Whilst those who have yet to turn their plans into reality and realise their dream of escaping UK will no doubt find the concept of this article strange, there are still others out there who have already expatriated, who are already living abroad and who know that they will one day return home to the UK.
Whether you’re living abroad on a temporary assignment and the end of your contract is set and in sight, or you’re disillusioned with your new life abroad and are currently putting the planning in place to allow you to return home, as an expat you need to know how to financially prepare for repatriation and a return home effectively.
If you simply think you can get on a plane and arrive back in the UK and pick up where you left off, you may be sadly mistaken, because just in the last 12 months the UK has taken a turn for the worst, and if you’ve been gone even longer, you may find the British economic landscape unrecognisable!
The majority of those who leave the UK with the intention of making a new life for themselves abroad cut the majority of their ties with Britain. What’s more, in order to fund a new life it is often necessary to sell up and settle up the old one first. For many, this involves selling any British property assets. Therefore, the first thing to consider if you are thinking about repatriating at any time in the future is accommodation.
The property market in the UK is in a poor condition at the moment as it’s suffering from the effects of what has been labelled the ‘credit crunch.’ In essence this amounts to the simple fact that banks have stopped lending! Where there were 6,820 mortgage products on the market this time last year, there are now only 2,888 – and if you don’t have a massive deposit and/or require very low multiples of your salary to raise the mortgage amount you need, you’re unlikely to be looked upon favourably by a lender.
For expatriates the situation is exacerbated, because often they do not have proof that British banks are comfortable with accepting of their previous income, and any lump sums that are being brought into the UK from a property sale abroad or from the coffers of an international bank account will be viewed with suspicion. Therefore it makes sound financial sense for an expat to think about saving as much as they possibly can whilst abroad to put towards a property purchase as and when they return home. And they will need proof of where these savings funds have come from.
Ideally you will have a 40% deposit for a property, and ideally you will have kept a banking presence in the UK whilst you were residing abroad. If not, then expect to again be treated with maximum suspicion when you attempt to open an account upon your return. For most people it makes sense to return to the UK and live in rental accommodation to re-establish a presence on the electoral role and to get bank accounts etc., in place well ahead of having to apply to a bank for anything like a mortgage or a credit card, a loan or car finance.
In the current economic climate it may make even more sense because house prices are falling – and the general consensus of opinion is that they have a long way to fall even now! So instead of returning home and committing to a property purchase at a price that will immediately put you into negative equity the minute the ink is dry on the contract, why not consider placing your 40% deposit in a high interest earning account and renting whilst you re-establish yourself in the UK.
For personalised and professional financial advice it is always prudent to speak to an independent financial adviser and even to seek advice from your accountant.