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.
