Home » Expat Focus Financial Update April 2023

Expat Focus Financial Update April 2023

UAE Launches ‘Second Salary’ Scheme

Expats in the UAE have recently been reporting concerns about retirement and their lack of savings – around 45% of UAE residents have not started saving for retirement, even though many of them intend to retire relatively young. In this instance, a second source of income would obviously be an advantage. Some expats invest in property as a way to secure a second income, but not everyone is in a position to do this, and a number of expats have clauses in their employment contracts preventing them from taking up other work. The National Bonds Scheme is therefore announcing a savings scheme, which includes expat workers. The new scheme, named Second Salary, is divided into two phases: the Saving Phase and the Income Phase. It works as follows:

  • If you save Dh5,000 per month for 10 years, you would be eligible for Dh7,500 on a monthly basis for the next 10 years.
  • If you save Dh5,000 per month for five years and redeem this within the next three years, you could claim a monthly amount of Dh10,020 for three years.

You can also withdraw the accumulated amount as a lump sum (if, for example, you needed to put down a deposit on a house). The minimum monthly amount currently stands at Dh1000 per month for three years.

The bonds scheme also offers a number of awards under a Dh3 million prize draw, and it is predicting an expected profit rate of 4.07% p.a., reinvested monthly. It’s similar to NSI Premium bonds in the UK, and as with premium bonds, the length of time and the more you invest both increase your chances of winning.

Group CEO of National Bonds, Mohammed Qasim Al Ali, told the Khaleej Times:

“We created the Second Salary plan in response to the growing demand for ways to create a sustainable extra income for our customers. We take pride in offering a highly personalised and flexible savings plan in Second Salary, which provides UAE residents with an affordable seamless enabler to achieving financial security. Our commitment to innovation in the industry remains steadfast as we constantly strive to develop new innovative avenues for our customers to enhance their financial futures.”

Financial Changes for Expats in Germany

April is bringing in some changes for expats in Germany, with amendments to the employee lump sum, and tax-free allowances for single parents on the rise.

The Arbeitnehmerpauschale (employee lump sum) will rise to €1.230 per year. If you are a single parent, your tax-free allowance will increase to €4.260, with extra for additional children. Check with your accountant to see how these changes could benefit you. Financial advisors note that these provisions have already been put into law and should start appearing in relation to your salary from this month onwards.

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Brits in Spain Benefit from New Childcare Legislation

New childcare legislation is being put in place in Spain, extending benefits to same sex couples but also revising childcare allowances. This is set to benefit Brits living in Spain as well as Spanish citizens, as the Spanish government seeks to broaden the categories of recipients, from the traditional ‘large families’ to single parents and other kinds of family units.

New paid leave schemes (of up to nine days a year) are also being put in place, and so is a parental leave scheme, which will increase leave to six weeks a year from 2023, rising to eight weeks in 2024. This can be used continuously or discontinuously. You’ll also be able to request a three-year leave of absence to care for children or other relatives if necessary.

Dubai’s Rent Increases ‘Price Out’ Expats

The financial press is blaming an influx of wealthy Russians and crypto millionaires for the rising rental market in Dubai and says that this may price out many other expats. Bloomberg reports in April that some rents have been doubled and some expats have noted increases of 60%. CRBRE, the real estate services firm, says that rents in the Dubai Emirate have reached record highs in the first two months of 2023, with a huge hike in the number of rental property transactions.

Rents in Dubai are supposed to be regulated, with restrictions placed on rental increases by the Real Estate Regulatory Agency, RERA, but many expats report that they are having to move from the DIFC, the Emirate’s chief financial district, as this operates under its own laws – like the ‘Wild West,’ according to one commentator. But it’s not only the DIFC that has been affected: rents have been rising in other areas, a result of insufficient numbers of properties which has made the Emirate a landlord’s market. Sharp (to the point of illegal) practices, such as landlords claiming that they’re moving into a property themselves, evicting a tenant and then charging a new tenant a much higher rent, have been rife. Expats have thus found themselves forced to relocate to cheaper properties.

Green Mortgage Products Offered to Expats

Mortgage lender Gatehouse Bank has announced recently that it will be offering green loans to expats living in the UK and abroad. These include mortgages for buy to let, houses of multiple occupation (HMOs) and freehold blocks. Each mortgage comes with a green option to offset carbon emissions for either a two-year or a five-year fixed term. The bank has also increased its maximum finance amount to £5 million. Gatehouse, which is regulated by the FCA, say that these mortgages are the first Shariah-compliant mortgage products available in the UK. Spokesman John Mace commented:

“Our Shariah-compliant green home finance offering is unique within the sector and has been designed to enhance our competitiveness while providing support for customers looking to reduce their impact on the environment.”

The bank is a founding signatory of the UN Principles for Responsible Banking, hence its emphasis on green lending products. Customers will also qualify for a 0.10% reduction on the standard rental rate if their properties have an ECG rating of A or B, thus rewarding clients who have more environmentally efficient properties. The bank’s headquarters is in London, with branches in Milton Keynes and Wilmslow, but it has a worldwide customer base.

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