“We are talking about a serious purchase here,” says Calloc’h. “A great deal of preparation goes into the decision to buy a yacht. I’ve never heard of a billionaire turning up to a yacht show and buying blind, as it were.”
“For a new buyer, it’s desperately important to understand the expense of running a yacht,” adds Richmond. “In terms of running costs, you should expect to pay 10% of the original purchase price per year.”
“Bearing all that in mind, it should be noted that ours is not a particularly trend-driven business,” Holroyd-Pearce continues. “It’s all down to personal preference and budget. People buy what they like, and what they can afford. In very broad strokes however, European buyers will tend towards traditional gentlemen’s yachts, whereas Middle-Eastern, Russian and Chinese buyers will favour brand new, cutting edge designs.”
Management’s definitive guide to buying, running, chartering and eventually selling one of these magnificent vessels.
Types of yacht
For the uninitiated, there are three main options. The first is to select from a shipyard’s standard range. These yachts tend not to exceed 75m in length, but most quality shipyards offer countless options up to this size.
The next stage in personal yacht tailoring
is the semi-custom yacht. While these boats are built to a standard hull design, the interior layout is entirely customisable, according to personal preference.
The holy grail of superyacht design is the full custom yacht. Currently being built up to 200m in length, every detail of these super- and megayachts’ specification is guided by the taste of the owner.
A standard build can typically be ordered from the yard and delivered in a few months, but a full custom build can take three to four years, depending on size and specification.
Should you be unwilling to wait, there is always the option of purchasing and redesigning an existing yacht. While this may be as simple a process as refreshing the interior décor, it may extend to breaking the yacht in half and adding a central section.
Building or refitting your yacht
Have your own project manager and owner’s representative from the start of the project. They can liaise with the project manager at the shipyard, as well as any external specialists. They will protect your interests, and ensure work is delivered in line with your agreements and expectations.
Work with specialist advisors from the outset to tailor your crew’s ‘back of house’ areas to your needs. Avoid the nasty surprise of not being able to enjoy the superyacht the way you imagined. This can be very disappointing, especially as there is a long wait in anticipation of a project’s completion.
Questions specialists should ask you include:
Do you plan to host events frequently?
How many guests would you able to cater for?
Do you anticipate cruising in remote locations for extended periods of time?”
What kind of cuisines do you enjoy personally and what would you like to be able to offer your guests?
Finally, build your yacht to stringently meet all legal requirements. Failure to do so can result in fines, court cases, PR disasters and even jail. The recently introduced Maritime Labour Convention (MLC) includes specific requirements for crew accommodations, contracts and working hours.
How to purchase
Once you have found your shipbuilder, or identified a suitable existing superyacht, the next stage is to seek out a broker to act on your behalf. Every existing superyacht will already be under the management of one or more brokers whose job it is to manage the sale. They will have a comprehensive knowledge of the market, and will be an invaluable source of information.
If you are choosing an existing superyacht, a detailed memorandum of agreement (MOA) will typically be drawn up to be signed by both parties. You should ensure the MOA describes the parties’ rights and duties should any issue be raised, including the rights to cancel altogether.
The MOA must also state that the superyacht will be transferred completely debt-free. Our recommendation is for prospective buyers to have a full survey done. Where possible, a sea trial is also recommended.
For a custom and semi-custom build, the purchasing process varies. As opposed to a MOA, a build contract is entered into directly with the shipyard. They will hold their own set of contractual terms, and amendments can easily be made to incorporate any personal requirements you might have.
The build contract will incorporate the total cost of the project as well as the terms for instalments in which it might be paid. It is worth factoring in changes in material costs as well as fluctuations in exchange rates. This contract will reflect in detail the strict range of regulations faced by shipbuilders.
In addition, the contract will cover the superyacht’s specifications, where the superyacht will be used, whether it will be chartered, where it will be registered, and therefore which flag it will fly. All guarantees and warranties should also be incorporated within this contract.
Financing
It may seem surprising, but it is entirely normal for superyachts to be financed. This is not an option typically available to buyers who do not have the necessary resources to buy a superyacht outright. Lenders do not see a superyacht as a promising security, as it can be easily moved from one jurisdiction to the next.
The purpose of financing is rather a way of purchasing in a more tax-efficient, secure and private way, or making funds available to other business investments that are expected to be more profitable. Leasing structures are available that offer the advantage of significant tax savings by avoiding EU VAT. This method also offers excellent legal protection, as the owner can be a bank rather than the individual or company buying the yacht. The buyer can thus remain anonymous, and cannot easily be sued.
On the other hand, the corporate veil of owning companies can be lifted, which can expose the buyer to risk. It is even possible in certain situations to set aside trusts. The increased privacy, security and safety of financing and leasing structures are attractive to many buyers.
We recommend seeking professional advice on setup. You should consider the following: Tax efficiency
Operational ease
Privacy
Reputation
Flag Choice
Registration
Always have an in-depth professional survey done with the vessel out of the water, plus a sea trial with experts who can check the vessel in detail.
Running costs
Just as you would during the build process, you should set up and run your yacht to stringently meet all legal requirements. Failure to do so can result in fines, court cases, PR disasters and even jail. As owners and guests are often high profile individuals the reputational risk can be significant.
Conduct pre-employment background and drug checks on all crew, and carry out drug tests on an irregular schedule. If drugs are found on board while your vessel is cruising in certain jurisdictions, it might have severe consequences for you, your guests and your crew. These range all the way from detention in pre-trial jail for weeks – under less than savoury conditions – to the death penalty.
If you want to feel at home on your yacht, enjoying the pleasures of superior service, have professionals create operating procedures and manuals. This will ensure consistently high levels of service, reducing crew turnover, costs and associated risks.
From an operational point of view, refrain from seeing your yacht as an individual asset, separate from your other ‘homes’. Integrate it into the management of your other private residential properties, estates, islands and aircraft. For example, your gastronomic preferences – palate, recipes, preferred brands, food intolerances, allergies or diets – are universal. You want to feel ‘at home’ wherever you arrive, be it at the yacht, the plane, or the villa. Minor details – such as finding clothes arranged in the same fashion in wardrobes at every location – matter.
Crewing
Use professional recruiters to carefully select each crew member. They will conceal your identity, discreetly searching for and interviewing the most suitable candidates. The crew contribute enormously to the overall experience of yacht ownership.
Have them thoroughly screened. Good crew, well managed and regularly trained, will significantly reduce employee turnover, costs, security and confidentiality risks. At the same time, the superior, personalised service will create a supremely relaxing environment. A good crew enhances a superyacht’s reputation, and adds immense value to chartering opportunities.
Selling your yacht
Should you come to sell your superyacht, the process is much the same as purchasing, but in reverse. Your broker will actively market the yacht to prospective buyers until such time that as MOA has been signed. It is not uncommon for the current owners to effect a refit, in order to improve the chances of making a sale.
Charter a yacht
You may be as yet undecided whether you are ready to take on ownership of a superyacht, given the associated responsibilities. You may, however, be interested in having the use of a superyacht for holidaying, entertaining or business. This would be the time to consider chartering.
For maximum enjoyment and minimum hassle, have your butler, estate manager or personal assistant liaise with the yacht crew well in advance of the start of your charter. Have them communicate your and your guests’ preferences to the crew as comprehensively as possible. They will then be able to tailor the entire experience to your tastes. This will often make all the difference.
Additionally, use an advisor or a buyer’s agent to guide you to the most suitable vessel. They can protect your interests by identifying the best yacht from the entire market, rather than simply selling you what they offer themselves.
Above all, enjoy the command of your own vessel, a privilege that few will ever experience.
