Finance Archives - Holborn Assets Cyprus

The Cost of Raising a Child: 0-17 Years Old

user — Fri, 07 Jun 2019 13:01:23 +0000

It’s no secret that having children is expensive but you might not realise just how expensive.

Whether it’s supporting a child through university or helping them on to the property ladder, the cost to parents after the age of 18 could be as much as £85,000 – But what about the years leading up to adulthood?

Research by Child Poverty Action Group revealed that the basic cost of raising a child until the age of 18 stands at just over £75,000 for a couple.

This figure didn’t account for childcare and other costs. Factoring in all expenses at the national average, NatWest found that the actual figure could be a little over £192,000 – that’s around £890 per month.

Figure 1 – A breakdown of costs using the NatWest calculator

Unlike the UK, schools in the Middle East charge yearly fees. Expats may have school fees included in their relocation package, but expecting parents already working abroad may not be so lucky.

Rent and school fees are considered the two biggest expenses for expats living in the UAE. The cost of education varies depending on location and the fees can be substantial.

Figure 2 Figures account for all curriculums, not just those teaching the British curriculum

Schools in the UAE teach a wide range of curriculums. For expats wanting to know about fees for schools teaching the British curriculum, check out our interactive map.

Managing your finances as a new parent has never been so important and our industry experts can help guide you through the best way to do this. If you would like to get in touch, please contact us using the form below.

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6 Months Until Brexit – Where Are We Now?

user — Tue, 30 Apr 2019 08:08:21 +0000

It’s coming up for 3 years since the first Brexit referendum. The UK has yet to leave the EU and may never do so. Uncertainty continues to prevail. If you are a UK expat, make sure your finances are Brexit-proof (and non-Brexit proof!) by speaking to an IFA.

So when is the UK leaving the EU?

Currently, British MPs have agreed to a 6-month extension of Brexit until 31 st October 2019. The UK may leave the EU sooner than that in the event that agreement is reached between British MPs and the EU. And all sorts of things can happen otherwise…

Can Brexit still be cancelled?

Yes – if the UK parliament says so: “the European Court of Justice ruled on 10 December 2018 that the UK could cancel the Article 50 Brexit process without the permission of the other 27 EU members, and remain a member of the EU on its existing terms, provided the decision followed a “democratic process”, in other words, if Parliament voted for it.” (bbc.co.uk)

Can Brexit be delayed?

Yes, if all EU countries as well as the UK agree.

Could there be another referendum?

Yes, if changes are made to UK law. The Government could do this theoretically. Some academic experts have said that another referendum would take a good five to six months to organise with all the appropriate legal mechanisms in place correctly. The first UK Brexit referendum took place almost 3 years ago now – on 23 rd June 2016. There was less than 4% of the vote in it – with Leave winning by 51.9% over Remain’s 48.1%. That’s very close! No wonder now UK politicians are failing to find a clear way forward. There wasn’t much a consensus to begin with!

How much does UK owe the EU if/when we do leave?

£39bn. That’s the sum which the current withdrawal agreement prescribes. It’s an irony of the Brexit process that Leave voters were promised that leaving the EU would save money for the UK.

Brit Expats in the EU: what happens if the UK leaves with a No Deal?

Widespread disruption to most areas of UK life – but particular worrying times for UK expats living in the EU: “for British citizens in the EU after a no Agreement Brexit, they will become third country nationals and will need to bring themselves within either EU law on third country nationals or national law of the Member State where they are living. Very few of the EU 27 have set out detailed instructions for their authorities on how to deal with British citizens after Brexit in that case.” (Professor E. Guild, Queen Mary University, London)

Brit Expats in the EU: what happens if the UK leaves with a Deal?

Until 31 st December 2020, British expats living in the EU will be able to stay as they are – if the UK Brexits according to the terms of the withdrawal agreement. Expats will need to ensure they are complying with the rules set out by the government of the EU country they are living in. And, after 31 st December 2020, no Brits will enjoy the automatic freedom of movement across other EU countries.

What does Brexit mean for my money?

That’s the big question! As long as Brexit uncertainty continues, the UK Pound Sterling will likely be weak. But, other than that, nobody really knows. Theories and observations bound, particularly in relation to the UK housing market.

How do I Brexit-proof my finances?

Give your financial picture a thorough review with your IFA. If you are a Brit living abroad, you need to be sure that Brexit does not deliver any personal nasty surprises in the area of:  Your status with the HMRC.  Your status with National Insurance Contributions (NICs).  Your UK state pension.  Your private and workplace pensions, some or all of which may still be held in the UK  Your cross-border investment interests, including property and funds.

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How to Make the Most of Tax-Free Earnings

user — Tue, 09 Apr 2019 07:20:16 +0000

Expats have plenty of spending options to enjoy – thanks to their earnings being free of taxation from their country of origin. (Except for US expats, notably.) But expats also generally know that there’s a bit of a trap in play with tax-free income. It goes like this: You leave your country of origin to take advantage of earnings that are not taxed by your home authorities. You end up with far more money than you would have if you had stayed at home. Your idea is to save enough abroad in a shortish spell to retire at home in comfort. But there are many spending temptations abroad. There are travel opportunities, there’s the brilliant weather – there’s a million reasons to put off investing in your family’s financial future. And what’s wrong with enjoying right now? Enjoying the expat lifestyle is all to the good. But it burns through cash. Can you find a way to spend money that will reap financial rewards in the long run? Here are two ideas – education, and property investment. Why not balance your leisure spending on some educational investment instead? And, if not, look at property, particularly in the UK.

You can’t start saving early enough for your kids’ education!

It’s not like most expats need to be told that their children’s education is important. But many expats fail to start saving early enough to tackle the high price of education when it comes around. Over half of UAE parents polled by the HSBC in 2017 said that they wish they had started saving earlier for their children’s education. And failing to start saving early enough means that money has to be begged, borrowed or mortgaged. Give yourself a break, and start looking into how you can start saving – and start making what money you do save start working harder. Get serious with your education planning and speak to an IFA! Parental spending on education in the UAE was the second-highest in the world in 2017 – at just under $100,000 per annum. We don’t hold back. The good news is that, internationally speaking, UAE schools are quite cheap. In Expatfinder’s 2018 analysis, the UAE was ranked 18th most expensive provider of International Schools out of 27 countries. International school fees began to rocket in 2017. Expatfinder’s 2018 survey of almost 700 international schools across almost 30 countries revealed “a startling 19% rise in prices compared to 2017”. When it comes to spending on education as an expat, be assured of one thing: by becoming an expat, you have done your children an enormous favour. You’ve made them into what are known as Third Culture Kids – which means the expat experience as children you are giving them makes them ready for anything as adults. Third Culture Kids enjoy expanded employment opportunities because they are going, as teenagers, into a global work market – and they are already far more globalised than their peers. UAE-based anthropologist Dr Joanna Seraphim says Third Culture Kids “are clearly more open-minded and tolerant because they have seen and experienced things that are different from the people in their own country. For example, a person in the UAE has tried lugemat (fried dumplings) from the UAE, masala chai from India, attended the Chinese New Year festivities and enjoyed Iftar with friends.” You won’t waste a penny giving your kids such advantages through international education.

Property investment opportunities – Britain?

Brexit has got many markets in Britain in shutdown. Nobody wants to spend any money – or risk anything – until the future of Brexit becomes clearer. Read here for an update on a conflicted UK property sector that could go either way. Pay close attention to the UK property sector in 2019. There will be opportunities, whether you are looking to buy-to-let, to settle down or even buying off-plan; speak to a Holborn IFA about your best way to secure a helpful UK mortgage from out in the UAE. Transnational mortgage resolution is bread and butter for the Holborn mortgage team, and will be much easier for you to navigate with experienced hands to deal with the paperwork. Decent off-plan opportunities in the UK are increasingly easier to find. That’s because developers and management companies are wising up to demand from overseas – as well as learning that high levels of support and flexibility for expat clients reap rewards. Off-plan in the UK isn’t the unreliable business that off-plan is held to be in Europe; we’ve all heard the European horror stories. Development and business regulation is high in the UK, and unlikely to slacken off post-Brexit. Of course, the UK is not the only off-plan market currently looking good; off-plan opportunities in the emerging economies of Asia (Vietnam, in particular) are opening up as regulation of foreign investment eases up.

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What is Off-plan Property Investment?

user — Thu, 28 Mar 2019 10:20:35 +0000

xOff-plan investment is an exciting and flexible option for private investors that is gaining in respectability worldwide. Both the UAE and the UK offer established sectors where private investors can gain excellent, long-term returns (in exchange for some risk, of course). And, in South Asia (particularly Vietnam), there are emerging markets that offer great opportunities to get in at the bottom right now in 2019.

What is off-plan investment?

Investing off-plan means buying a property before it is actually built – and, when it is built – rather than living in it, the investor will either sell, or hold the property and rent it out. Many off-plan formats exist. But always the priority is to clarify with an independent, qualified professional exactly what risks are involved, even if you are dealing with a respectable developer. In the off-plan investment sector, an IFA by your side works wonders!

What’s a key advantage of off-plan investment?

As the buyer, you choose how much you want to get involved in your investment. Suppose you were planning to buy off-plan with the purpose of eventually renting the property – companies exist which will take care of all management areas of the project, including furnishing the property and organising its letting to tenants. Buying off-plan from an established agency means you can take advantage of their bulk buying, with “property deals being heavily discounted and high yielding.” (sequre.co.uk) You can even get access to discounted solicitor services thanks to agencies pre-negotiating bulk discounts. Be sure to keep your IFA in the loop, whoever you choose to employ: your IFA has your financial interests at heart, unlike other appointed professionals necessarily!

Will I need a deposit to kick off my off-plan investment?

It depends, but certainly one of the big advantages offered by off-plan investment is the down-payment system. You can often pay by payment plan. This means you can pay in regular instalments – rather than have to cough up in one go the 25% deposit, for example, that applies in the UAE to all residential property purchases.

Can I get a mortgage for my off-plan investment?

Yes, you can. In the UAE, for example, Rakbank, Noor Bank and UAB are providers. Lenders view off-plan mortgages as more risky than bricks and mortar mortgages. And this can be reflected in the rate of interest you are charged. But it all depends on which developer is involved and what stage the project is at (the closer to completion, the less expensive the mortgage).

What sort of prices am I looking at for off-plan property?

As with all investments, the amount of risk determines the purchase price. More risk for the buyer = lower price. Off-plan property is cheaper than built property because it is an inherently riskier purchase. As thenational.ae points out, “there is a chance your property may not be built, may be built late or not to the specifications you expect.” On the basis that they have demonstrated success in the past, developers with a good reputation often charge higher prices than less well-known developers.

Can I sell my investment in off-plan property?

Not until it has actually been built. Unless you manage to broker a deal with somebody you know. There is not an established market in off-plan investments for buyers to sell to other buyers; it is an “illiquid asset” ie. not sellable.

Is buying off-plan better than buying bricks and mortar?

The great advantage of buying actual properties as an investment is in the area of “opportunity cost”. For bricks and mortar purchases, there is no problem with opportunity cost. The opportunity cost of an investment is how much your money would have been earning if it had been invested elsewhere. A rule of thumb is say the opportunity cost is 5% per annum – because you might well get this by simply putting your money in a high interest savings account, or ISA. The problem with off-plan investment is that, until your property is actually built, your money is not gaining any interest at all. It is not as if developers pay you interest on your downpayments. With bricks and mortar, of course, you can immediately start making money on your investment – by either renting it or selling it. With off-plan investment, your money can’t be touched for years. The good news about opportunity cost is that you can factor it into your investment equation – just as you would with any other cost. Just make sure your return on the investment is large enough to absorb the opportunity cost. Keep your eyes peeled, and get your IFA on the case too!

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