But while luxury assets are popular, our clients also recognise that tying up wealth directly in a yacht or aircraft isn't always the best option when so many other investment opportunities are available. This is where Investec's marine, aviation and high-end vehicle finance solutions can help.
Making your investments work for you
Luxury assets are often investments of the heart; yachts, aircraft and cars are very different investments to property or stocks and shares. They're also expensive to run. A yacht owner typically pays 10% of the asset price in annual operating costs, including mooring fees, fuel, insurance and crew salaries.
Chartering a yacht or aircraft can help offset some of these costs, but most of our clients buy luxury assets purely for personal use. So, how can they be a more effective investment?
Toby Robilliard, who heads Investec's marine and aviation team, says some buyers can be tempted to pay for high-value assets with cash. This may not be the best approach.
"These purchases generally depreciate from day one," he explains.
"By using finance for the asset, clients can instead invest in their business or pursue conventional investments to generate a greater return than the underlying cost. At the very least, a finance solution can minimise the overall cost of ownership."
How does luxury asset finance work?
We offer secured loan facilities ranging from £1 million to £20+ million for a variety of sailing and motor yachts, fixed and rotary-wing aircraft, and other premium purchases.
These solutions are available to both existing clients and those who aren't currently using our services. The underlying process isn't too dissimilar to purchasing a home.
"A mortgage is taken over the asset in the same way as a mortgage is taken over a property. But instead of registering a property with the Land Registry, the luxury asset is lodged with the relevant yacht or aircraft registry," Toby explains.
"The required mortgage documentation is then produced and delivered, which confirms a charge is being taken over the asset and a loan provided against it."
When yachts, aircraft or high-end vehicles are already owned outright, we can also provide finance against the existing asset to free up funds for another asset purchase or to pursue other opportunities to grow wealth.
That covers the basics. But everyone has unique personal and financial circumstances, so there is rarely a one-size-fits-all solution. Tailoring lending to meet individual requirements is therefore crucial.
"Depending on the particular circumstances, there are a lot of sophisticated structures available," Toby says.
"We engage closely with the client and have a deep discussion about what a solution could look like. We ask about their plans for the asset and how they want to own it."
Finding the right finance solution
Flexibility is key when funding a luxury asset purchase because buyers often have sophisticated borrowing needs.
Some may have earnings in multiple currencies, while others have complex income profiles that traditional lenders struggle to accommodate. In certain cases, a luxury asset owner may already be financing a purchase, but their current provider doesn't have the appetite to refinance in the future. These are just a few examples.
"We engage closely with the client and have a deep discussion about what a solution could look like. We ask about their plans for the asset and how they want to own it."
The answers to these questions help build a bespoke solution. Loan-to-value (LTV) ratios of up to 75% are available, as well as both fixed and variable rate interest options.
Clients can also take advantage of multicurrency capabilities, such as pound sterling, US dollars and euros. We offer annual payments, balloon finance or interest-only approaches, among other options.
"For example, a client may be selling their business or a property in the near future, so we can factor lump sum payments into the agreement. The LTV may be higher at the start of the loan, but these one-off capital payments will bring it down," Toby explains.
Going the extra (nautical) mile
Our clients are experts in many areas of business. That's what has helped them achieve their goals. But staying abreast of the latest developments in a market as niche as luxury assets can be time consuming.
That's why we also provide access to an extensive network of brokers, tax specialists, insurers and other professionals who can offer further advice and assistance.
Whether a client has a luxury asset already in their sights or needs help finding the right purchase, the marine and aviation team can help. They have decades of collective knowledge and experience within the industry, including a thorough understanding of second-hand markets and depreciation rates.
Toby says: "Other providers may offer the finance, but we go a step further by delivering a full end-to-end solution and connecting luxury asset buyers with all the right industry partners."
