Expat Focus Financial Update October 2020

Last month’s big financial news concerned the issue of British banks closing accounts belonging to UK expats in Europe. This has been a major source of worry to UK customers of banks such as Barclays. Accounts are being closed, because it is too complex and expensive for British banks to obtain licensing for financial services in the various EU nations – the system known as ‘passporting.’

However, the Financial Conduct Authority (FCA) has now stepped in and informed banks that they must give at least two months’ warning to customers whose accounts are in credit. They note that some banks have not done this, earning them a slap on the wrist from the FCA. Mel Stride, Chair of the Commons Treasury Committee, has raised queries that have prompted action from the FCA. Its Chief Executive, Nikhil Rathi, has told the Treasury that banks are being reminded of their responsibilities.

“This includes identifying whether closing accounts would cause any particular customers or classes of customer undue financial hardship, taking into account the availability of alternative products.”

However, you should still be able to keep your account open if you can supply a UK address for your British bank account. If you have not heard from your bank already, it is wise to get in touch with them as soon as possible.

We have reported elsewhere on the phenomenon of British expats considering a move from the UAE. However, there are some financial divergences from the Emirates’ increasing focus on localisation. Dubai is offering a Retire in Dubai initiative, promoted by Dubai Tourism in collaboration with the General Directorate of Residency and Foreigners Affairs (GDRFA-Dubai). It is initially focusing on expats already resident in the country, who are reaching retirement age and may wish to stay on. It is based on a number of financial strata: a monthly income of AED20,000 ($5,500), savings of AED1 million ($275,000), or property ownership worth AED2m ($550,000).

Retire in Dubai is aimed at wealthier expats, in common with most of these new retirement visa initiatives across the world. This will be a more attractive option to you if you have funds in accounts that are offshore and not based in the UK (as you will be paying tax on income in the UK). However, there is a tax treaty between the UK and the UAE relating to pensions. Therefore, go into this carefully, with your accountant or tax adviser, if you’re a British expat who is considering the Retire in Dubai visa.

Conversely, property buyers from the Emirates are said to still be attracted to property in London, despite rising prices. The US election may also have an impact, since GCC currencies are pegged to the US dollar. However, experts say that buyers from abroad continue to look at the big picture. Property company Knight Frank says that the relative volatility of the pound, caused partly by the impending Brexit, is proving attractive to investors. They warn, however, that there are changes coming. Investors are increasingly looking at how different nations have handled the Covid pandemic, and they’re also conscious that, with the end of the stamp duty holiday, a 2% surcharge will be added onto property transactions.

Knight Frank also says that it is clear that the clock is ticking. April is the cut-off date for significant savings, since this is when the new surcharge is due to come in. Areas of London with large family homes remain popular. Wimbledon, Islington and Wandsworth top the growth area, with Mayfair and Knightsbridge lagging behind previous performances.

The company also reports that, of the global developers whom they surveyed, around six in 10 have had to reduce or halt projects, usually as a result of supply chain issues caused by the pandemic.

Elsewhere, it seems that fund managers who have been threatening to relocate to Singapore from Hong Kong, as a result of political unrest and tough security laws, are in the main staying put. China funds specialists told the Financial Times recently that businesses have been expecting tighter restrictions for some time and have factored this into their operations. Wealth managers have been creating jobs locally. Furthermore, the standard of living remains high in the city state – the surroundings are pleasant and it’s easy to hire domestic staff.

However, this does not mean that the situation is entirely comfortable. Expats are reportedly concerned about visa issues, and the number of regulated funds has been decreasing. There are also logistical problems in servicing the Chinese market long-distance from Singapore. Overall, however, these various factors are likely to make expats come down on the side of remaining in Hong Kong, according to recent reports.

The recent elections in New Zealand have seen Prime Minister Jacinda Ardern remain for a second term, as a result of a landslide victory. The country’s financial system is bank-based, and prior to the election, the government introduced some new measures. These measures require all banks, asset managers and insurance companies who have more than NZ$1 billion in assets to disclose their climate risks. This means that banks will bear the brunt of assessing risk when it comes to lending on domestic mortgages: evaluating flooding risk on residential housing. They will also need to assess whether lending to farms is in accord with global initiatives such as the Paris Agreement.

As a result of the pandemic – which the nation is globally considered to have coped with comparatively well – New Zealand is now entering recession. However, the country is still a popular choice among expats. You may want to keep an eye on the changing situation if you are considering a relocation, but no doubt many will not be deterred from relocating to this beautiful Antipodean nation.