Purchasing a yacht is only one of the initial expenses. Owning a yacht in the EU has a yearly running cost as well, and you need to understand exactly what you’re getting into at the same time. Indeed, you need to know about all the variables to expect and even establish a budget before you purchase a yacht.
Here’s what you need to know about the yearly cost of owning a yacht:
The average yearly owning costs for a yacht are roughly 10% of the purchase value based upon an 80 to 150 hour-per-year utilization. This estimate does not apply for aged boats and includes crew salaries (when and if needed), telephone and communications, berthing, water and electricity, class certificate(s), company and vessel domiciliation (when and if required), maintenance, technical service, insurance and management. It does not include fuel consumption, which depends on the boat’s utilization.
Super or Mega-Yachts sailing also during the winter season in the Caribbean (or elsewhere) will consequently cost around double.
When hiring a professional yacht manager, you can reduce these costs to around 8% of the purchase value since they will make you benefit from discounted rates for all of the considerations herein, only granted to yachting professionals. Hiring an efficient yacht manager will also result in the pleasure of yachting freely and without the administrative or technical constraints, particularly if you own a commercial vessel.
Whilst refusing to waste money on unnecessary expenditures, if you’re smart, you should not spare on the essential items and if there’s money left over at the end of the year you can reinvest it into the boat, with maintenance or components upgrades – this will not only keep the boat looking and working better, but it’ll also maintain the vessel’s resale value.
Don’t hesitate to contact our YACHT MANAGEMENT team to analyze and provide you with a boat owning cost simulation. We will commit to reducing these running costs, as best we can.
While considering the purchase of a yacht, you may also be wondering if a crew is necessary. Most owners of 70’ and larger yachts prefer to have full-time crew aboard to help them run the vessel. Naturally, this cost is significant. Even if you can run your own yacht, however, you may want to consider bringing in a crewmember or two simply to take care of many daily maintenance chores required for luxury yachts.
Outsourcing guardiennage from a separate company is also a solution if you want to avoid permanent crew wages. Many companies on the Mediterranean marinas will provide with weekly cleaning and minor works on your boat.
When running a charter yacht, a full-time crew is mandatory, not the whole of it, but a minimum crew member staff. This becomes more expensive since these permanent crew members will necessarily have to be under an accredited payroll and with employment contracts in conformity with the Maritime Labour Convention (MLC). In these cases, be careful of the Social Benefits and Charges overhead that this payroll represents in Europe: an average of 23% in addition to the net crew salaries needs to be considered. Other crew expenses are to be considered as crew food.
If you wish to select your crew yourself, but do not want to hire them under your own company, please contact our YACHT MANAGEMENT team, which will provide you with solutions for hiring, contract and payroll management.
SERVICE & MAINTENANCE
Service and maintenance costs are hard to predict and will vary depending on the type of boat, how often you use it, how hard you use it, and how much of the work you’re willing to do yourself.
Every boat kept in the water needs careening, anti-fouling paint and new anodes on a regular basis, which also requires haul-out and manoeuvres fees. We advise planning to do this once a year.
Engines need scheduled service (such as tune-ups and oil changes), as well as unscheduled maintenance in case of mechanical problems. Logically, the more engines are on-board, the more the costs. Sailboats have different regular maintenance costs when it comes to propulsion; five years or so of normal sailing and half that for hard racing is all you can plan on before the sails need to be replaced.
Other main components will also need periodical service like generators, watermakers, transmissions, drives, thrusters, etc.
Outdoor upholstery fabrics and types of vinyl, like your Bimini tops and seat or sunbed cushions, also have a limited lifespan (five to seven years, on average) and will need to be replaced at some point. And while deck hardware (i.e. winches, capstans, etc…) may last for decades, the things you attach to it—like mooring lines and cables—need to be regularly replaced.
Then there’s the cost of cleaners, teak oils, wax, and polish. These are specialized marine products and they aren’t cheap, and over a season, you may spend a lot more than you expected on them.
BERTH, MOORING AND WINTER STORAGE
Mooring is going to cost you plenty. Fortunately, it’s a fixed cost from year to year, which makes it easier to plan for. Decide where you’d like to be moored and then if you’ll rent or purchase a berth. But don’t forget to consider ease of access and off-season hauling and storage costs, if you live in an area where boats should preferably come out of the water during the winter months. Finally, remember to add potential additional expenses for electricity, water, communications and television shore supply.
If you cruise to distant ports for weekend trips or longer navigation programs and plan to tie up in different marinas, you’ll also have to pay for a transit berth, very expensive in the Mediterranean in summer.
For more info, please refer to the article Berths Moorings and Winterizing Solutions in the Western Mediterranean on our blog.
Yacht insurance comes in many different forms, and before choosing a policy, you need to know the difference between the various types of contracts. Depending on the type of policy contracted, appropriate yacht insurance will generally cost you from 0.7% up to 0.8% (if you decide to include P & I) yearly, of the boat’s value. Look around for insurance brokers specializing in yachts, because there are a specific language and many clauses which can be unfamiliar to the common insurance agent. Insurance companies that specialize in boats often provide surprising fleet discounts and for the equipment on your boat. Other discounts may apply in relation to safety systems and navigation instruments. Where you cruise (and how far offshore, if you go into the ocean) can also have an effect on the cost of insurance. Find out all the ins and outs before you take possession of your yacht, so you can prepare to qualify for the lowest cost reasonable.
Today, it’s pretty easy to predict this cost, once you know which boat you’re considering, and how and where it will be used; on-line insurance quotes and calculators will help you estimate this expense.
Please refer to our Boat Insurance article on our Blog.
OTHER OWNING COSTS
It is important to ensure a good communications provider on and with your yacht and its crew. Although Communications costs like radio license, satellite telephone, fax, internet and satellite TV subscriptions are not very expensive nowadays, you’ll need to consider finding the most cost-effective providers.
When owning a yacht through a company, especially a charter yacht, you will also need to consider Legal and Statutory costs like yearly surveys, domiciliation fee (for both yacht and company), company registration fees, annual fees for maintenance, class and safety equipment revisions, fiscal domiciliation etc… In these cases, we recommend entrusting your yacht to a Professional Yacht Manager who will naturally charge you a monthly fee for their services.
Other Miscellaneous costs are also important to consider like gratuities, laundry, cash to master, bank charges etc… without forgetting the food and beverage provisions!
If you purchase a boat through Marine Finance, don’t forget to add the monthly or yearly interests and other financial costs.
Our YACHT MANAGEMENT team can also assist you in sorting out these expenses.
Fuel is one of the larger expenses. Even if you purchase a sailboat, few regular operational costs will compare with a motor-yacht (though naturally, with a sailboat fuel costs are usually lower). This is also the trickiest expense to plan for because it can vary so much from month to month and year to year. The best way to handle it is to try to predict the average distance you’ll cruise per season (or per year), and multiply by the boat’s cruising fuel consumption.
To minimize fuel cost, you must figure out your boat’s most efficient cruising speed, and stick to it. Most modern boats have fuel consumption displayed on the helm’s engine screens. Simply divide the speed by fuel consumption, to figure out how many nautical miles per liter you get at any given speed. Record the efficiency at different speeds and then compare them to see what speed your boat is most efficient at.