British Second Home Owners Hit by French Surcharge
The big expat financial news of the month relates to the new property surcharge on second homes announced recently by the French government. Rises of up to 60% in council tax charges were announced in August, when the government issued permission to just under 4000 French councils to impose new levels of council tax. Around 86,000 UK households have a second home in France, and this new move comes as a blow, following changes to residency requirements post-Brexit. Brits say that they’re now facing steeper charges for a property that they’re not allowed to live in for a large portion of each year. Even if you do have residency in France already, the charges for your main home are likely to rise as well, with a predicted increase of around 51% in Paris, for example, and a 25% hike in Grenoble.
Efforts are underway to curb second home ownership in regions where locals find it challenging to purchase or rent properties. This situation mirrors certain parts of the UK, where an influx of properties bought for AirBnB rentals has exacerbated housing scarcity for younger generations. Residency taxes are set to increase, with houses seeing a jump from an average of €772 to over €1,200, and flats from €941 to more than €1,500. The exact figures could vary significantly based on location. This surcharge initiative is extending to rural parts of France, including Brittany, home to over 8,000 British property owners.
Two thirds of Brits with homes in France are said to be contemplating selling, although estate agents say that there is little indication of this being put into practice yet. But it remains to be seen whether these residency tax increases will be the final straw for Brits with homes across the Channel.
French Transport Minister Calls for an Increase in Flight Prices
Along with residency tax hikes, accessing your second home in France might also become pricier. French Transport Minister Clement Beaune has proposed a floor price for intra-EU flights to bolster rail travel within the union. This has faced backlash from budget airlines, with Ryanair’s CEO Edward Wilson making a stark comparison to this move with North Korea. Already, France has shelved three flight routes with strong rail alternatives, including Paris Orly to Bordeaux, Lyon, and Nantes. Initially, the plan aimed to cover any route under 2.5 hours of travel time but was moderated due to concerns like limited late-night train services. Critics highlight capacity constraints on certain rail routes like Paris-Frankfurt and Paris-Barcelona.
Chinese Government Extends Expat Benefits to 2027
Expats in China have received a financial reprieve following the recent joint announcement by the Chinese Ministry of Commerce (MOF) and State Taxation Administration (STA). They have decided to extend current expat benefits until 2027. The continuation includes tax waivers on rent, children’s education, and language training. Additionally, individual income tax benefits will also be extended beyond this year. The exemptions encompass meal fees, laundry charges, certain business travel, relocation, and home leave expenses.
Business organisations say that this decision could put the brakes on an economic exodus of foreigners from the region. The move comes in response to concerns in Beijing that the economy has slowed down and that overseas firms may pull out of the country unless incentives are found to entice expats into remaining. The European Chamber of Commerce in China welcomed the announcement, commenting that it may “help to stem the outflow of foreign talent that has taken place over the last few years,” adding that it would be good news for families who either want to remain in China or who are intending to relocate there.
The Chair of the British Chamber of Commerce in China, Julian Fisher, had voiced concerns that the loss of these exemptions would substantially increase the cost of expat living, warning that some could find their income dropping by 40%. Fisher told the press that: “This is a real victory for sustained advocacy and a clear sign that the government is listening to measured calls for change.”
UK Mortgage Enquiries from Expats
According to property press reports from the end of August, UK mortgage inquiries from expats have seen a slight decline. While UK residents have shown a predictable uptick in interest-only mortgage inquiries, driven by increasing variable rate costs and a notable decline in product availability, expat inquiries decreased by 9% in July. However, this trend may shift. The Telegraph recently highlighted the interest of Hong Kong citizens in acquiring London property, and data provided by Legal & General Ignite indicates that the most searched term by advisers is ‘visa’. Although these searches witnessed a drop in June following a 28% surge in May, the term has maintained its top position since October 2022. Meanwhile, searches by expats grew by 17%, and those by overseas investors increased by 21%.
Australia is Top Choice for Chinese Property Investors
Chinese property firms are in serious trouble at the moment, with China Evergrande Group filing for bankruptcy protection in the USA in mid-August, and Country Garden facing collapse due to a $11 bn debt burden. The crisis has caused the Australian dollar to drop, but experts say that Australia remains the top choice for Chinese property buyers, followed by Canada, the UK, the USA and Thailand. 70,000 Chinese expats are expected to migrate to Australia by 2025, with the country’s education system proving to be the biggest attraction. And Chinese nationals make up 46% of Australian Golden Visa applicants, too.
Kuwait: Pay Any Money Due Before Renewing your Residency
First Deputy Prime Minister and Interior Minister Sheikh Talal Al-Khaled Al-Sabah announced on September 10th that expats will now be required to settle any outstanding money to state departments before they can renew their residency permit or transfer it (for instance, to another sponsor). You will also need to pay the health insurance fee.