A recent enquirer with Prime Cap was keen to understand how our services might improve the rate of exchange and refine ease of execution for payments related to the collection of sterling denominated rent on their London property, and the transmission of that rent to their US account, where they now live (and rent, as it happens).
The enquirer currently banks with a reputable, if not venerable, UK based private bank, but, as is so often the case they had suspicions that the rate of exchange could be improved on the basis that the amount being transmitted was 'small' although regular.
When addressing matters of this type and without having delved any deeper with the enquirer than to establish the basic terms of the matter, we need to assume certain things, however, it is worth noting that the particulars of the collection of funds will generally determine the best way to maximise rate and process efficiency - by that we mean that any recommendations we make have to work around and defer to the current way in which rent is collected from the tenant.
Is rent paid to you by an appointed managing agent?
If your tenant pays your rent to an agent managing your property then you are at liberty to instruct the agent to credit those pounds to whichever account you chose.
Prime Cap works directly with a number of managing agents who send GBP to their overseas landlords.
We work with them in a couple of ways.
1. If the landlord has stipulated that the GBP amount should simply be paid directly to their foreign currency account, then the agent can elect to instruct a currency broker like Prime Cap to facilitate the transmission.
In doing so, the agent is ensuring that the landlord receives as much as 5% more of the foreign currency amount than the landlord would receive were the agent to simply send an international sterling payment to them.
In this instance the agent is acting conscientiously and is ensuring that his client receives the optimum amount of foreign currency achievable.
Process wise, the client need do nothing, as Prime Cap engages directly with the managing agent to receive the sterling and send the foreign currency amount onwards.
This is a particularly useful service for lettings and management businesses in the UK with a number of overseas landlords who just want to receive as much as they can, directly.
2. Prime Cap's partnering with managing and lettings agents as a third party 'preferred' broker means that it is the receiving client who elects, or not, to engage our services.
It is a referral structure, plain and simple.
The client receives the same high quality service, unparalleled rates and easy to use tools, and the managing agent has a trusted partner to present to their international and overseas customer.
[ THIS MEANS SOMETHING FOR AGENCIES TOO ]
Many agents sell themselves on value for money - especially in the critically competitive market that is London today - so, providing an end-to-end suite of services differentiates you from the pack. Additionally, should the client disengage you, we have found that they tend to continue to rely on our services for any currency exchange. On the basis of a traditional referral agreement, you retain the passive income on offer through certain iterations of the set-up. Even if your client stops using you, we will still thank you for the referral.
Does the tenant pay directly to your GBP account?
If your tenant pays directly to your UK sterling bank account then, simply by advising them to pay funds to Prime Cap, you, as the landlord, can make use of the same expert private client offering that all our customer enjoy.
The tenant sends us the monthly amount either by standing order or by manual online payment. Their obligations do not change, only the bank account to which they are paying your rent does.
Prime Cap's accounts are fully segregated, which provides you with the comfort of FCA authorisation. On arrival of the monies, we notify you and invite you either to manually exchange funds over our online transaction platform, or leave instruction with our broking team to exchange and credit funds immediately to you.
Both processes benefit from the same compelling rates of exchange.
Do you have a standing order to send a set GBP amount to your overseas account?
As above, collecting your rent into your UK sterling account leaves you at the mercy of your bank when it comes to the rate of exchange used for the conversion of your funds.
All private clients are welcome to set up a standing order to credit Prime Cap's GBP segregated client account on a monthly basis and on the understanding that Prime Cap's team will exchange funds at the optimum rate and as rapidly as possible.
You simply receive the appropriate statements and confirmations detailing the rate achieved and the date on which funds will clear with you abroad.
Do you convert all the rent on a monthly basis, or only enough to cover your foreign currency expenses?
Whether you chose to send the full rental income to us or not, we can buy the foreign currency amount you need and hold or return any excess.
A changing rate of exchange means that month-by-month the foreign currency equivalent of the GBP you receive will vary.
By asking us to hold the GBP amount left over once the foreign currency amount is bought, you are building up a buffer that can offset any drop in the rate in subsequent months.
Keeping the excess/remainder in GBP means that you have a UK based GBP denominated sinking funds which can be credited back to your GBP account if you wish, or paid out to third parties if expenses are incurred with the management and maintenance of your property.
In this instance Prime Cap serves as both your currency broker and a competitive and speedy payments platform.