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A lot on their plates
8/21/2012 - James Cockington

All hail taxi plates may be expensive but they can be a nice little earner

Those who like to browse the ''businesses for sale'' advertisements in newspaper may have noticed that taxi plates are regularly listed, along with other business opportunities, such as cafes, service stations, hair salons and, as listed a few weeks ago, a bordello in the city centre..

Taxi plates - the more common term for a licence to operate a cab - are a well-established investment. These were once a working-class status symbol but now those buying taxi plates are just as likely to be retired company directors with an eye purely on the investment angle.

The taxi business has its ebbs and flows but those involved say cabs are an essential service with a relatively stable yield. The global financial crisis hasn't affected trade in most areas and the market value of taxi plates has risen steadily in the past 10 years.

Recent values are about $425,000 for Sydney unrestricted plates and $450,000 for the Melbourne metropolitan area.

Other cities are less expensive: about $300,000 for Perth, down to $105,000 for Launceston.

Market values are affected by factors such as the demand for services, the availability of drivers, the level of competition in an area and social demographics.

The Gold Coast, with its high percentage of cashed-up retirees, has the most valuable taxi plates in Australia.

These are offered for sale for more than $600,000 in some cases. Cairns also attracts premium prices.

The value of plates relates directly to how many people want to live there. The website has a link to taxi plates for sale with approximate values for comparison.

Plates from the Bunbury region of Western Australia are being offered for $200,000, along with the sales pitch that this is a fast-growing tourism area that's close to wineries. This may imply that there are plenty of visitors who are too drunk to drive.

Buying a plate does not involve buying a taxi or driving one, unless you particularly want to.

Investors usually lease a plate through an intermediary, such as an authorised taxi network, which then subleases it to one of its drivers. The network manages the details of paying rank fees and insurance.

Many licences are sold by existing owner-operators who are retiring and already have a connection with a taxi network.

According to the ads, the net profit each month is about $2500 for a Sydney or Melbourne cab.

There's a controlled number of licences issued by the various state government authorities, so existing plates are in demand.

In NSW, most licences issued by Transport for NSW can be traded, although the department has recently released short-term licences by tender. These are not tradeable so they are aimed at people who want to operate taxis, rather than investors.

Those planning to buy a plate will need to do some basic research. The NSW Taxi Council offers training material for buyers who want to learn more about the regulations in each state.

There are also taxi-plate brokers, who advertise in the ''businesses for sale'' section. Veteran cabbies are another source of general information and advice on the industry.

This can be a profitable little earner.

The owner of Bowral-based Southern Highland Taxis, Laurie Stewart, took over an existing business 12 years ago when he decided to move out of Sydney.

He was negotiating to buy the local Toyota dealership when he heard the taxi business was up for sale.

He picked up 18 restricted plates as part of the package and has since sold one of them to interstate investors who lease it back to him.

Stewart says plates in the southern highlands region, where he is the sole operator, have a market value of about $300,000. This represents a rise of $50,000 in the past seven years.

These plates form a valuable asset, able to be sold along with the business when he decides to retire.

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