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Expat Focus Financial Update March 2023

Hong Kong’s ‘inward looking’ budget fails to prioritize expats

Hong Kong’s Chief Executive John Lee announced in the autumn that attracting expats back to Hong Kong was a priority. According to Bloomberg, this policy was expected to feature in the new budget, in the form of some incentives for attracting overseas talent. But financial experts say that the budget has been ‘disappointing’ in terms of rebooting Hong Kong as a finance hub, and has not really addressed Lee’s desire to bring expats back into the region. Instead, the budget has focused on small to medium enterprise stimulus and is prioritising the domestic economy, which is expected to grow in 2023 (from 3.5% to 5.5%). Support measures for the general public have also been announced. Experts have described the budget as ‘inward looking.’

Top of the list for cheap retirement

Finance specialists Penfold have announced the results of a recent survey relating to cost of living, as reported in the Daily Express and elsewhere in February. Top of the list – around half of the cost of living in the UK – is Croatia, followed by Spain and Ireland. Penfold told the newspaper:

 “Croatia scores 28.47 within the Cost of Living Index, compared to the UK’s 46.42, meaning that rent costs and the price of day-to-day living is nearly half of that of living in the UK.”

Mortgage assistance for expats

The Suffolk Building Society released news of criteria changes in late February, reporting that the lender is now accepting applications from first time buyer expats who are currently abroad. These are aimed at customers who are not currently property owners in the UK, but who might want to purchase a rental for let. Applicants will no longer be obliged to spend a set time in the UK before submitting their application, and in addition, non-UK nationals can now apply if they are one half of a couple (one member of whom will need to be a British national, however. Affordability will be based purely on that person’s finances). As an example, SBS say that they can offer a buy-to-let two-year discount rate for purchase or re-mortgage, at 4.75% (standard variable rate-minus 2.69%), at up to 80% loan to value, plus application fees.

If you want to re-mortgage your existing property, this will also be possible, regardless of how many BTL properties you currently own, presuming that these are already self-financing.

Portugal ends golden visa scheme

Portugal has recently ended its golden visa scheme amid controversy over soaring property prices in the country. The government has been offering passports to non-EU nationals in exchange for investments, which usually take the form of property. The Portuguese government is, however, intending to bring in new restrictions for licensing accommodation for tourists, such as AirB&Bs, as this is fuelling the housing crisis.

Basically, this crisis has been created by a combination of factors: rich overseas buyers snapping properties up, a high rate of inflation (8.3%) which is not commensurate with wages, and increasing rents. On average, a spare room in some cities now costs more than a monthly salary at minimum wage. Rent increases are therefore being regulated and landlords will be encouraged to convert tourist properties back into accommodation for locals. The state is intervening because they say that average families, not just the most vulnerable, are being affected by the housing crisis. The government is intending to take out five-year leases from private landlords and use properties as a form of state housing.

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The regulatory move has not, however, found favour with everyone. The new digital nomad visa – which could potentially cause similar issues – is still going ahead. Relocation specialists Henley & Partners have also been critical of the dialling back of the golden visa programme, telling the UK’s i newspaper that:

“(We) would encourage the government [to] … look at options to adjust it to the current economic and property market context so that it can continue to provide significant benefits of its citizens, rather than removing this important source of investment and having to replace the revenue by taxing its people or raising the debt burden for future generations to come.”

But state authorities are increasingly looking askance at other types of golden visa, as well, such as those which permit citizenship at a certain level of investment. Brussels is trying to crack down on the practice, fuelled by security fears (the number of Russian oligarchs resident in the bloc illustrates why this is a concern).

Thailand’s golden visa

Continuing with this theme, it was reported in February that fewer than 3000 expats have applied for the country’s new long-term residence visa (LTR) and it is not known how many have let their applications drop. Along with Portugal, above, other countries have cancelled their golden visas, such as Ireland, and similar complaints have been levelled at the Thai equivalent, with concerns being raised about wealthy foreigners buying land and recent corruption scandals relating to Chinese nationals being granted visas when they were ineligible for them. But many expats believe the criteria for the LTR are too limiting and choose instead to rely on a tourist visa.

HSBC reveals relocation cash crisis

Research conducted by Ipsos for the HSBC suggests that around 46% of expats anticipate some kind of financial difficulty on relocating, such as a crisis in cash flow, and 53% report difficulties in setting up a bank account and other financial structures on arrival in their new location. 56% of the 7000+ expats surveyed said that they experienced problems with accessing or transferring their credit history, which led to problems with finance (such as applying for a local credit card). A higher percentage – 59% – reported concerns about paying taxes in their new country.

One in two respondents said that they had received no financial advice at the time of their move. Yet a quarter had relocated to earn more money, and a fifth had done so in order to benefit from a lower cost of living.

Around 5000 of those surveyed were international investors, whether in stocks, pensions, crypto or other forms of investment such as property.

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