seek advice from the co-ordination team before starting any new work
Legislation governing the sales of Timeshares is contained within the Timeshare Act 1992 as amended by the Timeshare Regulations 1997 SI 1081.
Under Section 2E of the Local Government Finance Act 1988 the property is not domestic property if it is Timeshare accommodation within the meaning of the Timeshare Act 1992.
5.1 Rateable Occupation of Timeshares
Where a Timeshare complex is run by a members Club, the rateable occupier is the Club Committee. An assessment of all the Timeshare accommodation units at any particular development should normally be entered in the List as a single assessment in the occupation of the Club Committee.
This approach differs from that in Scotland where the decisions of the Lands Valuation Appeal Court is that Timeshare units should be treated for valuation purposes as dwelling houses, with the Timeshare owners of each unit of accommodation being joint rateable occupiers. The unit of assessment in Scotland is therefore each individual Timeshare unit - i.e. each lodge/flat etc. The Scottish cases are considered not to have any applicability to the rating of Timeshare complexes in England and Wales.
Many Timeshare developments have built leisure facilities such as a swimming pool, squash court, bar, restaurant, café, tennis courts etc. Whether these are included with the Timeshare accommodation as one assessment depends on the facts in each case. The presumption will be that normally they will be treated as being in the occupation of the Club Committee unless it is clear both from documentation and from day to day management practice that the leisure elements are in the separate control of either the Timeshare developer or the Management Company. Separate occupation of the leisure elements may be evidenced by documentation showing that the Timeshare developer or Management Company have a separate lease or freehold rights in the leisure part of the complex and that separate accounts are kept for management and maintenance of the accommodation and leisure parts. In small developments in particular it is unlikely that the facts will support separation of the accommodation units and the leisure element.
5.2 Holiday Property Bond
Holiday property bonds are insurance and share based schemes by which the purchaser becomes a Bondholder by the purchase of units, each of the weeks in the various properties being priced in units. (For The Holiday Property Bond, the leading national organisation of this type, the price is £1 per unit.) Holiday property bonds have nevertheless come within the powers of the Timeshare Act 1992 by virtue of the 1997 Timeshare Regulations. The price payable for a week is similar to that of Timeshare, but the bond entitles the purchaser to use one of a portfolio of properties depending on the amount of units bought, and the point price for the particular property. Thus it differs from Timeshare in that the bondholder is not tied to a particular property or even to a particular week, as is a Timeshare owner.
The number of points needed for each property for each week of the year depends on the value of the property and the scheme provides for the bond holder to en-cash and surrender the bond very much in the manner of a conventional life insurance policy or unit trust.
There is no equivalent of the Timeshare Members Club at each property and the rateable occupier will be the operating property bond organisation.
Number of Single Bed Spaces - In calculating bed spaces, double and twin rooms will count as two SBSs and a single room as one. A bunk bed occupying a single size room will count as one space. A bunk squeezed into a double room to form a ‘family’ room should be ignored, as should ‘put-you-ups’. With regard to flats with no separate bedrooms, where there is a ‘bed-settee’ in the living area then this should be included as a single bed space.
In all cases plans and surveys should be stored in the property folder of the Electronic Document Records Management (EDRM) system.
8.1 Basis of Valuation
Form of return (FOR) VO 6049 is specifically for Timeshare accommodation. Details of rent, gross receipts and tariff are requested. Very few timeshare units are let on an open market rental basis. Consequently it is not normally possible to establish a scheme based solely on rental evidence.
As for previous lists, there is no known useful rental information. It is therefore necessary to turn to the R&E basis. The recommended method is to follow that adopted for the 2010 rating lists and adopt an R&E approach where this is possible, and to compare assessments on the basis of RV per unit and RV per bedspace. In most cases where an R&E valuation is not reliable it will be possible to make a comparison on a unit or bedspace approach. Where leisure and club facilities exist, such as swimming pools, sports halls, golf courses, restaurants etc, an end RV addition of up to 20% should be made, dependant on quality and extent. Regard should be had to the local self-catering scales, as for previous Lists.
8.2 Calculation of Bedspaces
When calculating the number of bedspaces, a double or twin room should be taken as 2 bedspaces, and a single room as one. A bunk bed occupying a single room should be taken as 1 bedspace. A bunk bed squeezed into a double room to form a ‘family’ room should be ignored, as should ‘put-you-ups’.
To refine this further, enabling differing sized accommodation units to be equated in value more closely; an adjusted SBS basis should be used:
| Unit type | Single Bed Spaces(SBS) | Factor / SBS |
| I Double Bedroom Studio | 2 | 1.15 |
| 1 Double Bedroom Apartment | 2 | 1.25 |
| 2 Double Bedroom, one bathroom apartment | 4 | 1.00 |
| 2 Double Bedroom, two bathroom apartment | 4 | 1.10 |
| 3 Double Bedroom apartment | 6 | 0.80 |
| 4 Double Bedroom apartment | 8 | 0.70 |
Thus a double-bedded studio would then be factored at 2.3 adjusted SBS (ASBS), a 3 double bedroom apartment at 4.8 ASBS.
All valuations should be entered onto the Non-Bulk Server (NBS), Class - Timeshare Complexes (Scat Code 281).
Other support available:
-
Survaid
-
Class Co-ordination Team
1. Market Appraisal
The location, quality, character of the development, the level of annual maintenance charge and the nature of the legal agreement are the factors which combine to influence the demand for, and value of, a timeshare investment.
In the recent past the capital value of some timeshare investments have fallen as a result of economic uncertainty, increasing annual maintenance liabilities and the existence of onerous contractual arrangements. The diversity of both property type and legal arrangement that exist within the timeshare sector has, however, ensured that not all properties have been affected in this way. Capital investment in conversion and new build developments, programmes of refurbishment, the flexibility offered by an increased use of ‘points based’ ownership schemes and the introduction, by some operators, of shorter contractual terms have helped improve the general appeal of timeshare ownership.
The demand for quality, well located properties remains strong and this is reflected in the levels of value that are currently being achieved; there is no evidence to suggest that this position will change in the immediate future.
Whilst certain operators are investing in their market share with improvements and new accommodation the supply is impacted by the closure of other developments one of which has reverted to residential use yet retaining some self-catering accommodation in the grounds.
2. Changes from the last Practice Note
There are no significant changes to the approach that was adopted for the 2017 Rating List.
3. Ratepayer Discussions
There have been no 2023 List discussions on this class of property.
4. Valuation Scheme
In the absence of reliable rental evidence and in the expectation of there not being reliable receipts available valuations should be prepared using the comparative approach, with assessments being compared on a RV per unit or RV per bedspace.
The price per unit or the price per single bed space that is adopted in this approach to valuation should reflect the location, quality and physical characteristics of the property.
Given the similarities that exist between some timeshare properties and other types of property that are used to provide short stay accommodation regard should be had, when preparing a valuation, to the approach adopted for these different classes of property.
5. The impact of COVID 19
The COVID-19 pandemic impacted timeshares in the period leading up to the AVD (1 April 2021). Details of the various restrictions implemented by statute in response to the pandemic, and of the vaccination rollout, can be found online. In February 2021 the UK Government published its Roadmap out of lockdown for England which set out four steps to relax restrictions. Step 1, easing restrictions on outdoor gatherings, had already taken place by the AVD.
The later three stages of the Roadmap for England included
- the opening of outdoor hospitality, and non-essential retail (Step 2, no earlier than 12 April);
- most legal restrictions on meeting others outdoors to be lifted, opening of indoor entertainment venues such as cinemas, casinos and bingo halls (Step 3, no earlier than 17 May 2021); and
- the removal of remaining restrictions on social contact (Step 4, no earlier than 21 June).
Subsequent to 1 April 2021 steps 2 and 3 took place as planned, but Step 4 was delayed four weeks to 19 July.
The situation in Wales, both leading up to and after the AVD, was similar although not identical.
When considering the proposed values, the effects of the COVID-19 outbreak need to be taken into account as they would have been anticipated by the parties at the AVD.
1. Market Appraisal
The location, quality, character of the development, the level of annual maintenance charge and the nature of the legal agreement are the factors which combine to influence the demand for, and value of, a timeshare investment.
Since 2008 the capital value of some timeshare investments have fallen as a result of economic uncertainty, increasing annual maintenance liabilities and the existence of onerous contractual arrangements. The diversity of both property type and legal arrangement that exist within the timeshare sector has however ensured that not all properties have been affected in this way. Capital investment in conversion and new build developments, programmes of refurbishment, the flexibility offered by an increased use of points based ownership schemes and the introduction, by some operators, of shorter contractual terms have helped improve the general appeal of timeshare ownership.
The demand for quality, well located properties remains strong and this is reflected in the levels of value that are currently being achieved; there is no evidence to suggest that this position will change in the immediate future.
2. Changes from the last Practice Note
There are no significant changes to the approach that was adopted for the 2010 Rating List. The majority of valuations will continue to be produced using the comparative approach with assessments being compared on a RV per unit and a RV per single bed space basis.
3. Ratepayer Discussions
There have been no 2017 List discussions on this class of property.
4. Valuation Scheme
In the absence of reliable rental evidence, the recommended valuation approach is one based on a full analysis of receipts and expenditure.
Where reliable receipts and expenditure information is not available valuations should be prepared using the comparative approach.
The fair maintainable trade, the levels of adjustment, the percentage range, the price per unit and the price per single bed space that are adopted in the valuation should reflect the location, quality and physical characteristics of the property.
Given the similarities that exist between some timeshare properties and other types of property that are used to provide short stay accommodation regard should be had, when preparing a valuation, to the approach adopted for these different classes of property.
1. Co-ordination Arrangements
Timeshare complexes and Holiday Property Bond are a Specialist Rating Unit (SRU) Class. Responsibility for ensuring effective co-ordination lies with the SRUs. For further information see Rating Manual - Section 6 - Part 1
For R2010 Special category code 281 should be used. As an SRU class the appropriate suffix letter should be S.
The Primary Description Code will normally be CC7 – Time Share Complex and Premises; Holiday Property Bond properties should be given the Primary Description Code CH1 - Self Catering Holiday Units and Premises but given the SCAT Code 281S so that they can be identified with Timeshares.
Separately assessed health and fitness clubs within a Timeshare complex should be given Scat Code 259S or 260S as appropriate and the Primary Description Code LC2 see Rating Manual: Section 6 - Part 3 - Section 965.
2. Previous Rating Lists
For the 2000 and 2005 Rating Lists valuations were made having regard to the receipts and expenditure (R&E) approach, and to comparison by RV per unit and RV per bedspace (SBS). The R&E approach was used where there was sufficient reliable evidence of weekly lettings, income, occupancy, discount from advertised tariff and costs to enable an R&E valuation to be adopted. In practice this was limited, as most timeshare complexes have few if any unsold weeks, so any letting operation tends to be small-scale.
Where an R&E approach was not appropriate, comparison was made using a RV per unit and RV per bedspace comparison with settled timeshare assessments. A check was also undertaken with reference to the relevant local office self-catering scale, although as most timeshare complexes are of better quality, are generally very well-located, often have access to high quality leisure facilities and will have economies of scale, assessments of timeshare complexes will normally devalue to figures above the top of local office self-catering scales.
3. Valuation approach for 2010 Rating List
3.1 Valuation
As for previous lists, there is no known useful rental information. It is therefore necessary to turn to the R&E basis. The recommended method is to follow that adopted for the 2000/2005 lists and adopt an R&E approach where this is possible, and to compare assessments on the basis of RV per unit and RV per bedspace. In most cases where an R&E valuation is not reliable it will be possible to make a comparison on a unit or bedspace approach. Where leisure and club facilities exist, such as swimming pools, sports halls, golf courses, restaurants etc, an addition of up to 20% should be made, dependant on quality and extent. Regard should be had to the local office self-catering scales, as for previous Lists.
3.2 Calculation of Bedspaces
When calculating the number of bedspaces, a double or twin room should be taken as 2 bedspaces, and a single room as one. A bunk bed occupying a single room should be taken as 1 bedspace. A bunk bed squeezed into a double room to form a ‘family’ room should be ignored, as should ‘put-you-ups’.
To refine this further, enabling differing sized accommodation units to be equated in value more closely; an adjusted SBS basis should be used:
| Unit type | Single Bed Spaces (SBS) | Factor / SBS |
| I Double Bedroom Studio | 2 | 1.15 |
| 1 Double Bedroom Apartment | 2 | 1.25 |
| 2 Double Bedroom, one bathroom apartment | 4 | 1.00 |
| 2 Double Bedroom, two bathroom apartment | 4 | 1.10 |
| 3 Double Bedroom apartment | 6 | 0.80 |
| 4 Double Bedroom apartment | 8 | 0.70 |
Thus a double-bedded studio would then be factored at 2.3 adjusted SBS (ASBS), a 3 double bedroom apartment at 4.8 ASBS.
3.3 Comparison with Self-Catering Properties
It is expected, when compared on a unit, or bedspace basis, assessments of the best timeshare complexes will normally devalue to figures above the top of local office self-catering scales to reflect their better quality, location, facilities and economies of scale.
4. IT Support
The development of a new facility on the Non Bulk Server (NBS) should enable input of factual data to achieve valuations that follow the recommended approach for time-share complexes. All valuations should be entered onto the NBS under the relevant Scat Code