HomeWhy buying a new home abroad has never been easier
By Nic Cicutti
New generation of independent dealers provides cheap alternative to banks
TRANSFERRING CASH abroad for other than business purposes was once seen as the preserve of harassed parents forced to send money urgently to penniless offspring stuck in some dingy boarding house somewhere in the Far East.
The cost was never really a consideration for mothers and fathers fretting over the safe return of a gap-year son or daughter.
But in today's increasingly mobile society where, thanks to cheap air travel, second properties in France, Spain or Italy are far easier to reach than holiday homes in Devon or the Lake District, the demand for the cheap transfer of currency is booming.
Catering to that boom are growing numbers of online and telephone-based foreign exchange dealers, who promise to be able to transfer money into almost any account, anywhere in the world, within hours.
Significantly, in many cases they can undercut traditional high-street banks, offering customers the chance to save many thousands of pounds on each transaction.
The initial surge in the numbers of people using foreign currency firms began five or six years ago, when the high price of sterling meant savings of thousands of pounds for anyone buying a car on the continent at euro prices.
Paul McKenna, managing director at Alliance Car Imports in Accrington, Lancashire, says a strengthening of sterling against the euro in recent months, means he can deliver large savings on many cars.
These include up to £6800 off the £18,320 list price of a brand new Renault Scenic 1.5 diesel Expression, or almost £8000 off the price of a Renault Laguna 2.0 DCI five-door hatchback.
Either way, increasing numbers of people, whether buying a dream home in the Dordogne or seeking out a cheap Audi in Brussels, are now flocking to these niche players every year.
The specialist agencies employ handfuls of staff yet are able to move tens, even hundreds of thousands of pounds at the press of a button.
Some estimates suggest up to one million people could benefit from their services, including up to 150,000 who buy foreign properties each year, the thousands more who buy cars abroad, the 250,000 who emigrate and the immigrant workers who send money home after moving to the UK.
The currency traders' proposition is simple: anyone needing more than a few thousand pounds at a time would be better off coming to them than going to a bank, both in terms of the deal they can get, the speed with which it can be executed and the overall service they receive.
Adrian Jacob, senior account manager at Currency UK, said: "In 99% of cases we are cheaper than banks. The savings we can generate will range between 1% and 5% on most contracts, depending on the currency and the size of the deal - the exception being if you have an exceptionally fantastic working relationship with your bank."
"The reason is that we operate on far smaller overheads than high-street banks do. Their margins on a trade will range between 1% and 5%, for some of the most expensive ones, with an average of 3.5%. In our case, we operate on a margin of just 0.3%, passing on those savings to the customer..."
Moreover, at a time when the values of currencies such as the euro are changing rapidly, dealers offer the possibility of "forward contracts", locking into an existing rate customers who put down a 10% deposit, even if the money is only needed in a few months' time...
Most dealers will open an account after receiving a signed fax from a client.
Extracts from Nic Cicutti's article, which appeared in the Sunday Herald on 28 Jan 2007
