Brexit and the used boat market - questions!

[macd]

Presumably the 3 year VAT status loss will apply to UK boats in the EU too.

Quite possibly, but you need to be aware what determines "UK boat" (or EU boat) in this context. It is not flag state, but owner's country of residence. But we're all just chucking chaff into the wind: no-one knows what arrangements will apply.

 

[peter gibbs]

Putting aside the interesting speculation, what is vital is that the RYA and other representative bodies, at the appropriate moment, ensure that freedom of movement for casual visits (both ways) is maintained as at present.
Making a landing declaration, as now with the Schengen form, should be adequate. UK registered boats will continue to carry red marked diesel for casual visiting, as at present, and the Commission will(hurrah) stop threatening us with injunctions for not wrecking our fuel supply industry.

EU built boats imported here will move as at present, no duty to pay, but only if the EU allows UK boats in on teh same terms - let's assume continued compliance with EU build standards, as at present. But VAT is likely to become a problem since we all know Brussels wants, desperately needs, all the money it can get to offset the loss of the UK contributions so will no longer allow UK VAT paid to qualify for exemption in the 27 members. So I guess this will get bound up in wider negotiations, and end up a political fudge. We might also find that bringing UK used boats to Europe to sell will attract tax: perhaps a sensible cut-off value can be negotiated to allow smaller vessels to trade across borders, but I'm not sanguine about that.

The total Game of Thrones dedication by the Commission to neutralising the fiscal impact of our departure through residual imposts and claims against us for every imaginable loss, even hurt feelings, will have an inevitable outcome. That is if we face down the cheese monkeys.

But let's press the RYA to establish goals and make the most of it.

PWG

 

[wotayottie]

With the likelihood of a hard Brexit with no deal, how do you think it will effect the used boat market in the UK?

If the rich boys and girls are no longer willing to purchase European boats due to higher import costs and higher costs associated with the devaluation of the pound, will they choose to purchase used boats on the UK market?

Are we likely to see an increase in the value of second hand boats in the coming years as demand outstrips supply?

Also are we likely to see a resurgence in the yachting manufacturing industry in this country?

Can the European builders afford to lose the UK market altogether?

The UK price of European brands will rise nearer EU levels as EU buyers enter the second hand UK market. The price of older British boats will decline with EU buyers not interested and the boats getting ever older.

There is no UK yacht manufacturing industry to resurge and who would be daft enough to start one here as opposed to the far east?

 

[ip485]

Simple really if the Euro were to really gain ground all boats here would be relatively cheap and the Europeans will buy. It happened only a few years ago when the brokers were selling everything to Europeans. The reverese is true should it go the other way. At whatever end of the market people are conscious of the price - even the multi-millionaires, sometimes even more so. Re-stimulating and all but dead building industry is much more difficult. Other than cottage boat building which deals in very small volumes, an enormous investment is required these days, not least because buyers expectations are much higher given there are builders who have made the investment and already trading. The investors are not in it for the short term and therefore will need to be convinced that changes in the market are also not for the short term.

I feel as so many of the builders producing yachts built to a standard, not a price, have gone, those yachts if well maintained will become increasingly attractive, and I think that is already happening.

As to yachting gererally I am not entirely sure which way the market is going. I am not sure so many "new" people are joining the "sport" and a bit like so many traditional past times (golf, cricket etc) I think people are finding other ways to spend their time and money - but I could be wrong. I think that is possibly less true in the Med and still further south where I think there is a growing interest.

 

[peter gibbs]

The decline in boat ownership has to be a major marker for our industry. My guess is that interest in sailing has not diminished but the flotillas and casual hiring have taken the wind out of ownership.

Yes, used boats are lasting a lot longer than once feared, and with a makeover (new engine, sails etc) can be recommissioned attractively for those wanting to get afloat in their own hull. Buying new is big money for most.

But the cost of mooring in the UK is an ongoing impediment and unlikely to ease in the foreseeable future. The planning bias against moorings continues to hurt our sport and without an increase in supply, charges will not fall.

Those who know the Netherlands well will marvel at the 700+ marinas and moorings of all types that represent a great opportunity for families, boat fanciers, and speed enthusiasts to get afloat in delightful surroundings. Many moorings are co-operatives. Mooring charges are not a constraint on the sport, and shouldn't be in the UK with our thousands of miles of coastline.

Interesting to note that membership of the Cruising Association is now at a record high, supporting mainly boat owning families here and noticeably in the Baltic and Mediterranean. The interest and inclination is there, but the economics are adverse, especially to young families with other calls on income.

PWG

 

[dom]

Simple really if the Euro were to really gain ground all boats here would be relatively cheap and the Europeans will buy. It happened only a few years ago when the brokers were selling everything to Europeans. The reverese is true should it go the other way. At whatever end of the market people are conscious of the price - even the multi-millionaires, sometimes even more so...

It's nowhere near that simple and post-Brexit prognostications are fraught with danger.

The euroarea is striving (not always successfully) to become an optimal currency area and the EU an optimal trade area. Within such a system, fluctuations in free-floating currencies will exert a fairly predictable influence on intra-EU trade.

Brexit is however a leap in the dark, the devil will be in the detail and we do not yet know how much new friction will be introduced, if any. Changes may or may not occur to the VAT status of UK vessels, we just don't know.

Until this kind of detail is available the possible influence of fluctuations in sterling on UK boat prices is simply speculation. The same applies to the food we eat, the cars we drive, the drugs we treat illness with and so on.

 

[ip485]

Dom - I dont disagree, but you appear to have read something else into my post, as far as my post went it is simple - IF the Euro gains ground then buyers will be attracted to the UK market. It really is that simple. Buyers arent interested in what may happen with the currency in future, they are only concerned with the cost of the yacht to them at the point of purchase.

I agree, what will happen to the Euro Sterling rate is entirely a matter of speculation - if any of us knew the answer we would be very wealthy indeed. I wasnt predicting it will move in one direction or the other, although I have my own views, much as the next man probably does.

 

[Bobc]

In my mind, the 3 biggest factors that will infuence new boat sales are:-

1./ The availability of cheap and easy credit (putting people off borrowing to buy a new boat)
2./ A fall in house prices (meaning that people don't have the equity spare to buy a new boat)
3./ More problems with company and final salary pensions (nice big lump sum payout disappears).

I doubt that Brexit will make any difference in itself.

 

[Tranona]

Not sure many people use mortgage type finance for boat purchases - rates are already high. In the past borrowing against a house was more common (that is what i did on an interest only basis) but lenders are reluctant to do that now with the tighter criteria.

 

[dom]

Dom - I dont disagree, but you appear to have read something else into my post, as far as my post went it is simple - IF the Euro gains ground then buyers will be attracted to the UK market. It really is that simple. Buyers arent interested in what may happen with the currency in future, they are only concerned with the cost of the yacht to them at the point of purchase.

I agree, what will happen to the Euro Sterling rate is entirely a matter of speculation - if any of us knew the answer we would be very wealthy indeed. I wasnt predicting it will move in one direction or the other, although I have my own views, much as the next man probably does.

Aha, perhaps I wasn't clear. I don't think the bit I've underlined is correct; save within a tariff-free frictionless market, which the EU has sort of been to date.

If for example post-Brexit VAT-paid UK boats are treated by the EU like US boats today, or if some other tax/duty/re-registration charges appear, then a simple devaluation in the currency may, or may not be sufficient to attract euro denominated investors. And vice versa of course.

We'll just have to wait and see!

 

[Tranona]

There are many other factors apart from the exchange rate that influences where people buy. The key figure is the total cost of getting the boat where you want it rather than the bare purchase price. So it is difficult for a buyer who wants a boat in the UK to take advantage of the lower price of boats in the Med, although as many of the extra costs are relatively fixed that becomes less of a barrier as the value of the boat increases. As we have seen the combination of exchange rate changes and compliance with EU regs has killed the import market from the US, and a similar situation could arise for EU buyers post Brexit.

Private buyers who go across borders and into different currencies are by nature opportunistic in just the same way as we might look at whether it is worth doing a booze and fags trip to Calais!

 

[ip485]

Dom - ah I see, and agree. Other factors such as the imposition of duty could negate any exchange advantages and of course my assumption was that overall the effect is to to reduce the cost. That might not be the case and the market will react accordingly. Delivery is in one sense just another cost and is a relatively more significant cost at the lower end of the market. At the higher end as percentage it is a much less significant consideration. My yacht was about 150 miles away and barely over 24 hours sail, had it been two or three days and 400 miles away it wouldnt have made much difference to me if the price was right. I think that would be true for most. If however it was £10K yacht I wouldnt want to pay someone £1k to deliver it for me and I might not want to spend a week collecting it given it would probably go at half the speed of mine and be much more weather dependant. I also think when buying in another country for some an unfamiliar process and legal framework is a factor. However all that said when yachts were "cheap" here for our European friends a few years back all the better yachts were going to Europe and the brokers could not get enough good "stock". 10% devaluation is 30K to 50K off a good 40 to 50 foot yacht and often a significant curreny devaluation also means for other reasons the "local" market is cold so sellers are far more inclined to give an even greater discount to a buyer with a fist full of Euros.