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June: This Month In Moving

Expats on the move

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Quick digest

June's monthly round-up of expat news: New cost of living survey puts Caracas as the most expensive city, London 46th. Another survey shows Turkey being cheaper for expats. Dubai's economy countinues to surge;up by 4.6%. Theresa May granting expats automatic one year passport extentions. One man is campaigning for his right to vote from overseas when it expired after 15 years of living in Italy.

Thousands of US citizens are renouncing their citizenship to dodge tax. Non-EU expats having children risk $15,000 medical bills. UK expats are investing more of their money in global equity markets. Australia seeks to wine and dine UK investors to encourage them to move to Victoria (AUS). Brits vote Australia, Canada and UAE as their top destinations - in that order. And finally expats no longer able to listen to UK coverage of Cricket!

The cost of living abroad

June saw the publication of the latest Cost of Living survey by ECA International. Caracas in Venezuela was named as the world’s most expensive location for expatriates. This time last year the city was ranked 32nd in the global standings in the survey where scoring high is an accolade cities would rather not have.

Oslo and Luanda (Angola) come 2nd and 3rd in the global ranking. In 2013 Oslo was first and Luanda second. Other places in the top 10 include a raft of European cities, including Zurich, Geneva, Stavanger, Bern and Basel.

ECA International, a specialist knowledge provider to companies, publishes two main Cost of Living Surveys per year. They are intended to help companies calculate cost of living allowances, so that their employees don’t suffer reduced spending power while abroad.

The surveys compare a basket of like-for-like consumer goods and services, purchased by agents in 440 locations around the world.

It had been thought that the cost of living in Caracas would fall, following a devaluation of the bolivar. But this hasn’t happened yet. Annual inflation in Venezuela is over 80%; Caracas living costs are 40% higher than Oslo. In the Americas, Manhattan is the second most costly location,

In South America, World Cup-hosting Brazil is considerably cheaper for many expatriates. Following the sharp depreciation in the Brazilian real, Rio dropped 72 places to 123rd worldwide. Sao Paulo is down from 64th to 130th spot.

Europe's most expensive top ten is dominated by cities in Switzerland, Scandinavia and Finland. In the UK, a stronger pound has pushed up costs for many expatriates there. Central London jumped to 46th position.

Tokyo (11th globally) is still the most expensive Asian location. Chinese cities have surged up the list. Five years ago Shanghai and Beijing just made the top 50; now they are 18th and 20th respectively.

Auckland in New Zealand is up to 36th position; Sydney, in Australia, fell from 17th place to 38th.

In the Middle East Both Dubai (165th) and Abu Dhabi (177th) seem bargain-basement compared with other cities. However both places rose in the ranking this year. Prices of items in ECA’s basket of goods for the United Arab Emirates increased at almost three times the rate they did a year ago.

South Africa has continued to fall in the global ranking of most expensive locations. The weak currency continues to make its cities cheaper locations for expats.

More price rises

Another survey show more price rises in popular countries among expats such as France. There living costs have risen noticeably because of the rise in utility bills, mainly electricity and gas. On the whole, however, food shopping costs less than the UK.

The data comes from the Overseas Guides Company's annual Overseas Living Price Index. It shows the difference in general grocery prices, comparing the UK with European countries.

One of the least expensive countries for the expat is Turkey. Utility bills are low, and everyday items are often cheaper. Bread is perhaps the best example, its low price fixed by the government.

Portugal emerges as the least expensive country in which to dine out, with the lowest price for beer – along with Italy. Wine was cheapest in Cyprus and Italy.

The survey found petrol was cheaper than the UK in most of Europe. And diesel was less expensive than petrol in every country, apart from the UK.

Elsewhere, general grocery shopping was more expensive in Canada and New Zealand. In New Zealand utility bills tended to be lower. Alcohol was priciest in Canada and the US. Car running costs were lowest in Canada, although that country, along with New Zealand had the highest-cost public transport.

Dubai economy up

As Dubai’s economy shows the sort of growth not experienced since the start of the global recession in 2008, UK expats there report an impact on the cost of everyday living.

The emirate’s economy expanded by 4.6 per cent in 2013, its most rapid rate of growth since 2007, according to figures from the Dubai Statistics Centre, released in June.

Among the reasons were the strong expansion in the non-oil sector and the recovery in the property market. The Dubai economy fell into recession in 2009 because of the debt and property crisis.

Also this month the emirates’ Central Bank issued its strongest warning to date that the Dubai property market may be overheating.

Bank economists estimate that in 2013 house prices increased by 24 per cent in Dubai and 21 per cent in Abu Dhabi. The Central Bank says the surge in property prices is being fuelled largely by cash investors. This may be due to instability elsewhere in the region, particularly in Egypt and Syria, with the United Arab Emirates seen as a safe haven. Another factor forcing up prices is likely to be the recent announcement that Dubai will host Expo 2020.

What could this mean for expats, who are most likely renting rather than buying property in Dubai? It may be too early to say, but since last December private landlords have been allowed by the government to raise rents by up to 20 %.

Landlords can apply rent rises when a property hits 11% below market value for an area. If it is between 11-20% lower than the average rent for a similar property, a landlord can increase the rent by 5%. The maximum increase is 10% if the property falls 21-30% below market rates and 15 % if the property is 30-40% under average rents. A 20% increase could be applied to properties which are more than 40 % below average rents for similar homes in an area.

Previously landlords were not allowed to increase rents for two years after a tenancy contract is signed. However I know of friends who had a rent increase imposed upon them, in 2014, just 12 months after they signed their rental agreement.

Perhaps it is not surprising that expats in the emirates who have not had regular pay increases, and, if they have children, who could be faced with higher school fees as growing demand for school places forces up prices, are talking about leaving.

Expat passport extension

UK Home Secretary Theresa May acted to defuse the passport crisis, with an announcement that expat Britons who need to renew their passports will be given automatic one year extensions. At the same time children of expat Britons who need passports will be given “emergency travel documents” for travel to the UK. Parents would still have to provide convincing evidence that the children were theirs.

The move came after a big logjam of unprocessed passport applications built up earlier in the month. British expats applying for new passports were reported to be suffering long delays. The UK Passport Office confirmed that processing times are "significantly longer" for overseas residents, compared to applications made by UK residents, because expat applications are now processed in the UK, at a centre in Liverpool. Before 2014 overseas applications were handled by the Foreign and Commonwealth Office's regional processing centres.

Processing time has gone up, even before the current delays, to six weeks or more Due to additional security checks.

In other passport news it has emerged that the UK, along with Finland and Sweden, has the most powerful passport in the world, granting it's bearers visa-free access to 173 countries.

Overseas voting

British citizens who live continuously for more than 15 years outside the UK lose their right to vote in national elections in Britain. The same applies to Cyprus, Denmark, Ireland and Malta.

Now the one-man campaign by British war veteran Harry Shindler, 92, to restore the right to vote has won praise from the top. In a speech in Brussels EU Justice Commissioner Viviane Reding praised Mr Shindler as a “remarkable" man who has “lost his voice in the nation for which he fought”.

She said the restriction amounted to “punishing citizens for having exercised their right to free movement”. Mr Shindler who fought in the Second World War, has been living in Italy for over 15 years. Now he is to propose to UK Prime Minister David Cameron that the right to vote be restored.

An ex-citizen

Expats have been known to complain about their native country. And a fair number, I’m sure, have no great desire ever to go home. But very few people from Britain, or expats from any country, will have taken the extreme course now being followed by several thousand Americans, and renounced their citizenship altogether.

Acquiring US citizenship is still the treasured goal of so many immigrants. Yet record numbers of Americans are cutting their ties with their homeland, and going through an official ceremony at an overseas US office to give up citizenship. In the first three months of this year, 1,001 U.S. citizens and green-card holders reportedly renounced their allegiance. 2014 is on track to top the 2,999 renunciations in 2013, the most since the government began disclosing the data.

The main reason so many Americans are taking this action is their concern over an aggressive new US government programme to pursue undeclared accounts held by Americans abroad. They renounce citizenship rather than risk big tax payments and penalties. Nearly 8,000 taxpayers ceased to be US citizens in the past five years, compared with fewer than 5,000 in the preceding decade.

Although the dragnet has caught US expats who did owe back taxes – since 2009, $6 billion in taxes, interest and penalties has been collected from 43,000 US taxpayers – citizens who aren't wealthy, pay taxes in their host country, and who say they weren't dodging US taxes seem to be saying the pressure is too much and they would rather cut their ties altogether than risk penalties for them and their children in the years ahead.

A US Treasury Department spokesman said the government's enforcement was intended to help make sure all taxpayers pay what they owe "regardless of where they live... while [maintaining] a balance between enforcement efforts and equity."

Childbirth costs

Do British expats pay enough regard to the medical costs connected with starting or adding to their families when they’re living abroad?

According to recent research, 55% of British expats in professional positions abroad have their spouses and families with them. Starting a family, or adding to it, is only natural.

However many who did not take out private medical insurance risk big payments for treatments associated with a difficult pregnancy or future complications. Outside the EU, even a normal hospital delivery can cost more than $15,000 without insurance.

And retrofitting existing health insurance may not do the trick, either. The sort of expat medical insurance required is only likely to come into force after a mother-to-be has been on that insurance plan for the previous 12 months.

According to Medicare International even problem-free childbirth in the Middle East would cost around US$4,000; in the USA, costs start at nearer $15,000. If there are complications, you could easily add on $14,000 in many hospitals around the world.

Expats play the market

British expats are investing more in stocks and shares as they become increasingly confident about equity markets around the world. They’re shifting their funds from less risky investments, such as bonds.

The findings come in research by Lloyds Bank Private Banking, who say the expats are particularly keen to invest in the UK Stock Exchange. The bank said expats held mainly equities, followed by corporate bonds and then government bonds.

Some 16% of the expats investing in the UK market said they had increased the size of their portfolio, compared to 10% who reduced its size.

Those in the UAE and USA were the most optimistic about their investments. 43% and 37% respectively held a positive outlook.

A Lloyds Bank spokesman said living abroad appears to give expats easier access to markets and investments that will help them grow or receive income from their assets.

Raise a glass to the expat life

It’s well know that when organizers serve guests a glass of wine, or two, at a reception, they’re likely to get a more sympathetic hearing for the message they want to impart. But will it work if you actually want people to come and live in your country?

The Victoria state government in Australia certainly think it’s worth giving the theory a try, as they seek to entice the very top type of expat to come over and stay.

At an exclusive reception in London on July 9, Victoria will be serving some of the best wines its growers produce, in a bid to entice potential migrants in the “significant investor visa” category. This was launched in 2012 to attract high net worth individuals with at least £2.7 million of assets available to put into government bonds, regulated managed funds or private companies.

In the wider picture, attracting migrants to Australia is not a problem. 12,500 visas were issued in 2012 in the most popular skilled worker category, double the 2005 figure. However, so far just one potential “significant investor” from the UK has expressed an interest in moving to Victoria, Australia's second-largest state, with boom city Melbourne.

The Victoria government, teaming up with Morgan Stanley and Coutts bank, hopes the chance to hear a keynote speech from wine expert Oz Clarke and receive first-hand advice on lifestyle and investment opportunities, as well as the premium wines, will entice some to think about a new life Down Under.

Victoria hosted a similar event in Paris this month, serving its own wines, and the hall was full.

A spokesman said the invitation to Victoria was open to “Britons without millions” too. They would find jobs available in the wine industry as well as in hospitality, health, construction and IT.

Expats’ favourite

UK expats have scored Australia and Canada first and second as their favourite destination countries. The United Arab Emirates was third.

The rating emerged from the NatWest International Personal Banking Quality of Life Report.

The study showed that 80% of British expatriates enjoy a better quality of life abroad. On the negative side the appeal of traditional expat communities of France, Spain and Portugal seems to be falling.

The study took the criteria of entertainment, food, law enforcement, public transport, sanitation, housing, public services, leisure and culture, schools and education, health care, retirement facilities and weather.

The rise of UAE as a destination was a noteworthy feature of the 2014 survey, said Dave Isley, head of NatWest International Personal Banking.

At the same time, the appeal of France, Spain and Portugal was diminishing, “with quality of life drastically declining for expats living there.” He said it seemed that expats were willing to adjust lifestyle and move to places like the UAE and Singapore in exchange for a stronger economy and better job opportunities. 72% of respondents said they moved to the UAE to boost their careers. The country climbed seven places between 2008 and last year, from 10th to 3rd.

They don’t expect to put down roots, however. 92% of UK expats see themselves as on a “temporary assignment” – only 8% expect a long-term future in UAE.

And finally...

Cricket over?

Remember that pair of cricket-lovers in the Hitchcock classic “Lady Vanishes”? Nothing must delay their dash back to England to catch the end of the England innings. Put aside Marmite, traditional ale and cucumber sandwiches. It’s wallowing online in the BBC’s Test Match Special commentary that most reminds a good number of expats of home.

But there are thunderclouds over the outfield. English cricket fans abroad are no longer able to listen to TMS’s coverage. The BBC raised its index finger to declare the commentary “out”, referring with bureaucratic obfuscation to a "rights issue".

Cricket-lovers want the decision referred to the third umpire. If it isn’t overturned, a little bit of England would be lost forever to those battalions overseas.


Gareth Davies

Written by Gareth Huw Davies

In a busy journalistic career Gareth Huw Davies has contributed to UK and overseas publications on a wide range of subjects, from property to travel, and business to the environment, most recently for the Sunday Times and Mail on Sunday. He has also written five e-books, on subjects as diverse as Garfield Sobers, David Attenborough and the River Fleet.