Take the €@$Y option

On a few occasions in this column, I have touched upon the importance of getting your currency transactions at the very best price when moving money between es and £s and vice-versa. I make no apologies for returning to theme once again as it is such a crucial aspect and easy to get right or indeed wrong!

During the course of a year, the currency markets fluctuate quite remarkably. We have seen highs of around the 1.52 mark and lows near 1.40 ­ a very significant difference in a relatively short period of time. These differences can be exaggerated further if you rely on High Street banks rather than specialist currency dealers to exchange your money.

Let us look at a couple of scenarios and see how the market could have operated against you.

For example, imagine somebody finding their dream home here in France around the 1st of August last year. Typically the time frame for a transaction is around 3 to 4 months, so let us assume completion around 1st December. To illustrate the problem we will assume a purchase price of 200,000 e. On the 1st August, the property would have cost roughly £131,500 in Sterling terms. Many people do stretch themselves financially to the limit when they see a perfect property. By the 1st December, the property would now cost the same buyers £140,500 ­ not a very nice surprise or welcome to France.

As we know, not everyone settles into la vie française, and some people end up selling up and returning back to the UK. Using a similar example, a sale for 250,000 e agreed in mid March 2005 with completion set for 3 months time. The vendors would have done their calculations and expected to receive £177,300 upon completion of their sale. However, due to the way that the markets have moved, they would only expect to receive £165,500, quite a mark down from their original sale figure.

We have just heard of a buyer with another agency, who haggled over the purchase price for around 2,500 Euros, and subsequently arranged their currency at near tourist rates with their bank, totally losing the saving and more, against what they would have achieved using a specialist currency dealer (F C D). Don’t fall into the trap of not getting the best deal for your money.

There is certainly one easy solution and that is a Forward Purchase or Time Option. This in itself will give you some control of the markets, enabling you to catch the ‘crest of a wave’ and provide peace of mind that your property will not change in value in the event of market volatility. This enables you to buy currency for a future date based upon today’s rates of exchange. A premium is charged to the spot rate for the length of time you wish to secure your currency, the longer the time-scale the greater the premium. But it makes life a lot less stressful if you need that element of certainty. We can put you in touch with a dedicated dealer to ensure that you get the very best rate for your currency. So ­ if you wouldn’t consider purchasing or selling property in the UK without knowing the price, don’t do it when buying a property abroad either ­ use a forward time option to plan sensibly and eliminate all the risk. Give us a call and find out more!

Now some handy tips on moving money to and from France, as a little research will save you time and money.

Bank charges in France vary considerably from one bank to another, so make sure you pick a bank that (a) doesn’t make receiving charges when you move funds across, and (b) doesn’t make a hefty monthly charge to run the account.The receiving charge is the most important factor. Some banks charge a flat fee of a few Euros to receive Euros from the UK (don’t send sterling or they may well exchange it at tourist rate!) ­ while some charge a percentage fee. Needless to say if you are sending, say, e 100,000 it is much better to pay a flat e 20 rather than 0.5% which would cost you e 500. Banks don’t tend to be too up front about this cost so don’t be afraid to ask.

Finally, a note on account numbers. French accounts have bank codes, branch codes and account numbers, plus an international SWIFT transfer code. These are commonly integrated into an IBAN (International Bank Account Number) plus the SWIFT code, and a new European directive means that you should always have the IBAN available, rather than the old sets of numbers. Your bank will be able to give you the number ­ it will start FR followed by about 16 digits. So, do your research and make sure everything is in order in good time for your transactions