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July 10th 2018. By Alex Smith.

Boat partnerships and syndicates

If your budget won’t stretch to the boat you want, why not club together with your friends? Alex smith examines the merits of joint ownership.

There are plenty of good reasons to buy your own private boat – not least, the freedom to pick the model, to spec it as you choose, to keep it where you want and to use it when it suits you, your family and your schedule. But the fact of the matter is that recreational boaters, particularly novice boaters, tend to be unrealistic about two things: firstly the regularity with which they will use their boat; and secondly the amount that boat will cost to keep. When the stark reality of these two factors (expense versus usage) kicks in, boat ownership can often begin to seem distinctly unsustainable – so if you’re only using your boat six or seven weekends a year, there’s no doubt that it makes good sense to share the cost with other likeminded boaters.

While running and maintenance costs are of course central, the other key motivator for shared ownership is the calibre of boat you can afford to buy. In isolation, our own personal finances might force most of us to rein in our ambitions, buy from the used market or give up getting on the water altogether, but shared ownership immediately increases the individual’s buying power by a factor of two, four or even eight. And when the time comes to sell the boat on, the regularity of use and the greater financial clout available for service, maintenance and upgrades, often mean that depreciation is not kept to a minimum not just by sharing the loss between shareholders but by buying a more desirable boat and maintaining it to a more perfect standard.

If your budget won’t stretch to the boat you want, why not club together with your friends?

For those looking to ease the financial burden and streamline usage to the reality of their circumstances, there now plenty of options. You could of course join a fractional ownership scheme, through a dedicated professional agency, where everything from purchase, service, maintenance, storage, cleaning and even training is organised on your behalf in return for a simple monthly fee. But whether you view it as quartering your costs or quadrupling your buying power, the merits of the syndicate to those in the right position to get involved, can be even more compelling.

Keep an open mind

Chances are you will already know whether you’re the type of person who will get on well as part of a syndicate. For instance, if you know exactly which boat you want, how you want it fitted out and what kind of optional extras deserve your investment, you may feel aggravated by the rest of the syndicate disagreeing with you. You may even feel resentment at the majority deciding upon an additional extra that you don’t believe the boat needs, but which you will nonetheless be required to fund and maintain.

This is where you need to be honest with yourself about whether you can compromise or whether you would be more likely to attempt to steamroller your partners into your own way of thinking. After all, the process can only work if open and honest discussion brings about a consensus to which everyone is happy to commit – so you need to understand that the benefits of the syndicate (a bigger, better boat, plus radically reduced outlay for purchase, servicing, maintenance and running costs) can only be attained if you soften your stance and accept that the boat spec and the usage schedule are no longer yours alone to control.

Ensure you want the same things

It is also important to establish at the outset that the various shareholders are looking for the same things. After all, while some will relish the idea of a readymade crew and anticipate the pleasures of heading out together with their syndicate partners, others will want complete privacy to use their allotted time slots as though they own the boat outright.

You also need to know that the people you enter into agreement with are serious about their share of the responsibilities. To keep the boat in good condition, preserve its market value and maximise everyone’s enjoyment, that needs to go beyond the simple observance of schedules and the paying of bills. When you leave the boat after a weekend away, it needs to feel like a showroom model, clean, squared away and emptied of any personal gear in full readiness for the shareholder with the time slot after yours.

And how do your partners feel about maintenance? Do you prefer to employ accredited professionals to service and maintain your boat or do you relish the prospect of lying in the bilge surrounded by spanners? Do you enjoy the idea of a get-together for a full top-to-bottom clean at the beginning and end of the season or would you prefer spending £500 on a proper valeting service. Of course, when the fees are split between the shareholders, first class professional care becomes much more affordable, so DIY may become less important or even positively undesirable. But wherever you happen to stand on the matter, you need to come to a consensus on issues like this at the very outset or you will encounter problems further down the line.

And as for unexpected bills or unscheduled repairs, through mechanical fault or incident on the water, you need to have a mechanism in place to reassign some time in the schedule for the shareholder who loses out while the boat is in the shed; you need to have a contingency fund to ensure that any works can be carried out speedily; and you need to have comprehensive insurance to be certain that nobody is left out of pocket on the basis of someone else’s mistake. For this (and for many other reasons) a proper contract is a must…

Azimut 80: running shot

It is important to establish at the outset that the various shareholders are looking for the same things.

Draw up a contract

It doesn’t matter how close you are to the other parties involved in the boat purchase. In fact, even if you’ve chosen to organise a syndicate with immediate family, a formally accepted contractual agreement is vital. If you become a member of the RYA, you can download a standard Shared Ownership Agreement for free, but however you source your contract, its content needs to cover the same basic criteria…

In addition to detailing each party’s financial stake in the boat, it should detail how and where the boat will be kept, maintained and operated, with explicit information on the responsibilities of each owner, and the share of expenses each owner will incur in relation to the boat. This should include provision for unexpected expenses relating to repairs and damage.

However, while the apportioning of expenses will usually involve quite a simple mathematical split, a more thorny issue can often be the usage apportioned to each member. Plainly, Bank Holiday Weekends and School Holidays during peak season will be more sought after than mid-February weekdays, so while it is important that a universally pleasing agreement is reached on the allocation of time slots, it is equally important that the contract allows a degree of flexibility, so the members can get the best out of the boat as life’s realities begin to get in the way of the ‘Blue Sky’ plan.

Naturally then, while a contract is a vital starting point, a sustainable shared ownership experience will depend upon ongoing communication and compromise. That is best managed by means of regular syndicate meetings, where usage and costs can be addressed, where any potential grievances can be nipped in the bud and where any desired upgrades can be discussed. This is also a great way to get together off-season and talk about any required changes to the contract – for instance in relation to a change in cruising region, to formalised updates in time slots or to change of ownership, should any of the parties wish to bow out.

Keep shareholder numbers low

The number of shareholders is best defined by the nature of usage. For instance, if your boat is to be kept in a local marina, a maximum of four shareholders will ensure that each member gets one weekend each month plus an extended (one or two-week) summer cruise. Industry figures suggest that this is in fact more per shareholder than most boaters would tend to achieve if they owned their own boats privately. However, if the boat is to be kept abroad, the shares can be for longer time slots but in fewer portions, enabling as many as eight members to gain authentic value from their share. While these splits have been proven to work for a lot of recreational boaters, greater numbers than this are likely to make the syndicate more complex to manage and the schedule more congested and cumbersome. And if you’re a really keen boater and your budget can accommodate the extra cost, you may in fact be better off retaining maximum flexibility by limiting the number of shareholders to two in the UK or four abroad.

Keep the schedule flexible

Plainly then, one of the major issues with a syndicate is schedule flexibility. You can’t just head out if the weather’s great, because it’s perfectly possible that it’s not your turn to use the boat; and neither can you simply delay your allocated weekend because it’s wet, grey and windy. That’s just the luck of the draw. However, if it turns out that you have an unavoidable commitment on one of your weekends, it is reasonable to have a system in place, enabling you to offer your weekend to one of the other members in return for one of theirs.

If you’re really friendly with your partners, it can also pay to sail together, effectively doubling your usage and and/or freeing up additional space in the schedule. And if one (or several) of your shareholders are among the growing number of childless freelance professionals in the UK, that can also be a great help, as it brings real value to weekday slots that might otherwise prove fairly redundant.

Have a selling procedure in place

When the time comes (as it often does) when one of you wants to sell your share, it makes sense for the other members to get first refusal. That may mean that the remaining members all expand their shares to retain an even split; or it may mean that one partner buys the largest share and proportionately increases both his expenses and usage. However, if no member is willing or able to increase his own share, the redundant share needs to be put on sale to the open market, enabling a new member to join. In that case, the continued sustainability of the agreement will depend upon the sourcing of a purchaser who agrees to the terms of the contract and who the other members are happy to accept. Until that new member is found, the original shareholder should remain liable for any expenses – and proviso for this should be detailed in the original contract so that everyone is confident about how the process works and happy that the interests of all will be protected. If no agreement can be reached then it is often the case that the whole boat needs to be put up for sale, but again, to avoid doubt or animosity, this operating procedure should be made explicit in the original contract.

Alex Smith is an ex-Naval officer, with extensive experience as a marine journalist, boat tester and magazine editor. Having raced as a Pilot in the National Thundercat Series and as a Navigator in the inaugural Red Sea RIB Rally, he has now settled in the West Country, where he lives and works as a specialist marine writer and photographer from his narrowboat in Bath.