Used boats: buy an old charter yacht
Will Bruton looks at the pros and cons of buying a former charter yacht and speaks to a number of brokers for advice on what to look for
Yacht charter companies increasingly own new yachts for just a few years, selling earlier to ensure they can offer the latest models to customers. Meanwhile, an older, heavily used ex-charter yacht can be offered for sale at very low prices. Is either option a good buy for the private owner?
Visit any charter destination in the world and you will find yachts that have suffered the punishments of a lifetime for charter. Scratches and bent stanchions are normal for something that’s been used for a week or two and then returned. But unlike many yachts on the used market, rental boats are used regularly, which means maintenance is regular. If you are considering buying a former charter boat, understanding the charter industry is essential.
Stephen and Estelle Cockroft run catamaranguru.com, a community site for catamaran buyers that has grown into a successful international brokerage firm, acting on behalf of buyers and sellers. They have dealt extensively with ex-charter yachts over the past 20 years.
“It’s important to understand the two main types of ownership programs run by chartered companies,” says Stephen.
“They are quite different. “Guaranteed income” programs give the yacht owner a check at the end of the month at an agreed rate. On these yachts, the owners have much less control over maintenance and the charter company oversees the decisions.
In “income sharing” programs, the owner is not guaranteed income, but he has more control over maintenance. “Standards vary a lot between charter operators, so it’s important to ask the question, ‘Who was motivated to service this yacht so far?'” Stephen thinks.
‘Phasing out’ is usually offered by larger charter companies and covers a period of up to one year during which the yacht is prepared for sale to private owners at the end of her charter period.
Neil Bingham is a broker for the in-house SIP brokerage of the charter company Sail Ionian. “A good number of our yachts are sold to charter clients. We like buyers to use the yacht, and most are sold while still in charter service.
“They are offered for sale in the last planned season – this allows the yacht to be checked while in use and to ensure that all equipment is working properly.”
Most Sail Ionian yachts are sold at around five years old and Bingham is clear on what that means in terms of boat wear. “We see yachts that are five years old like a car with 60,000 miles on the clock. It’s still good and goes to private use without major problems.
“The sails will still be in good condition, still retaining their shape, but the upholstery and canvas may need to be replaced. The dinghy may also need replacing. After seven to eight years, a old charter yacht will start to need big money and will naturally have more problems to solve.
Stephen Cockroft explains that even when buying from a large company, buyers should not expect to see comprehensive maintenance records. “Due to the nature of charter yacht use, little time is spent on record keeping. When there is a problem between charters, it is resolved quickly so that the boat can sail again.
“As the buyer of one of these yachts you can only rely on your own investigation and in our view it must be truly independent. We have seen yachts allegedly inspected with undeclared damage caused by hurricanes, evidence of hard grounding and all manner of undeclared major faults.
In the case of yachts with a phase-out period sold under a charter program, it is sometimes possible to examine the yacht while it is still chartered.
“A pre-disposal survey will help you negotiate what constitutes normal wear and tear and what needs to be repaired before a final price is agreed. You can then stipulate that this work will be verified by another survey once “It will be over. It makes a dying boat a much more attractive prospect and helps you manage your exposure to risk,” he explains.
Calculation of numbers
Because the market for ex-charter yachts is so diverse, it attracts a wide range of customers, Bingham says. “Yachts are coming onto the market that have been chartered for 20 years or more. I think it attracts some [people] who want something for nothing, so we see people who are not really going to buy from us. What we tend to sell, after five years, is a clear prospect and the yacht still has significant value.
However, he points out that charter companies are not immune to the increased demand for new yachts that other sectors of the market are experiencing. “Due to the limitation of our own supply of new yachts in 2022, we are also keeping some of them a little longer than before.”
The business model used by yacht charter companies, which do not own yachts but instead rely on outside owners, largely dictates the ex-charter yacht market, says Estelle Cockroft. “With returns of up to 9% per year, buying a new yacht and putting it on charter is an attractive prospect, but the value of the investment returned at the end of the agreement varies widely. If a new owner recoups 55% of the value invested when the yacht is returned to them, or if it is sold on the ex-charter market, I would say they are probably doing quite well.
“However, some charter companies are working on a 20-year deal, which is unlikely to stack up for the initial investor. All of this influences the sale prices of ex-charter yachts, and you shouldn’t pay more than 60% of new yacht value – although in these times when the market is short of supply, many are!”
Good used condition
Pete Green, managing director of Halcyon Yacht Delivery, regularly moves older charter yachts and sees significant variation in the quality of their maintenance.
“Charter yachts are typically used week in and week out throughout the season. They are often skippered by relatively inexperienced, hard-working sailors. This means that the chances of bumps or even grounding are much more likely than with a private yacht. A full and thorough investigation should highlight any potential structural or mechanical issues, which should then be corrected before the boat is put back to sea.
“Surface damage will be obvious to the naked eye, but watch out for scratches or dents and get a quote if you want them fixed. Fuel issues like the diesel bug are much more common with private yachts that have been laid up for longer periods.
Halcyon skippers are used to dealing with faults in the yachts they move and have encountered both basic maintenance neglect and more serious problems, reports Green:
“Some charter yachts are only used by day. We turned to yachts for delivery and found that none of the navigation lights were working!
“Moving a boat for a flotilla company in the Mediterranean, the toilet drain was calcified and almost looked like a stone version of arterial sclerosis. Hitting the tube on the dock for half an hour did the trick. This affects all the yachts in their fleet – replacing the tubes every two years could save you a lot of hassle.
‘There is a greater chance that a charter yacht has been misused, for example grounded and taken a hit on the keel, and this has not been reported when a client returns the yacht.’
I bought an old charter yacht
Gabriele Fantini recently underwent the handover by Sunsail of a 2015 Leopard 58 catamaran which he currently delivers to the Caribbean.
“The yacht I took over, aged six, has seen a lot of use but you can also see it has been very well maintained underneath. Component choices, like deck equipment for example, may not be not be what you would specify as a private owner as they have a keen eye on the budget and it’s worth bearing in mind that the whole layout has really been thought out for coastal cruising.
“Sunsail have been extremely professional throughout the review and delivery of the orders, but they obviously don’t do more than necessary. One thing that struck me, having skippered brand new catamarans, is that this process was perhaps easier than tackling a yard while a brand new yacht is under warranty. It can be a very long process.
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