Home » Expat Focus Financial Update 25 January 2017

Expat Focus Financial Update 25 January 2017

Expats' offshore bank accounts closed

Expats who have accounts with an offshore bank are being contacted and informed their accounts will close this summer.

The move by Nationwide International could affect thousands of British expats around the world.The Isle of Man-based bank is part of the UK’s retail bank Nationwide and they say the move follows a period of falling demand and a fall in the volume of business.

The bank also says its running costs have increased.

Expats should have received a letter to advise them of the upcoming closure but they will be contacted again with the date that their specific account will be closed.

Expats are being advised by the bank to transfer their savings and they can close their offshore account immediately or wait until they have been given a closure date.

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To help the situation, Nationwide International has removed the notice requirement on their accounts and the bank’s fixed-rate bonds can also be closed early with no penalty to be paid.

A spokeswoman for Nationwide International said: “Customers must find a new savings provider and all accounts will be closed. Customers who have more than one account will receive a separate letter for each account and our customers can be reassured their money remains in safe hands.”

Most expensive locations for high-end rental accommodation revealed

A survey of the world’s most expensive cities for high-end rental accommodation for expats has revealed that London is still top in Europe – despite the dramatic fall in the value of the pound.

However, when the world rankings are analysed, London is in fourth place while New York has overtaken Hong Kong to become the world’s most expensive location for high-end property.

The findings come from expat consultancy ECA International and their research stretches back more than 20 years to help employers find the suitable housing option for their employees.

The rent for a three-bedroom, unfurnished apartment in popular expat districts in London will cost around £5,574 or $7,886 per month.

ECA says that in US dollar terms, rents in London are around 40% more expensive than the next most expensive European location, which is Zurich.

A spokesman for the firm said 2017 offered interesting developments for the price of high-end rental accommodation in London and a lot depends on the impact of Brexit on the UK’s financial sector.

The spokesman added: “There’s also been an unprecedented surge recently in the supply of prime property in central London which could polarise rents between central and Greater London.

“With Brexit, there could be a loss of banking jobs which will put pressure on rents in the near future.”

The average price in Europe for a high end three-bedroom property will cost an employer average $2,330 in 2017.

After London, Moscow takes a second place followed by Zurich, Geneva, Istanbul, Paris and Stockholm. The top ten is made up of is Kiev, Luxembourg City and Amsterdam.

The average rent for a new York high-end rented property is now $10,502.

The spokesman explained: “New York tops the regional rankings and the rental market is active and prices have been climbing, fuelled by a strong employment market. Rents will remain high and dwarf income growth over the next year.”

The world’s top 10 consists of New York, Hong Kong, Tokyo, London and Port Moresby, the capital of Papua New Guinea. Also on the list are Caracas, Luanda, San Francisco, Moscow and Dubai.

The most expensive city for expats to relocate to

The Angolan city of Luanda is the most expensive city for expats to relocate to in 2017, according to moving service Movinga.

The firm says that for the first month of living in the city, an expat can expect their living costs to be $3,259 which is slightly higher than the costs incurred by expats moving to New York at $3,084.

San Francisco is the third most expensive place to relocate to at $3,050.

The survey looks at various data including living costs for the monthly rent of a one bedroom property close to the city centre, food and drink, the expat’s monthly commuting costs and a phone data plan.

The top 10 most expensive cities for expats to move to are made up of Zurich, London,Hong Kong, Sydney, Singapore, Tokyo and Seattle.
While these are the most expensive cities for expats to relocate to, the most affordable cities include Medellin, Bucharest and Tunis, where expats will spend an average of $397 in their first month.

When it comes to shipping an expat’s belongings to their new home, Hong Kong is the dearest place to move to, followed by Dubai and then Luanda. The cheapest for relocation costs is the South Korean city of Seoul.

Luanda also claimed top spot in the Mercer cost of living survey for two years, before dropping to second place last year with accommodation costs there being very high.

Saudi Arabia bins remittance tax plan

A plan to tax remittances being made by expats in Saudi Arabia has been rejected.

The kingdom says it has no plans for implementing fees on remittances ‘in line with international standards’ and the move overturns a previous announcement made by the country’s Shaora Council.

Expats were facing a 6% fee on their remittances and the kingdom has committed itself to the principle of capital being moved freely into and out of the country.

Wages database will stamp out 'black market money'

Oman has unveiled plans for a wages database to help stamp out ‘black-market money’ leaving the country.

The Manpower Ministry says the database will monitor how much an expat earns every month and compare it with how much they are sending to their home country.

There are fears that some expats are sending sums home that are much higher than what they are legally earning.

The government says the move is because the cross-border remittance of black-market money is hurting Oman’s economy.

The government says around OMR4billion (£8.3bn/$10.3) is remitted every year from the Sultanate.

British expats demand winter allowance reinstatement

Severe winter weather across Europe has led to heavy snowfall and freezing temperatures, which has led to British expats demanding the UK government reinstates their winter fuel allowance.

Until it was axed in 2014, British expat retirees received a £300 winter fuel allowance to help pay for their increased fuel costs.

Now expats, particularly those in the south of Spain, say MPs should revisit the rules for the allowance and the average temperature that will prompt automatic payment for those living in Spain.

Expats, many of them pensioners, have been telling British newspapers they are unused to the severe freezing temperatures and are spending small fortunes on trying to keep warm.

While southern Spain saw an inch of snow and freezing temperatures, northern regions in the country saw six inches of snow and lower temperatures.

UAE's property market could be hit by strong dollar

The property market in the UAE could be seriously affected should the US Federal Reserve raise interest rates and the dollar perform strongly against other currencies over the coming months.

In addition, real estate consultancy CBRE says that a significant pipeline of new housing could also dampen Dubai’s property market recovery in 2017.

The warning about the strong dollar was made by Propertyfinder and they say the strengthening dollar will make buying property more expensive in the UAE for foreign investors and expats and also push up borrowing costs for residents.

A spokesman for the site said a strong dollar has already had an impact on property prices which have fallen and expats are also ‘liquidating UAE property assets’ so they can take advantage of better currency exchange rates to buy property in their home country.

The CBRE report also points out that the UAE’s residential property values fell by 5% last year and experts are predicting further price falls which may help stimulate property sales activity.

Global ‘burgernomics’ index reveals most expensive places

As an indicator for pinpointing the world’s most expensive countries, it is unusual, but the Economist magazine has published its latest ’burgernomics index’.

The index is for the price of a Big Mac around the world, but stated in dollars to if the country’s cost of living is relative to that of the US.

For instance, the index reveals that the cost of a Big Mac in Sweden is 4% more than Americans are paying in their restaurants, which is $5.06.

Expats will find they will spend $5.26 in Sweden, whereas in Norway the price is $5.67.

The Big Mac index was launched in 1986 as a way to highlight the theory of purchasing power parity between countries and as an economic indicator by lecturers and educationalists.

The index highlights that the euro and emerging market currencies are looking undervalued when compared with the US dollar.

And while the pound has fallen to a 31 year low against the dollar, the Big Mac index points to the pound being undervalued against the dollar by 26% and against the euro by 19.7%.

Talent global talent competitiveness revealed

The countries that are best for attracting, retaining and growing talent have been revealed in a global talent competitiveness index.

In top spot is Switzerland, followed by Singapore, and the UK is in third – the highest place it has reached in the index published by Adecco Group.

The top 10 countries in the index consist of the USA, Sweden, Australia, Luxembourg, Denmark, Finland, and Norway.

The chief executive of Adecco, John Marshall, said: “The global talent competitiveness index has helped to cement the UK’s position as a world leader for fostering and nurturing talent.

“The UK’s flexible labour markets and openness are some of the factors that help outperform many peers but the country lags behind in vocational training and women’s equality.”

Housing affordability study ranks the most expensive

An annual survey of which countries have the most unaffordable housing has placed Hong Kong in first position.

The findings from Demographia International link the median house price in the country to its median household income.

Other cities in the top 10 are Sydney in second place, Vancouver in third, Auckland in fourth and California’s San Jose in fifth. The remaining places are taken up by Melbourne, Honolulu, Los Angeles and San Francisco, with the UK town of Bournemouth in 10th place.

The survey found that homes in Hong Kong are the least affordable as they cost 18 times the median pre-tax income, while in Sydney the median multiple is 12.2.

In other financial news…

The UK government has lost its Brexit appeal in the UK Supreme Court and must now consult with Parliament before triggering article 50. Essentially, Parliament must now give permission for the formal announcement that the UK is leaving the EU to begin.

Expats in Oman are being warned that the current rules over leaving the country without obtaining a no objection certificate (NOC) from their employer will remain in place and they will not be able to return within two years. Hopes had been raised recently that the practice would be outlawed.

Portugal has a new property levy of 0.3% on all properties worth more than €600,000; the new tax regime was brought in on 1 January. The allowance is per individual, so a married couple would be taxed on properties worth more €1.2million.

Expats living and working in Gibraltar have been reassured that the British territorial outpost is ‘well prepared’ for a hard Brexit after Prime Minister Theresa May confirmed the UK will pull out of the European Union single market. Fears that the financial industry there would be badly affected after Brexit may prove to be unfounded, Gibraltar’s political leaders say.

Americans looking to move overseas saw one website advising expats on where the best places are to move to record a 105% leap in traffic between the presidential election in November and President Trump’s January inauguration. The International Living website says a large number of Americans are ‘seriously thinking about becoming expats’.

US expats around the world, as well as Green Card holders, can begin submitting their tax returns from 23 January to the IRS, though expats also have an automatic two-month filing extension for submitting paperwork. This year, the deadline for returns is 18 April.

Saudi Arabia has revealed how it’s going to balance its budget by 2020 with plans to tax soft drinks and other harmful products by up to 50%. Energy drinks and tobacco products could be taxed at 100%. Expats will also need to pay VAT at 5% across the GCC region from 2018.

Kuwait has unveiled plans to fire expat teachers who are giving private tuition. The practice can be a lucrative one but the expat teacher must first meet the approval of the country’s education ministry.

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