"As property bond companies have to buy the buildings to begin with, what they then do is timeshare by another name," argues Arlette Adler, membership secretary of the London-based Federation of Overseas Property Developers, Agents and Consultants.
HBC Management, which launched HPB in 1983, claims that more than 24,000 bondholding families are "enjoying the benefits of HPB" in 700 properties it owns in 25 locations, from Dorset to the Dordogne, from the Lakes, Scotland, Wales and Yorkshire, to the Algarve, Cyprus, Florida, the Spanish Costas and Tuscany.
"They have a choice which includes castles, manor houses, converted cottages, part of a medieval village near Siena, a 400-year-old rectory in Cornwall, and new-builds which give them free golf in Norfolk," says Nicholas Beamish, operations director and co-founder of HBC.
"And this summer, they'll also have a choice of 147 properties we've tenanted - mainly bigger villas with pools which are more seasonal."
It is the aspect of choice that provides the major difference between HPB and timeshare. So as not to muddy the water, HBC Management recently changed its name from Villa Owners Club Limited. "VOC got involved in timeshare to start with, until we realised there were so many problems inherent that we needed to come up with something else," Mr Beamish explains. "As some people thought VOC was still in timeshare, the name continued to cause confusion.
"HPB is not timeshare," he asserts, "in that investors are not buying proportions of single, specified units, leased or owned by companies in particular places, but are holders in unitised funds and collectively co-owners of two portfolios, one of properties and the other of securities."
Sales of the bond so far make the portfolios worth a total of pounds 170m, which is divided roughly 40:60, with returns from the securities covering overheads and the costs of running the properties, currently valued at between pounds 90m and pounds 100m.
The purchase and development of new properties - type and location largely determined by balloting all bondholders every two to three years - are funded by sales, either to new investors or the 40 per cent-plus of existing ones who "top up".
The vehicle through which the investment is made is a policy issued by an insurance company on the Isle of Man - where 90 per cent of HPB's assets are held by a trustee bank, says Mr Beamish, "to make sure no one can run off with them".
As a financial product, not only is HPB subject to PIA and FSA regulations, "but from the very beginning we've had a cooling-off period of 28 days" [twice what the law now demands of timeshare] so that any clients who are misled by our salesmen can get their money back."
Neither at that stage nor after two years, when they can redeem their investment at the bond's unit price, as quoted, do many choose to opt out. For instance, last year, he says, sales were pounds 17m, redemptions pounds 1m, the occupation rate more than 80 per cent and overall average investment pounds 6,000 - more than three times the minimum.
Bondholders, who collect points at pounds 1 each, qualify every year for as many weeks' holiday in as many properties as their aggregated points allow. They can also take in any surplus points they have left from the previous year. If they don't go on holiday, they don't have to pay standing management fees; if they do, they pay weekly "user-charges" - pounds 390, for instance, for a villa sleeping nine in Majorca - to cover the costs of cleaning and maintenance.
"While neither is a financial investment as such and both are means of buying holidays, HPB is not timeshare," confirms Keith Baker, a specialist in related litigation at London solicitors John Venn & Sons. "And while I've often come across sceptics, no one has ever demonstrated to me that it's a pack of cards."Reuse content