Home » Expat Focus Financial Update 08 March 2017

Expat Focus Financial Update 08 March 2017

London becomes a cheaper city for expats

The Brexit vote has led to London becoming much cheaper for expats to live and work in, says a study.

While London has topped the lists for the most expensive place to live in for several years, it’s now lagging behind New York and Hong Kong, according to real estate firm Savills.A big reason for the slide is down to the pound’s value falling after the Brexit vote.

However, estate agents in the capital say that accommodation costs for the average Londoner, that’s the total of office and housing rental cost, is now £71,000 ($86,878) per year.

For expats living in New York, their costs are £90,700 ($110,979) and in Hong Kong they are £85,000 ($104,005).

In Paris, the costs for expats are £61,370 ($75,100), while in Tokyo the costs are £60,225 ($73,700).

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The top 10 most expensive cities for expats to live in is made up of San Francisco, Los Angeles, Dubai, Sydney and Miami.

The index from Savills helps employers understand how much it will cost to send an employee to work overseas and their research also reveals that London’s living costs are now 10% cheaper than they were in December 2008.

A spokesman for Savills said: “Cities may become more or less competitive over the short-term but their long-term costs need to be taken into consideration when employers sign leases.”

Restrictions to US entry

Expats from six countries are being denied entry to the US under a new presidential order signed by US President Donald Trump.

The six mainly Muslim countries are Iran, Syria, Libya, Sudan, Somalia and Yemen while Iraq, which was previously included in the order, has been dropped because it has introduced better data sharing and visa screening.

The new directive takes effect from 16 March and will place a 120-day ban on all citizens from those countries travelling to the US.

Citizens from those countries who are Green Card holders, legally recognised as permanent residents of the US, are not affected by the order.

House of Lords back EU expats in UK

The House of Lords has backed an amendment to the Brexit law which should guarantee the rights of EU nationals to remain in the UK when the country leaves the European union.

Their amendment will see EU citizens who are living in the UK being granted the same residency rights after Brexit and the proposals for this must be produced within three months of Article 50 being triggered, the Lords declared.

It’s the first parliamentary defeat for the Bill though the government can remove the changes when it returns to the House of Commons before being passed into law.

However, ministers say the issue of EU expats in the UK is a priority for them but this must be part of any deal that will help protect British expats in Europe.

The bill is now nearer to being passed which should see the triggering of Article 50 and the start of official negotiations for the UK to leave the European Union.

Most expensive business trip destinations revealed

A survey by ECA International, an expat business consultancy, has revealed where the most expensive destinations for business travellers are, with New York being the most expensive in the Americas.

It’s followed by Bridgetown, Nassau, Washington DC and then New Jersey.

In Europe, the most expensive destination is Geneva, followed by Zurich, central London, Paris and then Bern. Those behind the survey say the relative strength of the Swiss Franc against the US dollar makes their country’s cities more expensive for expats to live in.

In addition, Geneva also has high hotel costs which are being driven by increasing levels of tourism.

In Asia, the ECA International survey says Tokyo is the most expensive destination for business travellers, followed by Hong Kong, Seoul, Singapore and then Dhaka.

The aim of the index is to help employers and organisations predict the cost of a business trip for their expat employees on a short-term assignment.

The best passport for expats is…

A survey has revealed which of the world’s passports is the most desirable to hold for expats and high net worth individuals and on top of the list is Sweden.

The findings by wealth advisers Nomad Capitalist looked at 199 countries for their value of citizenship as well as other issues including visa free travel options and global reputation and personal and civil freedoms.

They found that having a Swedish passport enables the holder to travel without a visa to 176 countries but Swedish expats can also opt out of high taxes and live in many other countries without any bureaucratic headaches.
Nomad, which is a firm that helps high net worth individuals reduce their tax burdens by relocating overseas and obtaining residence permits to grow their wealth more quickly, says it advises clients to obtain a second passport whenever this is possible.

After Sweden, the next best passport to hold are those from Belgium, Italy, Spain and Ireland.

They are followed by Finland, Germany, Denmark, Switzerland and Luxembourg while those passports that are best avoided are from Libya, Pakistan, Eritrea, Iraq and Afghanistan is in the bottom spot.

The US was ranked in joint 35th place with Slovenia and the UK and Australia are both in 16th position.

In other passport surveys, Germany is generally regarded as being the strongest passport to hold.

Costs for expats renting revealed

A survey of how much it costs expats to rent a home around the world has been revealed in a new survey, along with how much the expat will need to earn whether renting as an individual or as a family of four.

The findings from Nested.com are calculated on a cost per square foot basis and reveal that San Francisco is the most expensive place in the world for expats to rent a property at £3.98 per square foot.

This means an individual expat will need to learn £69,086 ($84,550), while an expat with a family will need to earn £131,087 ($160,430) to live there.

In second place is New York City where an individual will need to earn £66,213 ($81,027) and for a family it is £125,636 ($153,746).

In third spot is Hong Kong (£53,481/£101,476); in fourth place is Dubai, (£49,204/£93,362) and Singapore is fifth (£46,541/£88,310).

The top 10 is made up with Washington DC, Geneva, Sydney, Zürich and then Los Angeles where an individual expat will need to earn £39,941 ($48,877) and for a family the figure is £75,786 ($92,746).

London is in 11th place with an individual expat moving there needing to earn £39,876 or £75,663, Tokyo is in 15th place followed by Paris and 18th, Beijing in 29th place and Berlin is in the 46th position.

Best areas in the UK for their quality of life

Expats heading to the UK to enjoy work opportunities may be wondering where the best areas are to live.

A survey by Royal Mail reveals all, by analysing the towns and cities for their balance between quality of life and work opportunities. Most of the best places are in the north of England.

The small town of Bebington near Liverpool claimed top spot.

In Scotland, the number one spot was taken by Neilston, near Glasgow, and in Wales it’s Morriston in Swansea.

The survey found that the best area for work-life balance in the south is Kesgrave in Ipswich.

No areas of London appeared in the top 10.

Expats can transfer money via Facebook

Expats can use Facebook to conduct international money transfers with TransferWise.

The firm’s new service helps users send money internationally through a chat application as competition in the sector intensifies.

The start-up, which is based in London, says it has a Facebook Messenger chatbot that will help users to send money to family and friends who are in the US, the UK, Australia, Canada and Europe.

Currently, Facebook allows people to send money in the US via its Messenger app but those wanting to send money overseas are not able to do so.

In other financial news…

According to news outlets, growing numbers of expats in Kuwait are opting to send their families back home because of the rising costs of living in the country. Expats there say they are facing higher costs for residency and school fees as well as increasing rents.

The strengthening US dollar means American expats looking to invest in Swiss, French or Austrian real estate will enjoy a more favourable financial climate. For some of Europe’s most pristine ski locations the dollar is making high-end properties more attractive to buyers using dollars. The dollar has strengthened by 20% against the euro over the last two years. The strong dollar has also seen a surge in the purchasing of prime central London property in recent months.

Four new exclusion categories have been added to the list for 500 expat teachers to be made redundant by the end of 2017 in Kuwait. The exemptions include Syrian teachers and those who have children in grades 11 and 12 and the wives of Kuwaitis. The government says expat teachers applying for exclusion from being laid off so that 25% of teaching posts will be taken by Kuwaitis will have their application decided on an individual basis.

News outlets in Saudi Arabia are reporting a denial from the Ministry of Labour and Social Development that the end of service benefit for expats in the kingdom are being amended. Rumours have been circulating that for every year of service, an expat will receive two months of salary as their end of service benefit. The current rules of half a month’s salary for every year of service for the first five years and then one month’s salary for every year afterwards is still in place, said the Ministry.

Lawmakers in Iran have set aside $52 billion as a budget to attract US-based Iranian expats as well as their investments back to the country. The government hopes to attract expats with scientific and economic experience and with up to 7 million Iranians living overseas with assets worth more than $1.3 trillion means the government is hoping to attract wealthy Iranians to reinvest in their home country. From their calculations, the government says expats investing 10% of their capital held overseas would have a huge impact on the country’s economy.

Saudi Arabia’s Ministry of Trade and Investment is looking to amend regulations that prevents expats from investing in the kingdom with a view to encouraging investment that will help create new jobs and boost the country’s development. The ministry is looking to create specific regulations and standards for paying taxes in the coming months.

British expat John Green has found a lucrative new sideline with a business selling bottles of Swiss Alps air to customers around the world which retail between £78 and £200 per bottle.

The flotation of the Egyptian pound has seen expats from Egypt sending more money home; remittances grew by $5 billion or 20% more than before the flotation. Currency experts say this shows growing confidence in the country’s new currency. Meanwhile, Bangladeshis remitted the lowest amount for several years in February with $8.1 billion.

An MP in Bahrain is proposing that expats who drive a car there pay a fee of BD100 (£217/$265) to help reduce traffic congestion and boost revenues. The move is currently a proposal but is set to be debated by MPs soon.

Just days after a famine was officially declared, the government in South Sudan has increased fees for expat workers heading there from $100 to $10,000. However, the actual permit fee varies depending on the expat’s skill level with the minimum fee being $1,000 and most expats in the country work in the oil industry or in humanitarian aid.

The European Commission has told the Spanish government to scrap the unfair expat fines incurred under the Modelo 720 system for the late or inaccurate submission of a tax return. The fine can be as high as 150% of the expat’s undeclared assets. The country has been given two months to scrap the fines and introduce a fairer system for those who make errors.