FOREIGN EXCHANGE


David Johnson of Halo Financial says


that on the other hand a currency broker can usually complete the currency transaction within one day. It can take a little longer in the US, where there is a further handover from Federal to regional banks. “If you’re sending money to the First Bank of Hicksville Nowhere,” he warns, “it can take an extra day.”


Are bAnks reAlly so Awful? If this sounds like bank-bashing, it’s not intended that way. Vasilios Dimarakis of Moneycorp says it’s easy to explain by the fact that banks and currency brokers have completely different business models. “We go for a high volume of currency transactions and low margins,” he says. “Banks don’t have the volume, so they have to have high margins – they’ll have multiple charges such as a handling fee, receiving fee, and so on.” For the small to medium sized investor,


he believes using a foreign exchange specialist will work out cheaper. But there’s an additional advantage for both purchaser and agent, since “Any good currency broker will hand-hold throughout the process. We don’t just carry out the transaction, we monitor and manage the transaction.” That means, for instance, that the broker will report the funds transfer as soon as it happens, and will also ensure the funds have arrived in the recipient bank.


budgeting with fixed rAtes While obviously the initial purchase of a property (and its eventual sale) are major foreign exchange transactions, most buyers of overseas property also have a requirement for smaller currency transfers over time, whether that is sending UK pensions or mortgage payments abroad, or bringing rental income back to the UK. Most brokers will handle regular payments, and David Johnson says “It’s been a great market for us, even though the ticket size is small compared to our usual transaction size.” Besides, clients who want the security of


knowing exactly how much they will have to pay each month can fix the exchange rate for up to two years at a time. That helps them budget, since the monthly payment won’t vary every month depending on currency fluctuations. With off-plan sales, stage payments also


need to be allowed for, possibly including fixing the rate at the time contracts are exchanged. David Johnson says, “If the deal involves stage payments, we can ensure the


currency is booked at a particular rate, and ready to go when it’s needed – it’s those aspects that are of the greatest benefit to the client.” Most brokers handle the major


currencies – Euro, US, Canadian and Australian Dollars – though currencies such as Brazil’s Real may need a more specialised firm. Chris Saint says the Euro is a major currency for Hargreaves Lansdown, and Halo Financial also handles a lot of Euro. Demand from the property sector is down, in line with property prices and transaction volumes, but Halo is still seeing good business in France and Portugal; Spain, on the other hand, has “gone through the floor,” David Johnson says.


leAving the Country – for good The migration markets also do well for many brokers. Halo sees quite large business from Britons migrating to Australia, the US, Canada and New Zealand; this has become more important as the property markets have slowed down. And of course the rate clients are getting


will be better than the rate they’d get from a high street bank. David Johnson says that Halo Financial has calculated the average saving to be between 2.5 and 4.5 per cent against booking currency from the bank.


“If clients are unsavvy and pay tourist rates, the variation could be even higher, 8 or 9 per cent.” Add in the benefit of timing, for instance where rates are fixed ahead, and clients could end up saving between 10 and 12 per cent on some deals, which on a €400,000 house is a very considerable amount. Patrick Joseph of MyFrenchHouse.com,


which is partnered with Foremost Currency, says that’s definitely worth having; “The difference can be the price of a swimming pool.”


whAt’s in it for the estAte Agent? It’s obvious what the advantages are for the client, but what about the agent? Patrick Joseph says there a number of benefits. For a start, the agent is


providing a one stop shop to the client, covering financial aspects of the


transaction. But equally, the agent benefits from the fact that currency brokers are used to assisting with property transactions and understand what is involved in the process and what information both buyer and agent need. With a good broker, you don’t miss


completion dates because the currency transfer has gone wrong. “With a good broker you always know what’s happening,” he says. “You never hear back from the bank or the notary, and from my point of view it’s important that a quick call to the broker will get me proof of payment, making everything ready for the completion date.” Adam Bobroff of Foremost Currency


It’s a new revenue stream for the agent,” Chris Saint says, “with no cost to the client as the fee comes out of


our commission.” Chris sAint ifA hArgreAves lAnsdown


confirms that helping the agent is a priority for him. “We have to be careful and not let out any client information without authority of course,” he says, “but subject to that, we will liaise with agents, we can send receipts to the agent or the notaire, and we will keep everyone involved in the transaction posted on the current situation.” About 50 per cent of Patrick Joseph’s


clients take up the offer of currency dealing with Foremost Currency. As some of them don’t need currency services at all (for instance those based in Ireland and buying in the Eurozone), that is, actually most of those clients who need currency. He makes it clear that clients are free to shop around, and they frequently do. Agents who enter into partnership with a currency broker can also expect to be


PROPERTYdrum NOVEMBER 2010 39


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