Maximise Enjoyment from Owning a Charter Yacht

Choosing the Right Programme #

Each of the above smarter yacht ownership solutions offers both benefits and disadvantages compared to traditional yacht ownership. It is therefore important that the potential buyer understands these differences so that the ownership model selected will best match the buyer’s requirements.

Below are some of the popular concerns amongst buyers;

Owner Access: Buyers may worry about the limitations on owner usage. Naturally, sharing access to the yacht with either co-owners or charterers will mean the owner cannot have unlimited use. Some programmes offer more flexibility than others so the owner access limitations or options should be consulted before making a choice. Buyers should consider both how much access they will want as well as the locations they wish to sail in.

Maintenance: Charter boats experience higher-than-average levels of usage, but they also receive high levels of maintenance, and due to the commercial regulations, the boat will often be maintained to a higher standard than many traditional owners would expect. Most of the smarter ownership programmes aim to remove the responsibility of maintenance from the buyer, but for buyers who wish to be more involved in the maintenance then Charter Management Agreement offers the most control to the private boat owner.

Global Network of Bases: Programmes offered by global operators will often offer the buyer the opportunity to sail on a wider range of yachts in a variety of locations which is a great opportunity to explore new areas. However, large global operators tend to have less ability to offer tailored programmes, so the potential buyer should consider their priorities.

Return on Investment: Shared access programmes do not offer a return on investment, but solutions which includes chartering do offer an opportunity to generate an income. How much you can expect to generate depends on the size and location of the yacht, and the programme selected. Arrangements which offer a guaranteed-income provide a predictable level of return whilst shared-income arrangements tend to offer a significantly higher return in a good year, but with the risk of under-performance.

Tax Benefits: There can be tax benefits from purchasing a charter yacht as a company. Advice should be sought from a local tax expert or consultant.

Global vs Local Operators #

At almost every marina around the world, a company offering yacht charter can be found. Sometimes these are branches of a global operator or it may be a local independent operator. There are significant differences to the potential buyer if they choose a programme with a large, global operator or a smaller independent business. Here we look at some of these differences;

Large, global operators: Frequently larger businesses will have strong connections to popular boat manufacturers and therefore can access brand new boats at a significant discount. They typically only offer Yacht Ownership Programmes in order to ensure consistency of yachts on their charter fleet, and the buyer is therefore restricted to a narrow selection of mass-produced yachts with standard options. Large operators are supported by dedicated administration and maintenance teams and a global network may offer members of their Ownership Programmes the opportunity to sail in multiple locations around the world as part of the programme. In order to operate efficiently, these large organisations rarely allow for customisation of yachts or programmes so the buyer has to simply choose from one of the pre-defined packages.

Independent operators: Independent operators are specialists in their local area and adapt their offering accordingly. They generally have a smaller fleet of yachts and a smaller maintenance and administration team. However, they tend to offer a more personalised service with more flexibility to both charterers and the yacht owners. Independent operators usually offer different types of ownership solutions and will often tailor any Ownership or Charter Management Programmes to suit the owner’s exact requirements. Independent charter businesses will usually accept a far wider selection of yachts onto Charter Management Agreements and therefore may be more suitable for buyers wishing to purchase a customised yacht model or to have more input into maintenance decisions.

There is also a variation in the quality of administrative and maintenance support offered by independent operators; so it is important to research the local operators carefully to ensure you choose the right one for you.

Contracts and Agreements #

For all of these smarter yacht purchasing solutions, some form of contract should be expected. As each programme offers different benefits and limitations it is impossible to cover everything here, but below are a few key points to check:

Shared Access Programmes
Contracts for shared access programmes or boat clubs typically specify the membership fees and exactly what access is included within this membership fee. It should also make clear the costs of additional access (if available), how priority is awarded for availability as well as any additional financial liability in case of accidents or damage.

Co-Ownership Syndicates
Contracts for Shared or Fractional Ownership syndicates should clearly detail what % share the co-owner has and how much access to the boats(s) is included and how that will be managed and prioritised. It should outline what equipment is on the boat and what the division of responsibility is between the syndicate manager and each owner in terms of arranging suitable insurance, booking berthing, planning and overseeing maintenance, paying for regular maintenance (often via levy) as well as covering minor costs (such as replacing lost cutlery). There should also be details on exiting the syndicate.

If a new boat is being purchased, it should be clear on what equipment will be included, what customisation options are selected and if there any additional importation, delivery or commissioning fees to be paid on top of the purchase price.

Charter Ownership Programmes
Charter Ownership Programmes sound simple, but the financial arrangements behind them are usually very complex. Contracts therefore should make the financial arrangements explicit. In most cases, the buyer only takes ownership at the end of the programme so the rights and responsibilities of the buyer during the contract should be clear; including the amount of access (usually in weeks), whether they sail only a specific yacht or can choose from a range, what input the owner has to decision making, possible liabilities in the event of boat damage as well as the financial implications of exiting the contract before it is completed or in the event of the Charter Operator defaults. It also needs to explain liabilities and options at the end of contract period.

Charter Management Agreements
Due to the tailored nature of many Charter Management agreements, there is an extremely wide variation in terms. The biggest areas to consider are Charter Operations & Maintenances Support (who is responsible for what activities eg cleaning before and after a charter, handovers, fixing minor faults, replacing lost items and consumables as well as arranging and paying for regular maintenance). It should also be agreed what decisions the charter business can take without needing to consult the owner and Payment Terms (for example who pays for what, how and when is charter income paid to the owner, it the owner share calculated before or after deductions and taxation).