Money, W
hile huge amounts of information are available on overseas property prices, rental yields, and foreign legal systems,
rather less thought appears to be given to currency issues. Yet choosing the right currency broker can make a substantial difference to what the buyer is actually paying in sterling terms. High Street banks are many buyers’ first
port of call, but they tend to offer a poor service to buyers. Currency transactions aren’t their bread and butter, and Chris Saint, currency analyst at IFA Hargreaves Lansdown, notes that many staff aren’t well placed to handle them. “When you speak to your bank you’re probably not speaking to a currency specialist who can take you through all the options,” he says. “When you speak to a broker, you know you’re talking to an expert.”
38 NOVEMBER 2010 PROPERTYdrum
makes the world go around
Andrea Kirkby looks at how agents can use foreign exchange brokers to save – and make –money.
While Hargreaves Lansdown doesn’t
advise on currency deals, it does provide information, for instance, offering weekly currency reports that clients and agents can use to keep up with what’s happening in the foreign exchange markets. The firm can also inform clients what different courses of action are available to them, as well as the risk involved in each one; for instance, buying currency forward, rather than using the spot rate. Chris Saint compares the decision to fixing a mortgage rate – but while most consumers know they can fix a mortgage, property purchasers are sometimes unaware they can fix their currency rate in advance. He says that particularly with off-plan
sales, “The timeframe for going through the property process is quite long, there’s quite a difference between exchange rates when you exchange and when you complete, so forward contracts are useful.”
It’s all about expertIse Adam Bobroff, director of foreign exchange at Foremost Currency Group, believes that brokers offer much more to buyers than simply good rates. “Apart from helping agents’ clients get a better rate, what we’re about is market expertise,” he says. For instance, stops and limit orders can be used to minimise clients’ risk, or to wait until a particular rate can be achieved. That can make a big difference compared to simply buying at spot rates. Banks are also frequently criticised for
the time they take to handle currency transactions. In a property purchase where the date of completion is fixed, and where clients are quite likely not to be in the UK at the end of the process, lack of timeliness can actually derail the entire deal. Even when the UK bank has got its act together, the receiving bank abroad can take further time to handle the payment.
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