House sale: Euros to GBP advice

cdjockey

Hello,


I have a friend who is not too financially savy and has asked me for some help. (so i thought i would ask you lot )



She has sold a house in Europe and now has over 100K in Euros in her barlays Portugal account.
She has instigated setting up an account in the UK with Barclays (A Euro denominated one) as she felt the exchange rate at present is not that good, and planned to convert to GBP with Barclays when there was a better rate.


My initial thought was that she would probably get a better rate with a specialist exchange company, although I gather from her that they have offered to do it at a “commercial rate” - Not sure if this will be good or not.



I have had a look around on the web and found a list of companies that might possibly offer a better exchange rate (HiFX, TorFX, RabbitFX, Money Corp etc) but I cannot find a good comparison of rates offered.


The best advice seems to be to register and set up an account with a couple of them and then phone around for best rate on the day and go with the best.


Some of my questions: How long does it typically take to get set-up with these companies? (I assume you need to send proof of who you are and address?), Are the funds protected with them while they hold them (I guess even then only up to £50K) should the worst happen.


Has anyone had to do this before? Advice on companies to use would be welcome.


My own thought was that she should have fixed a rate a the time of the house sale and then she would know how much it would be worth, but unfortunately she did not ask me at the time.


Many thanks.


cdjockey


:beer:

Cook_County

She may be exposing herself to increased CGT on the foreign currency so may wish to move into Sterling before Budget day.

97trophy

cdjockey wrote: »

she felt the exchange rate at present is not that good, a

With respect, she is trying to be too smart by half. Whilst it is possible for the Euro to strengthen it is also possible for the Euro to weaken from here. No one can predict.

One possible suggestion is that she open an account with XE trade (xe.com) and then switch the money in smaller chucks of 10 or 20K over several months to get an average price rather then doing just one trade.

All the brokers are now regulated by the FSA and client money (I believe) is held in segregated account.

I use XE trade and they are owned by Western Union and thus IMO very safe.

JamesU

97trophy wrote: »

I use XE trade and they are owned by Western Union and thus IMO very safe.

Trophy, can you give an idea of the exchange costs for Eur to sterling using XE?

Typically using a UK Barclays Euro account on this amount, I would anticipate 1.5%- 2% in total for Eur to Sterling. XE has also been recommended by other OPs recently, but I have not been able to do a direct cost comparision on XE.

CDJockey, some useful links to read through on known costings.


Barclays UK Euro account
https://forums.moneysavingexpert.com/discussion/2457663
(postcount 4)

Caxton/XE
https://forums.moneysavingexpert.com/discussion/2536995
(postcount 7 and postcounts 16-19)

JamesU

JamesU

Cook_County wrote: »

She may be exposing herself to increased CGT on the foreign currency so may wish to move into Sterling before Budget day.

Cook-County, I do not really understand this.

House is sold, payment received in Euros in Portugal, and it is easy to establish £sterling equivalent based on exchange rates on the day of sale to calculate any potential liability to CGT on the sale of the property.

The Euros are then held on account. Until such time as they are exchanged into Sterling, surely there are no further capital gains to consider? (or indeed CGT losses to offset against any gains on house sale if the Euro is weaker when they are finally exchanged, relative to Eur exchange rate on the date of sale).

So why is there a need to exchange the Euros into Sterling before budget day to reduce exposure to CGT? (unless of course it is in case there is an immediate CGT rise on the day!).

JamesU

97trophy

JamesU wrote: »

Trophy, can you give an idea of the exchange costs for Eur to sterling using XE?

Eur to GBP currently 0.8203 (yes you can trade at the w/e) - Friday close spot market 0.8357

JamesU

97trophy wrote: »

Eur to GBP currently 0.8203 (yes you can trade at the w/e) - Friday close spot market 0.8357

Spot at 0.8357 on Bloomberg also,

Assuming this exchange can be done right now, and figure is from XE:

(0.8357-0.8203/0.8357)*100 = 1.84% exchange costs

Is the above OK? If so within 1.5% - 2.0% range expected?

JamesU

97trophy

I agree with your maths....another good thing about XE is they will do small contracts. I have done trades as small as £10.00 - when I first tested their system.

JamesU

97trophy wrote: »

I agree with your maths....another good thing about XE is they will do small contracts. I have done trades as small as £10.00 - when I first tested their system.

Trophy, appreciate confirmation on this, thanks.

Getting these rates on small transactions is a definite plus and good to know. I did investigate a few providers some years ago, but was not really up to date with any changes and their competitiveness. Based on XE here and comparisions on the other threads recently, looks like an optimal range on costs to aim for is between 1.5%-2.0%. Useful info, as OPs are posting questions on Eur/Sterling transactions quite regularly.

JamesU

cdjockey

Thanks JamesU and 97Trophy, very interesting.

JamesU could you tell me what the Barclays % boundarys are, eg 25K, 50K, 100K, 150K. I am not absolutely sure what the total euro amount is, it may be over 100K.

From other posts it seems as though it could be worth trying to push to get in contact with banks biz team or foreign exchange division to try and get best possible rate. Seems as though 1.5 - 2% is typical and that Barclays is not that much worse than XE.com or any others.

The whole rate will be up in the air with the budget on tuesday, EU submit on thursday, and if a spainish bank goes bust in the mean time....

Unfortunately she needs the money reasonable quick to buy a house here (divorce caused sale). I have said to her she could hedge some of it by just changing some of it for deposit and doing rest later. I have spelt out to her from the start that these things can go eithier way, my aim is to get her to get it changed asap as trying to guess the market is impossible.

JamesU

cdjockey wrote: »

JamesU could you tell me what the Barclays % boundarys are, eg 25K, 50K, 100K, 150K. I am not absolutely sure what the total euro amount is, it may be over 100K.

If you opt for Barclays go in to see them at a main branch and check a typical rate against spot price for cost comparison:

Phone number provided for foreign exchange dept on euroaccount.
Day rate exchange under £25K.
Better rate secured with international banking section over £25K.
If account set up, can phone direct to foreign exchange.
Quote/accept/decline transactions until happy with rate.
Monitor intraday and over a range of days (see threads)
These variations as important as variations in exchange rate between providers
Aim for 1.5 - 2%
1% variation on 100K exchange is £1K difference of course

Logisitics to consider:
Be sure of bank costs on Portugal side for transfer out to UK Euroaccount
Limit of 12,500 Eur previously/transaction into UK, probably not changed
Multiple small transactions around 12.5K (money laundering regs)
Larger transactions may incur time delays/paperwork/higher costs
Once into UK Euroaccount exchange straightforward as above

cdjockey wrote: »

Unfortunately she needs the money reasonable quick to buy a house here

Trophy's suggestion of cost averaging multiple exchanges over a period of months sounds like a good approach, but for sure if you do it in lump sum, anybodys guess if it turns out to be the right timing.

cdjockey wrote: »

Seems as though 1.5 - 2% is typical and that Barclays is not that much worse than XE.com or any others.

No idea on logistics of set up, but XE looks reasonable if it is 1.8% when you try to do it. See also Jonbvn/MSE link and asterisked providers as may also be good possibilities. Yes, case of checking out a few and getting an idea of their exchanges rates and comparison of costs incurred relative to spot price.


JamesU