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Expat Investor : September 2007
www.expatinvestor.com HSBC's r e s earch has found that women are less prepared for retirement than men. Ian Martin, head of pensions & retirement income for HSBC Insurance, considers some of the reasons why pension apathy is stronger among wo men. He tells Expat Investor,"It has been well documented that women are falling short of ensuring they have adequate retirement provision in place and we have found that six out of 10 women are not currently contributing to a pension scheme. "A key reason for this seemingly lacklustre approach to retirement planning is a lack of understanding of exactly when -- and how -- women can pay into a pension. We found that 44% of HSBC respondents thought they had to be working to make pension contributions and only 36% were aware that anybody can contribute to a pension on behalf of somebody else. "Current pension refor ms indicate that by the time a 27-year-old women reaches the age at which she can claim basic state pension, she would be entitled to around £135 a week, but only if she has made National Insurance contributions for most of her life. "A t HSBC we are working hard to get the message across to everybody that retirement planning should start sooner rather than later and we are seeing positive signs that people are taking pension provision more seriously - but as current research shows, there is still a long way to go." STATISTICS AND ANALYSES Women must prepare financially for retirement Two fifths of Brits want to buy property abroad £10bn a year spent on the hidden costs of movi A medley of statistics and analyses revealing much about our responses to saving, investing and spending our money. Is money the last taboo? Does size matter? We'd rather talk about sex and health than money, new research from Scottish Widows reveals. It seems that money is fast becoming the nation's most uncomfortable topic, with nearly one in ten ofu s refusing to tell anybody at all how much we earn. Nearly nine out of 10 of us keep our salary a secret from our friends and two out of three of us don't e ven tell our families how much we get paid. The survey also reveals that couples are happier discussing health issues than they are discussing money -- nearly one in five people is uncomfortable discussing salary, savings, and investments with their partner, and avoid it if possible. Similarly, 75% of people admit to feeling uncomfortable discussing money issues with friends, and are twice as happy to talk about relationship worries and health problems. Work is the one place where most of us are actively discouraged from talking about how much we're getting paid, yet the study reveals that men are almost twice as likely to share salary secrets with their work colleagues than they are with their mates -- one in five men will happily disclose their salary to people they work with. The survey also reveals that more than a third of us do not know exactly how much our partner earns and can only give a rough estimate -- with 5% of couples unable to give even a ball-park figure. Mike Hoban,Customer & Brand Marketing Director of Scottish Widows, says, "As a nation, we've become increasingly liberal -- we are happy to talk to our loved ones about sex, relationships and health problems, bu t despite this moder n trend in honesty it seems that money is now the topic we avoid. It's no surprise that the nation is under- saving and under-preparing for the future when money is clearly such an uncomfortable subject. If you really can't face discussing money with people you know, it might be a good idea to seek professional financial advice." Over two-fifths of Britons (42%) are interested in buying property abroad or moving abroad,according to new research from Bank of Scotland Inter national. When asked where they would most like to live in the world, Britons ranked Australia in the top spot, with 10%,followed by New Zealand at 9%.France topped the European destinations, with 6% of people wanting to move there, followed by Spain at 5%. Ofthose surveyed, almost three- fifths of people (59%) who would most like to live in Australia were under the age of 45,with just 16% over the age of 65 years. Ofthose Britons who would most like to live in Fr ance, over three-quarters of people (76%) were over the age of 45, with just 3% under the age of 25 years. In total, over two-fifths (42%) of respondents had considered moving or buying a home abroad. Almost one half (44%) of these people were below the age of 45 years, whilst almost two-fifths (39%) were aged between 45 and 64 years ofage . Four per cent of people surveyed already owned a home abroad, and two-fifths of these were under the age of 45 years (40%.) One in five people (19%) owning their own home abroad was over the age of sixty-five. Tony Wilcox, managing director at Bank ofScotland International, comments on these findings: "It is the yo u nger generation that continues to be attracted to moving abroad, and Aust ralia and France are clearly popular destinations. "Living, working or retiring abroad can mean a whole set of lifestyle changes, including an impact upon your financial affairs. Expatriates have different financial requirements, and when moving abroad it is important to have the right products and services in place." No matter how generously large or painfully small people's pay rises or bonuses may be, nearly eight in 10 (79%) of us will have already mentally spent the extra cash even before it hits our bank accounts. Research from Alliance & Leicester Savings reveals that of the four and a half million workers who will receive a cash bonus this year, 40% will spend the lot, and although the average amount received last year was £500 or less, more than one in 10 ofthose who don't s ave admit they would never dream of saving their bonus -- regardless ofho wbig it was. Receiving an annual bonus is always something to look forward to, and workers across the country will inevitably have had the 'watercooler According to a new study by The Co-operative Bank, the average household in Britain spend £23 800 underestimated, despite the fact that coll i gossip' well in advance about which holiday, handbag, gadget or credit card bill the extra cash will be spent on. The Alliance & Leicester Savings survey found that fe wer than one in 10 people actually save their whole bonus. And it seems Brits do no better when it comes to putting away the extra money received in pay rises; despite any good intentions, m ore than half find pay rises tend to get swallowed up by day-to-day spending. More than a third of those who don't save say they'd need to get a pay rise of 6% or more before they would even consider putting some away. While there could be an argument about pay rises only covering the rising cost of living, the survey reveals that the most popular reason people cited for not saving their bonus was that the amount was perceived not to be big enough to make a real difference to their finances. Although a one-off bonus may not make a real difference on its own, saving part of any windfall, when you are lucky enough to receive one, could soon turn into a sizeable savings pot for the future. s, or putting off tive Bank's new help and advice for oking to move. w.co-operative vinghome, nfor mation and to do with m mortgage rates inding out how worth and removal firm. NVESTOR 5 10-minute snapshot of UK banking Every 10 minutes UK banks pay out more than £3 million through cash machines, the British Bankers' Association shows in its latest annual statistics. The 24th Annual Abstract of Banking Statistics sets out the scale of one the UK's most globally successful business sectors. The Abstract shows that in every 10 minutes banks: distribute nearly £3 million in cash through cash machines. process 25,000 cheques, 102,000 automatic credits and 123,000 plastic card payments. increase support for small businesses by £81,000. receive £750,000 from customers for safe keeping. approve m ortgages worth more than £4 billion. contribute £190,000 towards the UK's balance of payments and pay £175,000 in tax to the Exchequer. To register for the digital edition, go to Serving expats for more than 16 years J In this issue Almost one in 10 British citizens (5.5 million) now lives overseas.This is the official statistic reported by the Institute for Public Policy Research. What's more, this figure rises to 6 million if those who live or work part of the year abroad are included. IPPR confirms that, taken together, these figures represent approximately 10% of British citizens. Up until this extensive research was undertaken, tentative government estimates of expat numbers ranged from 4.5 million to 14 million. Over the course of 40 years, some 67,500 more Britons have left the UK every year than have retur ned -- a population loss that has been balanced out by increasing immigration. The research found that the number of Brits choosing to go permanently abroad doubled from 53,000 in 2001 to 107,000 in 2005 -- some 2,000 people a week. IPPR's figures have been calculated from official sources, such as census data, counts of pensions paid over seas, passport applications and other statistics. This research finds that those most likely to leave the UK are young wo rkers without families, along with those seeking to retire. Dr Dhananjayan Sriskandarajah, co- author of the report, said that the scale and spread of the British expat diaspora was probably being driven by the UK's economic strength. A strong economy was attracting economic immigrants -- but also encouraging Brits to broaden their financial horizons. Young people were the most likely 5.5m Brits now live away from UK Investor EXPAT g p £4.95/ 7.50/US$7.50 Sept 2007 Bringing advisers and investors toge the r Investor EXPAT Tony Hetherington Our offshore financial investigator exposes a financial scam. Offshore banking A guide covering as practical and purposeful as accounts can get. Isle of Man A Manx-style safe harbour for all your money needs. Offshore bonds Skandia Inter national explains the rationale for investing in the offshore bond market. First Person The latest research on what's driving the European equity markets. Regulars 10 Offshore funds 12 Offshore savings accounts 21 Property investment 22 Offshore mortgage market Next issue Investment banking Insurance claim disputes Purchasing healthcare insurance US equity market 6 14 19 24 5 www.expatinvestor.com As the Institute for Public Policy Research confirms, almost one in 10 British citizens are now living overseas. Hannah Beecham repor ts on what leads Brits to leave the UK and where in the world are the favoured locations. For more infor mation fr o m our advertisers or about products featured in Expat Investor enter the Fast Facts number onto the Reader Reply Ser vice coupon on page 20 or go to: expatinvestor.com www.expatnvestor.com "There are those that you know you should read, and then there's the magazine you will read." To register for Expat Investor digital edition, visit the website at www.expatinvestor.com Serving expats for more than 18 years one million over five years, if the economy remains strong. to want to leave, with a quarter saying they were hoping to live abroad. Dr Sriskandarajah pointed out that latest figures indicated emigration would grow further. He believes a million more British nationals will emigrate over the next five years. The majority of expats are living in Australia, Spain, Canada, New Zealand, the US and other English-speaking nations. But in all, some 41 nations each have at least 10,000 permanent British residents. There are also large communities of Brits developing in rising Middle Easter n and Asian economies. South America also attracts Brits. There are more British expats living in Argentina than there are in the Falkland Islands. Many of those going appear to be young and highly skilled -- the UK gover nment estimates that four in 10 of those leaving in 2004 were in managerial or professional occupations. The second group, notably those based in Europe, are the middle-aged, retired or semi- retired, who are investing in foreign property. But as countries like Spain becomes pricey, the Brits are moving eastwards. IPPR's research estimates there are 10,000 Brits who live part-time in Bulgaria. The key question is whether emigration is likely to grow -- and if so, on what scale? Migration statistics are very difficult to predict, as history proves. But the UK government's own adviser s suggest the net loss of British citizens will continue at about 60,000 a year until 2008. IPPR's research, however, suggests the figure will be higher -- between 500,000 and Before you go Properly research your destination. Find out about the local laws and customs. Find out what the Foreign Office can and can't do if things go wrong. Lear n some of the local language. While many expats may live in British enclaves, contact with local people -- and the authorities -- is crucial. Wo rk out retirement income. Many expats fail to take into account both inflation and exchange rate fluctuations. Research how liabilities for UK taxes apply to expats. On arrival Register with the local This opens doors to loca and health services. Fin local welfare entitlemen about health service ch British residents of E states must apply for a permit within three m Register with the B Consulate. Make a Will. One legal problems for a when a relative dies Open a non-resid account. Keep a valid pa Know before you go The Foreign Office is currently campaigning f r wannabe expats to engage in best preparat practice before making a move overseas. Following these key steps can help avoid m problems in the future. Fast Facts 77480 PROPERTY INVESTMENT September 2007 EXPAT INVESTOR 23 Mortgage monitor -- a market view David Buchanan, Business Development Manager with Irish Permanent International, places a spotlight on the UK mortgage market for expatriate investors. Dalmatian island bolt-hole Home-from-home insurance Lifestyle, lower cost of living and climate are prime motivators Global Spaces has launched Kavanjin in the town of Sutivan on the Croatian island of Brac. The scheme comprises around 85 luxury one, two and three bedroom villa- style apartments overlooking the roof tops of Sutivan and onto the Adriatic Sea. With its crystal clear waters, marina, surrounding islands and beautiful beaches, including the world-famous Golden Cape at Bol, Brac boasts a plethora of themes to attract a range of interests, from beach lovers to sea-faring sailors and wind surfers. Sonny Gowans, CEO of Global Spaces, says, "The island of Brac offers a fir st-rate location and a powerful case for investment due to the limited amount of new build property cur rently available in the local market. Kavanjin is situated in a perfect holiday location in one of the world's top nautical destinations. "What's more, with the country's expected entry into the EU in 2008/09, Croatia will continue to enjoy an ongoing period of capital growth increasing property prices further." Global Spaces confir ms that each of the apartments at Kanvanjin will be built with care and consideration for the local environment with materials reflecting local Croatian architecture. Each apartment will come with a private ter race and a parking space. A communal and family friendly club house and pool will further accentuate the local Mediterranean lifestyle. With local amenities as well as beaches, restaurants, cafes and the Sutivan At the time of writing, the Bank of England Monetary Policy Committee (MPC) raised interest rates once again in July 2007, voting 6-3 to raise the base rate further to 5.75%. This represented the fifth increase in the base rate since August 2006 and most commentator s now predict a further increase could be expected in coming months as we near the peak of the cur rent interest rate cycle. Halifax House Price Index (HHPI) issued on 4th July 2007 confir med house prices increased by a 0.4% in June 2007, the second successive month of growth of less than 0.5% and annual house price inflation is standing at 10.7%. The increase in mortgage rates since last summer and negative real income growth are expected to cause annual house price inflation to slow over the coming months. HHPI believes house price growth will continue to be supported by solid fundamentals in the UK economy with the underlying rate of economic grow th above long-ter m average. In Piraeus Bank recently conducted a survey amongst people planning to buy overseas property within the next two years and, more specifically, those countries in South Easter n Europe where the bank has a presence. The survey revealed the most popular motives, and the areas where these potential buyers are most likely to buy within that region. Overall, Greece made it to the top of the popularity stakes with, nearly 20% of those surveyed finding it the most appealing property destination. Cyprus came a close second followed by Bulgaria, Egypt and Romania. Reasons for purchasing showed that those who preferred Greece and Cyprus were mainly looking for holiday homes, while the majority of people looking to purchase in Bulgaria are doing so to gain from the anticipated capital growth of the property. Nearly half of respondents to the ter ms of the housing market, the ongoing shortage of housing supply is expected to continue to support house prices so a widespread fall in values is not being forecast. However, the increase in mortgage interest rates since last summer and negative real income growth are expected to cause annual house price inflation to slow over the coming months. In general, IPI has seen the market remain buoyant, with interest from offshore investors remaining strong for UK residential investment property. The UK property market is still viewed as a sound long-term investment, although recent base rate increases will no doubt continue to put pressure on yields and rental cover going forward through 2007 and into 2008. In response to the current market conditions we are seeing lenders introduce more innovative products for the buy-to-let investor. Fo r more mortgage infor mation from Irish Per manent Inter national, enquire through the fast fats number belo w. survey stated they expected to pay a purchase price in the range of €100,000 to €250,000. Interestingly, reports Piraeus Bank, more people indicated a budget of €101,000--€250,000 for Greece than for Cyprus, even though, comparatively, Cypriot property is more expensive than that of its Mediterranean neighbour. Overall the survey shows that the main motives for buying overseas are lifestyle, climate, and a lower cost of living. Amongst those surveyed, approximately 70% plan to buy an overseas property within the next year, and they described their main goal as having a holiday home, achieving capital growth, and generating rental income. Over a third of those seeking properties in Greece and Bulgaria stated they require a mortgage on the over seas property in order to finance the purchase. Only 10% of people buying in Greece would consider doing so as a totally cash transaction. A further point of interest revealed by this survey relates to Bulgaria. Despite the market being driven by agents selling off-plan properties, 40% of respondents indicated that they are looking for resale property. The majority of people looking to buy there are seeking an apartment. Retirement was the least likely reason for purchasing according to participants in the survey, Cyprus having the highest number of those at 13%. Irini Tzortzoglou, Head of Retail Banking, tells Expat Investor, "Piraeus Bank has identified a growing trend amongst property buyers in South Easter n Europe which is supported by the findings of the survey, that is buyers of second homes are looking to enjoy the property for holidays with family and friends, at the same time as both gaining from steady capital appreciation and generating useful rental income which can be used to offset the cost of the mortgage". "In order to achieve this Utopia, buyers have to buy in the better locations, and take their time to look around to compare and contrast prices to ensure they get good value for money. Last but not least, buyers should obtain good, independent legal advice to ensure they are buying with clear legal title to the property". Piraeus Bank can help overseas buyers in Greece and Bulgaria through the buying process -- for more information on mortgages visit www.piraeusbank.co.uk Fast Facts 77481 marina just a short walk away, residents will also enjoy easy access to everything that this picturesque island has to offer. Brac is the largest of the Dalmatian islands of which there are approximately 1,200, offering one of the "world's best nautical locations". This attraction brings with it the kind of affluent tourist who likes to look for the perfect bolt- hole to explore the countless sights, islands and marinas. With regular flights to nearby Split from Gatwick and Luton, Brac is just a short ferry journey from the mainland. Alter natively, the island has its own airport for shorter trips. Prices at Kanvanjin start from around £85,000. For more information, visit www.globalspaces.com Over 800,000 households now own a property abroad in ever more emerging markets, presenting unique insurance dilemmas for Brits trying to protect their overseas investments. Overseas property specialist HiFX Insurance has responded to this increasing demand for a place in the sun or snow by widening its insurance protection to cover destinations such as Dubai, Bulgaria, Cape Verde, Croatia, Morocco, Poland and Romania. Mark Bodega, Marketing Director, comments, "Emerging markets present their own challenges, but there are some fundamental factors that people need to consider when insuring any property abroad." HiFX Insurance's top tips 1. Do not be tempted to use a normal home insurance policy and avoid disclosing that the property is a holiday home, as this could invalidate your insurance. 2. When arranging your cover, it is important that you carefully consider what you will be using your overseas property for. Will you be using it occasionally as a holiday home or residing there permanently? Or do you intend to let the property out to tenants? In particular, how long is the property likely to be empty? 3. Consider the language difficulties of local language insurance policies. Understanding the specifics of cover levels and making a claim in a fo reign language can be tricky. 4. It is also vital that you have the relevant insurance in place by the time you exchange contracts on your property as often the notaire/notario will require your policy document before the sale can be completed. With the increasing number of cases of what HiFX Insurance calls "land grab", where local authorities reclaim the land that a property has been unwittingly built on illegally, it is important to bear in mind that most insurance rarely covers the reclaiming of land from ruling authorities. Therefore, anybody buying in Spain should do vigorous checks to protect themselves prior to buying. HiFX recently discovered that insurance was low on people's list of priorities when considering buying property abroad, whereas investment viability and the legal issues of buying abroad were ranked as the top considerations. Mr Bodega adds, "Adequate overseas property insurance is essential to safeguard the viability of your investment. Storm damage and bu rst pipes rank amongst our most common claims. Over seas repairs can be expensive and, in order to protect your investment, it is essential that any material damage is repaired by trustworthy, skilled tradesmen." PROPERTY INVESTMENT September 2007 EXPAT INVESTOR 21 Banco Halifax Hispania has opened a new branch in Calahonda on the Costa del Sol in Spain to serve the growing British market looking to buy a second home in Spain. The branch, located between Marbella and Fuengirola, is the twentieth Banco Halifax Hispania branch to open. Banco Halifax Hispania also has branches on the Costa del Sol in Málaga, Marbella, Benalmádena, Fuengirola, Torrox, Sotogrande and Guadalmina. Ian Smith, head of European Operations at Halifax plc, says, "Banco Halifax Hispania continues to see an increase in demand for financial services in Spain amongst British people. It is committed to enhancing services for customers." Some of the benefits of the Bank's service include: All dealings can be carried out in English. In addition, there is also a UK based, specialist customer service team for those customers that wish to open a Banco Halifax Hispania bank account or arrange their finance for a Spanish property before they leave the UK. Provision of mortgages in euros. Most Banks in Spain will offer a maximum loan to value of around 70% of the property. The large 30% deposit reflects the fact that the property is not the customer's main residency. In situations where someone holds Spanish residency papers, the maximum loan will usually be increased to 80%. An approved panel of qualified solicitors and surveyors in the popular Costa del Sol and Costa Blanca regions that can help with all aspects of the purchase. Fr ee telegraphic transfers between Halifax and Bank of Scotland current accounts to accounts with Banco Halifax Hispania. keep them the same. low rental yields and/or availability of tenants are not concerns for the vast majority of landlords. Only 4% cite these as a worry. Andy Wiggans, Director of Mortgages, tells Expat Investor, 'Our research findings, based on nearly 5,000 landlords, reveals that confidence in the buy-to-let market remains high and there is very little concern over availability of tenants or rental yields. Indeed, over half of landlords (51%) are looking to increase their portfolios over the next six months. Many of our landlords have been in the market for a long time, with half investing in property for more than five years. Significantly, even those who have been landlords for under four years believe the sector remains strong, with many planning on expanding their portfolios." Banco Halifax Hispania opens branch in Calahonda Buy-to-let landlords' confidence remains high Fast Facts 77471 Fast Facts 77472 Bradford & Bingley, one of the UK's leading buy-to-let lenders, has unveiled what it believes to be the largest and most authoritative landlord survey in the country with nearly 5,000 respondents. Key findings reveal that confidence remains high among the vast majority of landlords: 96% of landlords expect rent levels across their portfolios to either increase or stay the same over the next six months. 88% of landlords are planning to either increase their property portfolios in the next six months or to Egypt since Roman times. There is something for everyone in this ancient land: its 7,000 years of history, with its pyramids, temples, palaces, desert and necropolis bring in the culture-vultures; the Red Sea which conservationists and scientists have termed "one of the seven wonders of the world" attracts divers to its beautiful blue depths, and sun lovers are attracted by 365 warm, dry days a year. Airlines fly tourists in either direction to the resorts or via Cairo daily from the UK with direct flights taking around five hours." Investors can buy a hotel room in one of the three most popular Egyptian resorts -- Aswan, Luxor, Sharm el Sheikh -- from just £32,000. Tahir Ali, Managing Director, adds, "This is a unique offer for investors -- the opportunity to invest in fully completed, furnished, turn-key properties." www.Egypt-Revealed.com (minimum) free accommodation you get at the resort of your choice every year and investors could be in credit by £260 a day. "For the rest of the year, Egypt's leading five-star hotel chain will be managing and renting out your room (or suite or chalet) on your behalf, generating a guaranteed 8% annual rental income from year one." Egypt Revealed adds that besides the profit from the rental of your apartment you can expect large capital gains also. The company says that average property prices in Egypt have risen by 50% in the last two years and they are expected to rise again by 15--20% in 2007. Tourism in Egypt, likewise, is on the up. "Over 25% more UK holidaymakers visited Egypt in 2006 than the previous year and by 2010 they expect the number of worldwide tourists to reach 9.5 million per annum. Tourists have been coming Get paid to stay in 5 Egyptian hotel When a basic room at the five star Landmark Hotel in London starts at £349 per night and you could pay up to £2,900 for a night at The Dorchester, how amazing would it be to actually make money from staying in luxury? This is the question posed by Egypt Revealed which is promoting a scheme to invest in purchasing a room in an Egyptian aparthotel. If you were to purchase a £32,000 hotel room and keep it for three years, Egypt Revealed estimates you can expect an annual growth of up to 15% and a guaranteed annual rental income of 8%. Add this up and divide the profit by the 28 days
July August 2007