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Expat Investor : March 2008
March 2008 EXPAT INVESTOR 19 PERSPECTIVES Serving expats for more than 16 years J In this issue New research from Halifax shows that the South East of England was the most popular region for people to move to between 1996 and 2006, with 2.5 million arrivals from elsewhere in the UK. However, the South East also recorded the second highest number of people leaving to live in another UK region. Overall, the South East experienced a net gain from internal migration of 384,000; the second biggest of the 12 UK regions. The South West has experienced the largest net gain from internal migration during the past decade. Over 440,000 more people have Movements and removals Investor EXPAT g £4.95/ 7.50/US$7.50 March 2008 Bringing advisers and investors together Investor EXPAT Tony Hetherington Our offshore financial investigator exposes a financial scam. Practical banking Test drive the workhorse of expat financial products. Jersey What's going for growth in this popular offshore finance centre? Healthcare Research vital changes in the international healthcare market and check your policy remains current. First Person Bank of Butterfield describes its Fa mily Office. Regulars 10 Offshore funds 12 Offshore savings accounts 21 Property investments 22 Offshore mortgage market Next issue Portfolio management Banking in the Middle East Mortgage intermediaries The essential HIPs guide 6 14 16 4 www.expatinvestor.com Internal migration patterns reveal which UK regions will be the hot property spots in the year ahead, as Hannah Beecham reports. For more infor mation from 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 Fast Facts 33000 www.expatinvestor.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 19 years 24 moved to the South West from elsewhere in the UK than have left to live in another region, boosting the region's population by 9%. Halifax's research shows that, although the population of London is still growing, 2.4 million people have left the capital to live elsewhere in the UK during the past ten years. As a result, London recorded, by a significant margin, the greatest net loss from internal migration (608,000) of any region. Northern Ireland was the only other region to experience a net loss. London's decline due to internal migration, however, was more than offset by the arrival of one million people to the capital from abroad over the past decade. Overall, the city's population has risen by 538,000 over the last 10 years. This represents the biggest increase of any region. The total population in the North East experienced a net fall in the decade to 2006 of 20,000. Populations increased in all other regions, with the South East (438,000) and South West (331,000) experiencing the biggest increases behind London. The substantial net gain from internal migration has been a significant factor behind the rapid rise in house prices in the South West over the last ten years, confirms the Halifax. The average price in the South West has increased by 206% during this period -- a rise that is surpassed only by Northern Ireland and London. But it is the country's coastal areas that have seen the biggest increases in net internal migration. Sixteen of the 20 local authorities with the highest levels of net internal migration since 1997/98 are coastal areas, suggesting that people are moving in large numbers to enjoy the benefits of living near the sea. Birmingham, the UK's second largest city. recorded the biggest decline in net internal migration (-61,000), followed by the London boroughs of Newham (-51,800) and Brent (-51,100). Nineteen of the 20 local authorities experiencing the biggest net drop in internal migration in England and Wales are in major English cities, including 15 London boroughs. Nearly a quarter of a million people (220,000) have moved to Birmingham since 1997/98, the highest internal inflow of people to any local authority in England and Wales. Birmingham also recorded the highest outflow of people (281,000). Seven of the 10 local authorities with the highest number of internal immigrants also feature among the 10 local authorities with the largest number of people emigrating to other parts of the UK. These include some of the largest cities in England and Wales -- Birmingham, London, Manchester and Leeds. Martin Ellis, chief economist, says, "Figures at a local authority level highlight the transient nature of the population in many of the UK's major cities. Birmingham, for example, recorded both the highest level of immigration and emigration in England and Wales." 2007 city movers and shakers St Albans remains the most expensive town in the UK, with an average house price of almost £350,000. Belfast saw the fastest rate of house price growth in the UK -- house prices rose by £200 a day. Oxford maintains its position as one of the most expensive places to live, while boat race rival Cambridge slips back in the rankings. Newcastle and Durham both saw prices fall by 3% in the year. HOUSE PRICE GROWTH IN UK TOWNS AND CITIES, 2007 % change Price in Price in £ Change Ranking by Ranking by 2007 2007 Q4 2006 Q4 per day price 2007 price 2006 Belfast 32% £306,698 £233,222 £201 5 7 Aberdeen 25% £234,041 £186,497 £130 11 19 London 16% £329,007 £283,554 £125 3 3 Oxford 13% £339,404 £299,209 £110 2 2 St Albans 13% £347,563 £306,767 £112 1 1 Reading 12% £256,439 £227,987 £78 8 9 Bristol 12% £240,850 £215,530 £69 10 10 Brighton 11% £307,606 £277,895 £81 4 5 Edinburgh 10% £257,288 £232,927 £67 7 8 Plymouth 9% £182,461 £167,240 £42 21 25 Cambridge 9% £306,134 £281,227 £68 6 4 Glasgow 9% £176,608 £162,284 £39 25 27 Southampton 7% £215,585 £200,852 £40 14 14 Canterbury 7% £231,122 £215,349 £43 12 11 York 6% £224,872 £211,883 £36 13 12 Coventry 5% £173,626 £164,777 £24 27 26 Bath 5% £245,124 £233,811 £31 9 6 Bradford 4% £175,331 £168,434 £19 26 24 Swindon 4% £197,389 £189,808 £21 18 18 Manchester 4% £206,181 £198,620 £21 16 15 Cardiff 4% £209,230 £201,593 £21 15 13 Leicester 4% £166,317 £160,557 £16 28 28 Norwich 3% £203,371 £196,756 £18 17 16 Liverpool 3% £157,632 £153,528 £11 29 30 Leeds 2% £195,521 £191,012 £12 19 17 Nor thampton 2% £187,927 £183,765 £11 20 20 Birmingham 1% £179,726 £177,310 £7 23 23 Sheffield 1% £181,630 £179,833 £5 22 22 Newcastle -3% £178,309 £183,653 -£15 24 21 Durham City -3% £152,902 £157,499 -£13 0 29 Source: Nationwide Almost one-third of Nationwide's survey of 30 towns and cities saw double-digit house price growth in 2007. OUT NOW! *THE ANNUAL INTEREST RATE QUOTED IS VARIABLE, GROSS AND EFFECTIVE FROM 31 DECEMBER 2007. THIS RATE IS PAYABLE WHERE NO MORE THA N 3 WITHDRAWALS ARE MADE IN A BONUS YEAR (1ST APRIL -- 31ST MARCH) WITH A RATE OF 5.75% PAYABLE WHERE 4 OR MORE WITHDRAWALS ARE M ADE IN THIS PERIOD. THIS ACCOUNT IS ONLY AVAILABLE ONLINE TO INDIVIDUALS AGED 18 OR OVER AND IS NOT AVAILABLE TO UK RESIDENTS. Maximum balance is £ 1,000,000. Bradford & Bingley International Limited, International eSavings Unit, PO Box 263, Douglas, Isle of Man IM99 2JJ Br itish Isles. Registered in the Isle of Man No. 052221C. Registered Office: 30 Ridgeway Street, Douglas, Isle of Man, IM1 1TA. With share capital and reserves in excess of £266 million. Copies of our most recently audited accounts are available on request. Bradford & Bingley plc undertakes to discharge the liabilities of Bradford & Bingley International Limited in so far as the latter is unable to discharge them and remains a subsidiary of Bradford & Bingley plc. Under Isle of Man legislation, eligible deposits made with an Isle of Man office of Bradford & Bingley International Limited ar e covered by the Depositors Compensation Scheme contained in the Banking Business (Compensation of Depositors) Regulations 1991 (as amended). This advertisement does not constitute an invitation to make deposits in any jurisdiction to any person to whom it is unlawful to make such an inv itation or offer in such jurisdiction. Interest rates are variable. Your tax position will depend on your personal circumstanc es and you may wish to seek guidance from your tax adviser. It is the responsibility of the depositor to dec lare any interest received to their relevant tax authority. EU residents who are subject to retention tax by way of the EU Savings Tax Directive will need to consider the effect of the retention tax that will be applied to their accounts. Licensed by the Isle of Man Financial Supervision Commission to conduct Banking Business.%* GROSS P.A. 6.25 eSaver Internet Savings Account . Minimum balance £1 . No hassles . Helps you save . Manage from home 24/7 Available now at www.bbi.co.im/esaver Up to Fast Facts 33600 longer have the surplus salary to invest. How, for instance, will you deal with surrender values if you decide to cash it in early? There is a danger that you may have to lapse the policy and lose money. An alternative is to invest in offshore investment funds since you would not be restricted on what you buy and sell and there is no specific term involved. The solution though is to take independent professional advice before making investment decisions. Even during this brief introduction you can appreciate that there are many financial aspects to a move abroad and no single point of contact to advise you on everything. I have three golden rules if you are moving abroad for a period of time: Tr y and talk to people already living in the location. Visit as often as you can beforehand. Seek professional advice from a legal, tax, banking and investment perspective. If you are prepared to make the effort in these respects, you are more likely to reap the financial benefits from your time abroad. To find about more from Ashburton, enquire through the fast facts number below. Moving abroad -- a back-to-basics look at the financial issues One of the biggest misconceptions there is when moving overseas is that you will automatically be better off than if you had remained at home. Whilst there are plenty of financial advantages to life abroad, they are unlikely to be served up on a plate, and a lot of planning and professional advice is needed to ensure that you make the most of your time abroad. Over the course of a series of articles, I will be offering my perspective on the financial issues you need to consider as you embark on an overseas posting. I have, up until very recently, been based in Dubai, although my permanent home is Jersey, so I have first-hand experience of the pitfalls that await the unwary. One of the basic considerations is the local currency. There will be the currency you are accustomed to at home, the currency in your new location and there may even be another currency in which your salary is paid. Depending where your assets are held, you are suddenly juggling currencies and trying to ascertain what is a good exchange rate and where to get it. Buying and selling currency at home and abroad becomes a major issue. You have to decide which currency is the most suitable, as invariably there will be a requirement to convert currencies. It is vital to invest time in considering carefully the strengths and weaknesses of the currencies to ensure that you do not lose out. Investment managers can often offer advice on currency movement and will try to structure an individual's investments in a way that might neutralise the effect of currency conversions. Property is another important early consideration when moving abroad. Most people already have an investment in property. However, they will need to decide to rent or buy whilst working abroad. For many this is the first time that property is a genuine investment opportunity and homeowners moving abroad will need advice on the best option for their particular circumstances. How advantageous is it to have bricks and mortar in another jurisdiction? Who will look after the property when you are away and how difficult is it to own your own home whilst working abroad? Another early consideration is your pension scheme. Generally speaking, you will have an existing pension in your home country. There are a number of questions you must ask before taking action. Is it transferable, for example, should you freeze it while you are away and can you add to it? If you start a new scheme whilst you are abroad, will you join it in your own name or will the company operate one for you? Taxation also needs to be taken into account for the sale of your property after leaving. You may earn tax free income once you begin your new posting and you should waste no time in investing the surplus income effectively, not least because your time abroad is likely to be based on a contract of limited duration, sometimes as little as two years. Generally speaking in the savings and investment market, expats tend to opt for a life assurance wrapped product. The leading international life assurance companies probably write 70% of their business in regular premium savings, normally for terms of five to 10 years duration. However, if you are contracted abroad for five years and you have a savings plan for 10 years, you have to consider how you will maintain the premiums once your overseas contract is completed and you no In the first of a short series, Gavin Fraser, Global Sales Director, Ashburton, offers his perspective on the financial issues expats need to consider when moving overseas.
January February 2008