New Timeshare Directive
Better protection due to better rules
Consumers across the EU are set to benefit from greater holiday protection - when they buy and resell timeshare holidays, or timeshare-like holidays on cruise boats, canal boats, caravans and "discount holiday clubs" - under new rules agreed by the European Parliament on 22 October.
The aim of the proposed Directive is to further boost consumer confidence in the Timeshare industry (worth over €10.5 billion and responsible for more than 40,000 jobs across the EU) and to eliminate the rogue traders who cause problems for consumers and bring legitimate operators into disrepute.
Up to now, EU rules on Timeshare have given consumers basic rights with regard to clear information, the right to withdraw and change their mind, and a ban on deposits. The new Directive aims to tackle loopholes in the current rules.
New: timeshare-like products
Most importantly, it would extend the scope of the 1994 EU Timeshare Directive to cover new products which have emerged on the market – like discount holiday clubs, and "timeshare-like" holidays on cruise boats, canal boats and caravans.
It would also extend protection to important areas like timeshare resale and exchange clubs.
The new rules would ensure that consumers are equally well protected across the EU and will create a level playing field in the market for timeshare and certain other holiday-related products.
What is timeshare?
Timeshare is the right to spend a period of time (i.e. one or more weeks) in a holiday property for a specified period of the year for three years or longer. Timeshare holidays are very popular in many EU countries. For example, the UK, Sweden, Germany, Italy and Spain, have some of the highest number of consumers buying timeshare holidays. Spain, Portugal, Germany, Italy and France have substantial domestic timeshare industries. Countries like the Czech Republic, Hungary and Poland show a growing market for consumers buying timeshare holidays.
The 1994 current Directive protects consumers' interests by:
- Giving buyers the right to information in a prospectus before signing a contract.
- Seeking to prevent 'pressure selling' by allowing for a cooling-off period (right of withdrawal) of at least 10 days.
- Prohibiting operators from taking deposits from buyers during the cooling-off period.
Why did the Commission revise the current law?
Since the adoption of the Directive in 1994, there have been major developments in the marketplace. New products and contracts have been developed that fall outside the scope of the legislation. Therefore, consumers who buy them do not get the same rights or levels of protection. For instance, the new products may allow the consumer to use different kinds of property (e.g. cruise boats, caravans or canal boats), or the contracts may last for less than three years. A further problem is that the re-sale and exchange of timeshare schemes are not covered by the existing rules.
What will the new Directive cover?
The new Directive will replace the old one with a modern, simplified and coherent framework, covering timeshare and long-term holiday products, as well as exchange and resale. The proposal will extend the scope of current rules to cover:
- Shorter term contracts – contracts of less than three years will now be covered.
- Moveable property – the rules will cover contracts for timeshare on property such as canal boats, caravans or cruise ships.
- Long-term holiday products – these include holiday discount clubs, where consumers pay for instance 3,000 euro to get a password to a website, where they are promised "huge discounts" which are often misleading, on holiday accommodation, flights and rental cars. With the new rules, the traders will not be able to request the entire payment for the membership of such clubs upfront; consumers will be able to pay instead by yearly instalments.
- Resale of timeshare products – many timeshare owners are approached by commercial agents who ask for a fee in return for selling their timeshare.
- Exchange of timeshare products – some timeshare owners pay an additional fee to join an exchange club, where they can swap their week in e.g. the Canaries for a week in the Alps. Additional information requirements should ensure they get a realistic picture of the offer and they do not end up being disappointed.
The lack of regulation of long-term holiday products, re-sale and exchange schemes means that they are not covered by rules on cooling-off periods, deposits and consumer information. Consequently, consumers who sign up under pressure have little scope to change their mind.
The new Directive will enhance consumer rights in the market for timeshare and long-term holiday products, and create a level playing field for the sellers of these products.
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