Expat Focus Financial Update 16 May 2016

British expats struggle to get BTL mortgages

British expats looking to invest in property with buy to let mortgages have a mixed environment with lenders leaving the market.

NatWest and RBS have announced they are no longer offering mortgages to expats and this extends to current expat customers wanting to increase their borrowings.

The only applicants that will be considered by both banks are diplomats, consulate staff and members of the Armed Forces.The final deadline for expat applicants wanting a buy to let mortgage is Wednesday 18 May.

A spokesman for NatWest said: “We look regularly at our products and balance the complexity and costs of providing these to customers and, in this context, we have decided to stop new lending to expats.”

However, it’s not all bad news since Skipton International has just announced that it has seen a jump in buy to let mortgage applications, particularly from expats living in Spain after receiving more applications in the first three months of this year than they did in the whole of last year.

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Skipton is one of the leading providers of buy to let mortgages for expats and demand has been growing for their products since launching in 2014. They will also offer mortgages to self-employed and retired British expats.
High Street banks unwilling to take on expats

Meanwhile, it’s also becoming more difficult to find a major High Street UK bank willing to take on expats as clients; instead, they have begun opting instead for UK residents.

Indeed, those who move overseas for work or living purposes are now facing the real prospect of their bank closing their account after bringing in new conditions – which is what happened to dozens of Barclays customers late last year.

The expat banking director of Lloyds Bank, Richard Musty, said: “International banking legislation is changing and most UK retail banks and building societies are no longer providing new banking facilities for people who are living overseas.”

The move means that expats have to look for an offshore bank account. However, these are also declining in number and have increasingly strict criteria which must be met before an account can be opened.

US expats continue to surrender passports

The trend for US expats to give up their passports or green cards continues, with 1,158 taxpayers giving up their citizenship in the first three months of this year.

The last quarter of 2015 saw 1,058 US expats giving up their passports, according to the Treasury Department.

Last year also saw a new record of 4,279 US taxpayers giving up their green cards or passports, a rise of 25% on 2014’s figure of 3,415. The figure for 2013 was 2,999.

Critics say the growth in US expats giving up their citizenship is because of increased activity by the Internal Revenue Service and the Treasury to track down Americans with undeclared assets and their income which is held abroad by enforcing the controversial Foreign Account Tax Compliance Act (FATCA).

The result of the new law means it’s becoming more difficult for US citizens living and working overseas to find banks willing to take them on as clients.

In addition, bodies representing Americans living abroad are also highlighting issues over US tax reporting obligations with some organisations saying that the figure of having more than 1,000 US taxpayers surrendering their passports every quarter is becoming ‘the new norm’.

Expats in Switzerland warned of austerity measures

Expats living and working in Switzerland have been warned about austerity measures aimed at saving billions from the federal government budget.

The country is looking to save around CHF .3 billion, or US $3.1 billion, over the coming three years and that’s on top of the CHF 2.8 billion cutbacks already announced.

Spending cuts are being targeted at welfare, education, the army, research and development.

And despite strong growth in the economy, the unemployment rate has risen from 3.2% in 2014 and looks set to reach 3.6% this year. The economy has also been hit with a strong franc.

Chinese economy 'to pick up'

Various Chinese media have been reporting that the country’s economy is about to pick up once more, which will be good news for the growing numbers of expats who live and work there.

The Communist Party of China’s flagship paper, the People’s Daily, has quoted a high-level official as saying that the economy will be picking up but warned of local government debt and industrial overcapacity.

They say the economy will now follow an ‘L-shaped path’ as economic momentum picks up rather than having an economy that is V- or U-shaped.

The unnamed official said the economy of China had huge potential and will continue to grow strongly for years to come.

UAE publishes workers' welfare report

The publication of an annual report which highlights the labour rights for expats working in the UAE has been published by the government.

The aim of the report is to underline that workers who move to the UAE are ’employed and recruited equitably and are safe in their place of work’. The report follows severe international criticism for some working practices in the emirates.

The government says the report’s publication will drive transparency over labour issues and ensure there is ‘frank and fair’ discussions about transnational labour mobility and how this impacts on future economic development.

A spokesman for the Ministry of Human Resources said: “The workforce in UAE is our biggest asset and a driver for growth which enables economic diversification to help secure the future of tomorrow’s generation.”

Various laws and regulations have been brought in to help protect workers including the standardisation of labour contracts to help promote transparency and clarity for both employees and their workers.

Rocketing rent costs impacting expats in Beijing

Expats living in Beijing are seeing their quality of life being affected by fast rising rents which means they are looking to move into smaller and cheaper apartments that meet their budget constraints.

According to the country’s real estate association, Beijing rents rose by nearly 13% last year and a newspaper report reveals some of the struggles a growing number of expats living there have been having.

Rents have been rising there for some time now, and a survey released last month measured the living costs for expats placed Beijing as the most expensive city for renting.

According to Global Cities Business Alliance, rents can cost 1.2 times the average monthly salary and are dearer than Hong Kong and Abu Dhabi rents.

Despite expats in Beijing being paid higher than average salaries than local employees, their housing costs are still taking up a large slice of their earnings and, in turn, affecting their quality of life.

Expats look to stay in UAE

The future for expats living in the UAE is looking brighter than ever, according to a survey.

Last year, 54% of expats said they could not consider buying property because they were not sure how long they were planning to stay. This year, however, that figure has fallen to 36%.

The poll was conducted by a finance comparison website who says that the number of people wanting to buy property is rising.

A spokesman for the site said: “It seems that fears and attitudes are changing and insecurity about the future is lifting.”

While investing in property is attractive for expats, prices fell by between 10% and 13% in 2015 and could fall another 10% this year, but this is not preventing expats from investing.

The spokesman pointed out that the property market in the UAE is stabilising and there are enough impressive property developments to encourage expats to stay for longer. In addition, the survey also found that expats are being encouraged by the strengthening price of crude oil though the strength of the dollar was affecting their income.

Expats shopping in China

Shopping online for expats in China has just got easier thanks to the efforts of three US expats developing an English language website to help people navigate the huge Alibaba platform.

The trio have spent $77,000 to set up Baopals to help foreigners living in China buy the goods they need online. The site helps by automatically translating information about the product as well as customer reviews into English.

Since its launch several weeks ago, the site has sold more than 7,000 products and shipped them to expats living in 40 Chinese cities.

Apparently, the most popular items being shopped for by expats are women’s clothing, household goods and electronics.

Qatar surveys expats for their views on public services

Expats from Western nations are less impressed with the public services in Qatar than Arab expats living there, according to a survey.

Qatar University wanted feedback on what expats thought about the country’s electricity and water utilities and both were given high marks by respondents.

Most people were also happy with the country’s healthcare services as well as the cultural activities and were also impressed with schools and infrastructure. Qatar’s healthcare system particularly rated highly with those expats who had used the service, researchers revealed.

Researchers at the University say the findings are crucial because it reveals that residents who say they are satisfied with the public services tend to report that they have a high quality of life.

In years gone by, Qatar rated poorly for the quality-of-life of people living there in international indexes. However, there has been a massive investment in public services over recent years, though the government is planning to reduce investment due to falling oil revenues.

Polish expats send home record amount

Polish expats around the world sent their families around $4.2 billion or £3 billion last year, according to the National Bank of Poland.

Expats living in Germany sent their families the most with €1.3 billion, with those living in the UK sending £1 billion.

The bank estimates that the number of Polish expats working around the world is now standing at 2.3 million people, with most working in other European Union countries; those working in Holland sent their families €0.23 billion and from Ireland they sent home €177 million.

In other expat news

Lithuanians are not planning on going home

More than half of Lithuanian expats are not planning on returning home, except for those living and working in Russia and the UK. When questioned, just 40% said they were interested in returning, 17% had no interest 43% said the question was ‘irrelevant’. However, for expats living in Russia, 61% expressed an interest returning home to Lithuania while in the UK the number of Lithuanians considering moving home was 51%. The average response for Lithuanian expats living in EU who are considering returning to their country was 43%.

UK expats have referendum vote appeal ‘rushed through’

Despite losing a legal bid to be granted a vote in the upcoming UK referendum on the membership of the European Union, British expats living overseas have launched an urgent appeal to the Supreme Court to have the right to vote on June 23. They say that a large proportion of around two million expat Brits working and living in EU member countries will be affected by the government’s rule that if they have lived overseas for more than 15 years then they are ineligible to vote. The appeal is being rushed through the court system because the referendum date is quickly approaching.

Kuwait deports expats driving illegally

Officials in Kuwait City have reiterated their plan to deport expats who are caught driving without a valid driving licence after rumours that the order had been withdrawn. Indeed, the Ministry of interior says it’s more determined than it has ever been to deport those who have been caught driving without a licence, with 620 expats being deported over the past year – 145 of whom were caught between January and April. There’s also a plan to withdraw vehicle number plates of drivers caught parking in disabled spaces or parking in ways that hinder traffic flow on roads.


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