Getting Afloat - Part 4

Peter Underwood looks at what turns ordinary people into boaters.

The market for boats has gone through substantial changes as we have gone through a double, perhaps triple, dip recession. More boats are up for sale as owners try to realise the value of under-used assets but prices are falling. Will you be buying something that is worth very little in future? Can you have faith in the future of the waterways now they are run by a charity? Are you safer buying something second hand that has already lost its initial premium price, or is a new boat a better option? Where will the money come from and how do the sums add up?

The market for boats has gone through substantial changes as we have gone through a double, perhaps triple, dip recession. More boats are up for sale as owners try to realise the value of under-used assets but prices are falling. Will you be buying something that is worth very little in future? Can you have faith in the future of the waterways now they are run by a charity? Are you safer buying something second hand that has already lost its initial premium price, or is a new boat a better option? Where will the money come from and how do the sums add up?

Unless you are listening to a boat salesman it is clear that owning a boat is not quite the investment today it was before the banks crashed our economy and we started to attempt to pick up the pieces.

When we bought our first boat nearly a couple of decades ago, we didn't expect to make money on it, as we could on a property, but neither did we expect to lose as much as we knew we would on a new car.

Boats sat somewhere between the two and, if you spent money on improving them, you might even get some of that investment back when it became time to sell.

Yet, even then, boats were not bought and sold like houses. Then and now they are sold like cars and you stand as much chance of buying a boat with problems as you do of buying a rogue car, with as little comeback.

That's not aimed at frightening any prospective buyers, it's just a reminder that buying a boat is very much a case of buyer beware – you need to be fully informed of what is on the market, exactly what you can expect to get from broker, and how much it is going to cost you, over and above the purchase price.

However, there may never be a better time to buy a boat – there are bargains out there that you may never see again if the economy picks up and the country begins spending money once more.

 When the boating bug bites you just want to be out of the water

- but you could do so in a real bargain.

Let's start with the current market. If you want to buy a boat of any sort, from a windsurfer upwards you are about to become part of the tiny 2.7 per cent of British households which own a boat, according the  British Marine Federation's latest available research.

That is just over a million craft of some sort but six out of ten of them are canoes, small sailing boats or windsurfers.

Of the remaining half a million in round figures, most are coastal craft of some sort but, according to Canal and River Trust (CRT) statistics there are around 36,000 boats on their waterways. That has grown substantially from the turn of the century up until the last couple of years – from 25,401 in 2000/01 to 35,241 in 2010/11.

The number of new licences issued by the Canal and River Trust (then British Waterways) peaked in 2008 when 2,135 new boats bought licences. Since then it has nearly halved – 1,687 in 2009, 1,544 in 2010, 1,480 in 2011 and just 1,279 last year.

So what do all those numbers tell us when it comes to deciding whether to spend your hard-earned cash on a boat now?

First of all it shows that this is a really small marketplace with just a thousand or two boats changing hands each year. Check through the boating magazines and you will see there are perhaps half a dozen big brokers dominating the inland waterways market with maybe two or three times that number of smaller operators. Most big towns have more car dealers than that.

Whilton Marina, one of the bigger brokerages sells 20-25 boats a month according to Sales Manager Andy Robinson, that's 300 a year.

The second point worth making is that we are currently in a buyer's market. There are more people seeking to sell their boats than in the past, partly because boating is a hobby that has attracted many middle-class, fairly well-heeled families who may well now be feeling the pinch as public sector jobs are axed, pay is frozen, the future price of the house no longer seems quite so rosy and loans are no longer easy to arrange.

In fact, one smaller broker, Simon Jenkins of Norbury Wharf on the Shropshire Union canal reckons prices are now down as much as a quarter over the past couple of years, something that has made the finance companies offering boat mortgages very nervous and almost taken them out of the marketplace.

If you enjoy boating and can afford to buy your own rather than hiring for the day or the week

- there may never be a better time.

So if you are unaffected by those sorts of factors it may be a very good time to buy. Andy Robinson says, “boats have to be priced competitively to sell,” and any casual observer of the boat sales pages of Towpath Talk and elsewhere will often see boats reduced substantially from the original asking prices.

So there are bargains out there, and the experts tell me there are even bigger discounts to be had at the top end of the market. but the cost of boat ownership doesn't stop when you hand over tens of thousands of pounds and become the proud owner.

There may also be bargains to be had amongst the builders of new boats who have been badly affected, in part by the 20 per cent VAT that has to be paid on a new boat used for leisure purposes. There are no figures available but estimates by observers of the industry suggest builders who may have previously produced 10 boats a year have dropped to two or three.

It is easy to fall in love with the idea of boating and with individual boats, but you have to know you can afford it. Simon Jenkins said: “Anyone who bought a boat two or three years ago has seen it fall in value by around 25 per cent and will have spent out around £4,000 a year in each year of ownership.”

The latest CRT survey of boat owners shows that they spend an average of £3,900 a year on their boats - £2,000 on mooring fees, £700 on licence fees, £500 on maintenance, £350 on fuel, £250 on insurance and £100 on surveys and safety work.

The Trust has decided to stick to a rise in licence fees which is well above inflation this year, despite the recession, although it has promised lower rises in the years to come. It is also pushing up the prices of its moorings, sold through an online auction system, by hiking reserve prices considerably in the auctions and making it impossible for market forces to push down prices.

That may well be the shape of things to come as the Canal and River Trust, which has a fixed government income for the next decade or so, is facing rising costs and many fear those will be passed on to boaters.

The cost of Canal and River Trust licences and moorings is rising but at least they

have a guarenteed government income for the coming years, so boat owners can

look forward to their hobby being protected for some time to come.

 

So, if you have spent £40,000 on a boat you will be paying out nearly ten per cent of that initial investment every year that you own it and you may have seen its value fall by £10,000.

I can tell you that your boat will not increase in value by that amount each year. Andy Robinson optimistically says: “I can't honestly tell a buyer that a boat will increase in value. If you buy a boat for £30,000 and you keep it in tip-top condition we could probably still put it on the market for £30,000 in a couple of years time.”

The difficulty is that keeping a boat in the best possible condition costs a lot more than just £500 on maintenance, you have to keep that paintwork sparkling and correct any faults that develop, so you will have paid out, perhaps £6-8,000 over that two years, just using the boat and looking after it.

Even so, that's not a bad price for several family holidays and a few weekends, around £3-4,000 a year if you compare it with spending an equal time abroad.

Simon Jenkins thinks the market has just bottomed out. “I think we have got to the stage where people will just stop selling boats, they can't go much lower. I have just sold a 60ft, 2001 boat for £18,000 and that would have been unthinkable a few years ago.

“To me, that means this is the best possible time to buy if you can afford to do so. There won't be a time like this again for buyers. Even then you won't be getting an appreciating asset but you will get a good boat at a good price and have a lot of fun.”

 Simon Jenkins reckons prices have fallen by 25% in the past two years

but believes they have now bottomed out.

He thinks boat owners have reached the point where they won't sell at a low price and will try to save elsewhere. “We are seeing fewer boats being used for cruising and I suspect we will see more boat owners avoiding costs like licences and mooring fees.”

Whether that's true or not the boat market is a better place for buyers than it has been for many years and there are still canny people with the money to take advantage and they are doing so in steady numbers.

Whilton's Andy Robinson says he's selling to 25 or so such people every month and Simon Jenkins, who operates on a smaller scale sold four boats last month. Back of an envelope calculations would suggest that's around 200 boats a month being bought across the inland waterways.

Whether you should become one of those buyers depends very much on your personal situation. If you have the money available, or the impeccable credit history needed to borrow it, and you are reconciled to paying out a few thousand a year in costs and depreciation in order to have several wonderful holidays and weekend breaks then now really is the time to go for it.

All these words of caution have little to do with the essentially emotional decision to buy a boat – but they have to be said because of the national economic situation. When we are bouncing along the bottom of a recession it would be foolhardy to encourage anyone to spend on something they can't really afford.

I suspect, however, that all the facts and figures will fall on deaf ears if the people thinking of buying have already fallen for the waterways. If you are the sort of person who worries about what the future value of you boat might be and see it as an investment you will take heed.

If you want to be a boater you will find a way to buy a boat, enjoy the exceptionally low prices now available and get out on the water as quickly as you can.

I know that when we decided we wanted a boat 18 years ago we made the very grown-up decision to wait a year and make it a wedding anniversary gift to ourselves.

We lasted about a month before we went out and bought our first boat anyway.