Thinking Of Owning A Boat? The Essential Guide From ABYA
The Association of Brokers and Yacht Agents (ABYA) offers some guidance for those who are thinking of owning a boat for the first time (or for those who already do but want to check their knowledge!)
As featured in this month's edition of Boat Trader Magazine
What to do first?
Anticipating that you've already established that you like boating (perhaps by taking a flotilla holiday, or hired a narrowboat, or simply spent time with friends boating), take stock of your personal situation. Who will be coming boating with you? What are their ages – children looking for fun; adults looking to cruise the creeks…? It's important not to put others off initially by taking them outside their comfort zone or even frightening them with something too big, or too powerful. Better to start smaller and grow together.
Then consider your budget. The cost of buying the boat itself isn't the only thing to consider. You may want to take out finance but be sure you can afford it, the same as with anything else, and you'll be required to register on Part 1 to record the finance company’s interest. Then there's the cost of insuring it, mooring it, maintenance, fuel, paint and varnish, new and replacement equipment. Just like a car, it has to be maintained, and being in the water for at least 6 months of the year will require lifting to be cleaned every so often. What will you do with it in the winter? Keep it afloat? Store it ashore? What's available at the marina or boatyard you're interested in? Check with them that they have a berth or mooring available before you go ahead. Also find out what all the costs are – the berth itself, shore supply, cleaning, etc. It pays to be rigorous in your planning so there are no nasty surprises later on. Buy with your head, not your heart!
If you think you'll buy a trailable boat there will be the cost of fitting a towing bar, and buying the trailer. Check the local planning rules to ensure you're allowed to keep it in your garden. Where will you launch?
If you've followed through the above you'll now have an idea of the sort of boat you want and what you can afford. This is where the dealer or, if you can’t or don’t want to afford buying a new boat, a broker can advise you. The benefit of buying second-hand is that someone else has dealt with any wrinkles and probably fitted some extra kit. And there isn’t the VAT depreciation – just the same as a car. Either way, talk to an expert in that type of boat. They can tell you what's available on the market, and will have an idea of costs to guide you. There's loads of information online about each type of boat – from the builder’s own website to the magazine forums, as well as Class Associations. The dealer will have manufacturer’s details on performance; the broker will have the service history and information from the seller.
Narrow down your search to what you can afford and what you think you want, and buy the best you can in that range. A new boat will carry a manufacturer’s warranty. A second-hand boat, if sold by a private individual, won't have any warranty. Once you've made your decision on your preferred boat, you'll be asked to place a deposit with the broker or the manufacturer. A dealer will issue any part-payment documents, if appropriate, and arrange delivery, any extras, etc. If you're buying through a broker, they'll issue you with a Sale and Purchase Agreement which sets out the terms of the sale for both parties, and will include an inventory of the equipment to be left on the boat. Check this carefully, then you won’t be surprised when you take ownership and the dinghy isn't there for example. A Conditional Agreement will allow for a survey and an in-water trial if you want one. Be aware of the timescale within the Agreement for the completion of the survey and for you to make up your mind.
A new boat will have a pre-delivery inspection. If you're buying second-hand, you are advised to have a pre-purchase survey by a marine surveyor who is a member of one of the professional associations as they're required to hold Professional Indemnity Insurance. Choose a surveyor who knows the type of boat you're looking at. They won’t mind you asking. Most are happy to chat to you (within reason!), but if you can manage to ring during the working day, rather than Sunday afternoon, they'll be happier.
The survey will tell you the condition of the boat as it stands and if there's work to do immediately, later or some cosmetic items which don’t affect the performance of the boat. It won't tell you about other pieces of equipment you might like to have fitted, and it IS NOT a guarantee that the boat is in as-new condition. If it's a 10 year old boat, it won’t be perfect. Nor will a 10 year old car. You need to have reasonable expectations, so don’t use the survey as a shopping list. Also bear in mind that if you want any work done, wait until you're the owner, as any warranty will be to you, not to the previous owner. You'll need a survey for insurance and the same survey will suffice. If you want to register on Part 1, the surveyor can do the measurement survey at the same time.
The dealer will provide a Builder’s Certificate, Invoice showing the VAT amount paid, RCD compliance certificate with a list of the standards the boat was built to, warranty documents, manuals, etc. Keep these carefully. They need to be passed on to subsequent owners.
If you aren't the first owner, the broker should have gathered as much information as he can from the previous owner to pass on to you. If there's no VAT evidence and no RCD certificate, you need to ask questions. If there are no Bills of Sale, is the boat stolen? If you're buying privately, you still need all these documents handed on to you.
There are many courses available around the country and some are offered in your own boat if you wish. It isn’t a matter of getting in, turning the key and going. There are Rules of the Road, speed limits to be adhered to, and safety equipment and other equipment to understand, as well as boat handling techniques.
The RYA website is a good place to start.
It can be complicated, but essentially VAT was payable on boat purchases after 1985 in the EU, or if the boat has been imported to the EU since then. If it was purchased by a company, they'll have put the sale through their accounts and must raise a company invoice on sale of the vessel, to the next owner. If it was purchased by a private owner either from new or at some point subsequently in the chain, the VAT status continues on from that private owner without them having to raise an invoice, which of course they cannot do as a private person. So the evidence that counts is the most recent transaction where VAT was payable. A statement by the original builder, by an owner or by anyone else that the boat is VAT paid isn't valid. It must be a document showing the amounts, the name of the company and their VAT number. It could also be a customs import form. A Bill of Sale saying VAT inclusive isn't valid evidence either. For more detailed queries try the HMRC website - Customs Notice 8 or talk to your broker.
This applies to all boats built in the EU since 16th June 1998, or those brought in from outside the EU since that date. It's possible to put an imported boat through Post-Construction Assessment (PCA) to ensure it complies with the RCD, and it will be given a certificate to say so. It's important to check this first as if a new engine is required, this can be very costly! Boats built in the EU prior to 1998 and exported and re-introduced do not need to have PCA. However, they do need evidence they were built in the EU prior – the Builder’s Certificate is ideal. Boats that are RCD certificated will have a Craft Identification Number (CIN), which should be on all the documentation and on a plaque on the boat. The CIN (like the VIN on a car) ties all the information together.
The Builder’s Certificate is just that and is the first step in the legal chain of ownership of the boat, as it'll have the first owner’s name on it and should be passed on to subsequent owners. If the boat was sold by the manufacturer to a dealer, the Builder’s Certificate will be to the dealer.
Each time the boat is sold, a Bill of Sale should be issued from the Seller to the Buyer. This is the document that passes legal title via the shares in the boat. Boats are owned in 64ths, and there may be more than one owner – perhaps a husband and wife. It has nothing to do with the price paid – the name is somewhat misleading. A standard Bill of Sale can be downloaded from the MCA website.
You should keep good copies of all documents somewhere safe, but bear in mind if you're travelling outside the UK, you may be asked for your papers, and the VAT paid evidence will be top of the Customs officer’s list, with some EU states wanting to see the original. A plastic wallet in a plastic zipped bag to try and keep these documents dry is essential. It also means if you're asked for your documents, they're all together and you aren’t searching around in lockers for them in the middle of the night while it rains on a grumpy customs official!
Owners of smaller runabouts and RIBS tend not to want to register on Part 1, but there is an option of Part 3, which has no legal title attached to it, but can be useful if you want, say, to take your ski-boat behind the car on holiday to France or Spain. Part 1 is the closest to legal title available. The forms can be downloaded from the MCA website (see above) and you need to arrange for a measurement to be done by an authorised tonnage measurer. (*Tonnage is a historic term relating to the cargo volume). To register a new boat, you'll need to send in the documents requested on the MCA forms. For a second-hand boat, you need to be able to show 5 years ownership history. The VAT evidence isn't required for Part 1, although other registries in the EU do include sight of the VAT evidence. Again use the forms on the MCA website. There are various benefits of Part 1 registration, especially if you're intending to go further afield.
Lifejackets are essential for all those on board and a liferaft(s) to take everyone. Powerboats have kill cords, so the power is cut if the driver falls overboard. It's vital this is used to avoid accidents where the boat continues to run with no-one steering it, usually with fatal consequences. Have a fire extinguisher, a torch and a radio which has been properly registered and an EPIRB. Don’t rely on a mobile phone. It isn't only a legal requirement to update these licences, it's essential for your safety. If an EPIRB is registered for a boat in one place, and you've bought the boat and moved elsewhere and not re-registered, the receiving station for the alarm will think you're in the first place, and the Coastguard will call the number they have for the previous owner, to be told the EPIRB in their boat is fine, not realising you haven’t re-registered the one on their old boat. They can’t help you if they don’t know where you are!!!
It may sound complicated, but provided the dealer hands over the documents and the owners pass them on to each other, it really shouldn’t be. A folder with the documents which can be added to with information on new equipment bought, service history of the engine, etc is ideal. Also ensure you register/re-register all equipment.
All you need in your Boat File for many years of happy boating is:
- Builders Certificate and subsequent Bills of Sale
- VAT evidence
- RCD certificate
- Safety Equipment record (dates for replacement etc)
- Licences for radio, EPIRB, etc
- Any warranties
- Service history for the engine and other equipment
- Manuals for the equipment on board
- Anything else you find useful …