Only a decade ago, the Chinese economy was smaller than that of the UK, yet many economists believe it will become the world’s largest by 2018.

This incredible economic success story is just one of the reasons why the number of expats in the country has increased by around 20% over the last five years.

But why are so many British expats choosing to make the move to the Orient? And what plans do they need to make for their financial well-being in the future?
The simple truth is that the Chinese government is embracing international companies and foreign workers as it attempts to steer the nation through the most rapid period of economic expansion in history.

The process for work visa applications has been simplified, systems have been set up to make the cultural transition more comfortable and local expat groups are being encouraged to play an active role in helping people to settle in China.

Shanghai Is China’s Success Story

Whilst Hong Kong and Beijing are proving very popular with expats, it is Shanghai that is China’s true success story. Rich in local culture but with all the trappings of modern city living, this vibrant city is easily the most multi-cultural in the country. Indeed, large parts of the city have a Westernised ambience that makes Brits in particular feel right at home. And as the likes of Ford and GE continue to move their operations to China, the influx of expats into Shanghai is set to continue for many years to come.
Although large swathes of the country are still regarded as developing regions, the major cities offer expats a relatively high standard of living. Property prices in Shanghai and Beijing in particular are high due to sheer demand, but the comparatively high salaries being offered by multinational companies ensure life in China is one of comfort and relative luxury for foreign workers.

QROPS & Pensions

British workers in China need to make plans for their future, however. China has no social security agreement in place with the UK, so expats will not be eligible to receive annual increases in their state pension – effectively diminishing their pension over time. Retirees in China could also be liable to tax from HMRC if their pension fund is still based in the UK. However, a QROPS is a specific type of expat pension that will allow the fund holder to avoid paying income tax, capital gains tax, and in some cases, inheritance tax.
China does not currently have any QROPS pension schemes recognised by HMRC, but British expats can transfer their UK-based pension to a third-party jurisdiction such as Jersey or Malta. People who are living in China or who are planning to do so within twelve months will be eligible for this type of transfer, but many financial advisors believe that only funds of £25,000 or more will benefit from this type of overseas pension transfer.

Retirement

Retiring in China takes people away from the safety net of the UK’s welfare system, so planning for retirement in the country is essential. An offshore investment of this nature will give people the chance to manage their funds in the local currency, and the sheer number of global investment options will be far greater than with a UK-based pension provider.
The country’s system of taxation and pension provisions is complex, and it can change depending on which part of this vast country an expat is living in. However, advice from an independent financial advisor and careful planning should maximise a person’s retirement income – something that will greatly enhance an expat’s golden years in the beautiful country of China.

This is a guest post on behalf of Which Offshore who are an online consumer resource for those seeking information and advice pertaining to matters related to expatriate life and offshore finance. For more information, please visit – http://www.whichoffshore.com/

This week new EU rules will come into force across Europe’s 6.5 trillion Euro mortgage market. The aim is to stop the possibility of future housing bubbles by ensuring the creditworthiness of potential customers, along with proper assessment of their ability to repay.

Self-certified loans will be banned and it will become illegal for those performing internal bank credit checks to have their pay linked to the number of mortgages they approve. Some of the new EU mortgage laws will come into force during the middle of 2015.

Rules For The New EU Mortgage Laws

Further rules, which are currently being revised by the Irish Central Bank, suggest EU mortgage laws will have influence over late payments, arrears and repossession procedures.

The new EU laws will require creditors to “exercise reasonable forbearance before foreclosure proceedings are initiated,”  although it is not clear what ‘reasonable forbearance’ constitutes yet. The law also seeks to cut the year-long repossession process down to 30 days when a borrower is believed “not to be co-operating with the bank.” Banks will have the power to remove the tracker mortgage from restructured loans.

The EU legislation wants to ensure that borrowers can shop across all borders for their mortgages. This would include the ability to shop in different currencies. Specialist brokers who are properly authorised, registered and supervised at national level will be appointed to oversee mortgage transactions and to ensure the regulations that are put in place are enforced.

Other EU Member Mortgage Laws

Meanwhile over in Spain their Parliament recently approved another new mortgage law. Mortgage holders in payment difficulties now have more opportunities to keep their homes. Many believe the new law did not go far enough because it does not allow full insolvency. Spanish defaulters cannot turn their keys in to the bank to end their debt, they can be repossessed and yet still owe the remaining balance, thus trapping them in the debt for a very long term.

A  similar system of debt following a person exists over in Ireland. The Irish government hope to tackle this by bringing in new rules which force anyone applying for debt write down to comply with strict new guidelines about how much their monthly spending limits can be. The insolvency services allow a single person only €247.04 a month for food, €57.31 for heating and €125.97 for “social inclusion and participation.” Existing on these figures could be a huge challenge for those in an insolvency predicament.

Many fear this will lead to a much higher rate of people choosing full bankruptcy, due to it being the only route open which fully escapes the banks clutches.

Since the budget announcement of another housing scheme to help first time buyers called  The Help To Buy Scheme, many experts have commented that the scheme may in fact damage the market further.

Another Housing Bubble?

Help To Buy could in fact create another mini artificial house price rise because it increases demand without increasing supply. This pushes up prices and makes them less affordable, creating the opposite effect to the one the government intended. Added to that is that by underwriting the extra 20% needed for a deposit it makes a mockery of controlling the banks’ spendthrift ways which led to the initial housing price bubble.

Many have questioned if there is a need to help those who may be buying a £600,000 home. Surely if you need to move at this level then you do not need government help. Not many “first time buyers’ fit that bracket for housing. If banks consider the existing buyers too risky and restrict that by requiring bigger deposits, then why is the government subsidising the same people? It seems to make little sense.

In the past government dabbles in the housing market have usually flopped or caused chaos. Would it not be better to allow the market to correct itself rather than to continue to dabble and possibly make matters worse?

Of course, the other factor in the Help to Buy scheme is that it requires banks to sign up to it. Banks will only do that if they feel they benefit, or if they are forced to because they are partially government owned. Banks will need to pay a charge to be included, which means they will add that to any loan, potentially costing the borrower very dearly.

New Regulations Again?

Current financial rules require banks to keep six times more capital against 95% mortgages than those with 60% LTV. It remains to be seen whether the regulator will change this in light of the new scheme. Lending interest rates vary hugely now depending on the deposit put down, and range between 2.59% to 6.19%. If the interest rate were to rise in future, as it surely will, then many who have used this new Help To Buy scheme could find themselves in hot water. Add to this the artificial pricing mentioned above and the market would likely see another crash, which of course leads to repossessions.

The Help To Buy scheme seems to have been ill conceived and not properly thought through. It has little to do with first time buyers and is more a desperate move to get people buying property. One wonders whether this is so that stamp duty and other tax could be collected as property prices rise yet again.

Shared equity schemes such as this rarely are a good idea long term. They merely solve a short term problem whilst storing up trouble for the future. Most will find it difficult to get out of or move on from a shared ownership scheme. The housing charity Shelter agrees:

Of the 145,000 people who have bought a shared ownership property since 2001, fewer than a fifth have bought their own home outright.

Based on those figures, is the Help To Buy Scheme really a good idea?

In the news this week is a declaration from the HMRC that they will now be chasing after Capital Gains Tax deemed not to have been paid on properties sold which used to be Buy To Let, gifted or second homes.

HMRC Property Sales Campaign

The new campaign called the Property Sales Campaign will be aimed at anyone who sells a home in the UK or abroad for undeclared capital gains tax due on the sale profits. Controversially, this will include holiday homes and properties which may have been gifted and later sold on.

In its latest scare tactic style of collecting tax, the government have set a deadline for people to come clean and declare the sale by August 9. The owner would then have until September 6 to come up with the amount owed. This same tactic was used against those the government deem to be tax evaders who have offshore accounts.

After that date, HMRC will have threatened to take a much closer look at the tax affairs of those who have sold properties other than their main home without paying  the CGT.

Fees Due On Top

The HMRC hopes that the campaign to push people to come forward voluntarily by giving them favourable terms, will boost tax coffers. However, a penalty of 10% will still be due by coming forward early, it just won’t be as much as any penalty than if HMRC comes knocking first. The HMRC state that they have new technology and better staff to chase tax evasion.

Marian Wilson, head of HMRC Campaigns, said: “Some people will not understand that selling a second home, a holiday home or a property disposed of as a gift could attract Capital Gains Tax. They need to look at our website or contact us.

“Telling HMRC about your tax liabilities is simple and straightforward, and help, advice and support are available.

“It is better to come to us before we come to you. After the opportunity closes on  September 6, HMRC will use information it holds about property sales, in the UK and abroad, to identify people who have not paid what they owe. Penalties – or even criminal prosecution – could follow.”

Recent announcements for the government suggest that they would like to get tougher on landlords who own properties that are rented out which fall into the lowest brackets for energy efficiency. As part of the Green Deal  repayments on the government loan for the work are made via the electricity bill. So in effect tenants are paying for the work.

According to the English Housing Survey, published earlier this month, 11.4pc of homes in the private rented sector were rated F or G in 2011. By 2018 it will be illegal to rent a property with an EPC rating of E or below.

Long Finance Deals

In most cases the loan is stretched over many years, usually between 10 and 25. The loan stays with the property, even when it is sold. The government has said that it expects interest rates for the loan to be between 7.5% APR and 9.5% APR. Loans stretched over a very long term will end up being very costly. Selling a home with a Green Deal incentive attached can be off-putting to buyers, who are not keen on getting saddled with previous debts. If the tenant falls into arrears with the energy bill debt, they will be chased in the usual fashion via the energy provider.

Approved Installers

Assuming that the landlord would have to use approved installers, this would mean that the green additions will probably cost more then if the landlord were to make the improvements themselves. Approved partners are rarely competitive in pricing because they don’t need to be. Take up on the green deal has been much lower than expected. One factor in that may be because it takes far longer to get to a break-even return on any energy saving investment due to the initial high purchase expenditure.

What About Our Traditional Housing?

It should be remembered that much of our property in the UK is traditional houses, not newer builds. This is particularly true in rural areas where many properties are physically incapable of qualifying for higher bands, simply because of their construction methods.  In fact, some newer green incentives could damage listed property. Making property legally un-rentable, when people still want to live in them, does not help solve the housing crisis.

Another part of the Deal is that the government hope to force landlords to comply with the clause “landlords will not be able to refuse tenants’ reasonable requests for energy efficiency measures.” This of course begs the questions, what is deemed to be reasonable and how or where is that arguable in law, should it come to that? Surely if a landlord thinks the tenant is being unreasonable they would just evict the tenant.

A simple fact is that most homes can vastly improve their energy rating with better insulation, which is both simple and cheap to fit. So why bother with the Green Deal at all?

Kings Cross in is being tipped as the next up and coming investment area in London. With property prices in west London growing ever out of reach and the market somewhat saturated with investment buyers the smart money is looking for other opportunities elsewhere.

The King’s Cross Central Partnership have confirmed a £250million bank funding boost for 272 apartments around the Regents canal area.

The site will be a combined office, retail and residential area which will encompass new roads (including King’s Boulevard), new public spaces (including Granary Square), a new bridge across Regent’s Canal, canal-side improvements, and the Energy Centre with its district heating and distribution networks.

Google Set To Move In

At the end of last year Google announced it was close to completing a deal worth more than £550m to build a new UK headquarters at King’s Cross. Google were in talks about opening a 700,000 sq ft site coasting in the region of £550 million with a view to move in by 2015.

In its distant past Kings Cross had a somewhat seedy reputation, yet approximately £2bn has been invested in transport infrastructure over the past ten years. More recently Kings Cross has seen a rebirth which was largely helped with the Eurostar. And it is the areas infrastructure which is helping investors to see the potential in Kings Cross. The recently renovated St Pancras Hotel scooped Hotel of the Year award and the Refurbishment of the Year award at the 2011 European Hospitality Awards.

Renovation Is Key

Many of the old derelict warehouses have already been renovated and renamed the Regent Quarter, in the last few years. One of the noticeable things about the new developments is that they are keeping and renovating many of the old Victorian buildings and blending in the new ones, rather than just scrapping to start from fresh. This should lead to a vibrant mix of living/ working space.

It is felt that the new University Of The Arts who moved into the old Granary building has breathed new life into the area as students flock to study and live there. From an investment perspective, the Kings Cross area is still cheaper than many other areas of London, with the added benefit of huge regeneration and great infrastructure already in place it’s popularity can only grow as more money is pumped in. Even residential rents are much cheaper than neighboring Bloomsbury by something like £50-60 per week less, and office space is still affordable.

Investors still looking at London as a long term investment should consider Kings Cross now, whilst it is still affordable.

*photo from bbc.co.uk

There is a growing demand for investments models to combats China’s air pollution problems. Air pollution is now said to be so bad that a new classification of ‘beyond index” was coined to describe it recently.

Challenging Balancing Act

The new leaders in China are faced with the huge challenge of balancing economic growth with public health and sustainable development. China’s air pollution comes in the form of  particulate matter. These are air particles like soot, liquid droplets, dust, dirt, and smoke which come from the excessive use of carbon fuels such as coal.

Alternative Investments Sought

Alternative investments are being sought to reduce the excessive use of coal and fossil fuels in China’s manufacturing and daily use for heating. China’s demand alone surpasses the rest of the world’s demand. India is not far behind both in demand and pollution levels. The Chinese government has been accused of denying the pollution existence and covering up the growing pollution problem for many years. However, more data has been collected in recent years making it very hard to continually deny that the issue has reached crisis point.

On cold days, smog becomes trapped beneath the cloud making the situation worse for anyone at ground level. NASA released some pictures of the smog being clearly visible from space.

Air Quality Measuring

The air quality index (AQI) in Beijing was recently recorded at 341 when the recent snap was taken from space. An AQI above 300 is considered hazardous to all humans. At the peak, the pollution measured by the U.S Embassy Beijing Air Quality Monitor an AQI of 886 micrograms per cubic meter was present in the atmosphere. A joint report by Greenpeace and Peking University showed larger ‘particulate matter’ also carries many more toxic heavy metals including, organic pollutants, acid oxides and microorganisms such as bacteria and air-borne viruses.

Alternative Sustainable Investment

There are so many parallels between the UK and Japan regarding our current recession that even politicians are now admitting that we may be in for the same fate. With the Financial Times, Vince Cable and City watchdogs all seeming to agree that we may be on the brink.

Debt Mountain

Britains economy has a growing debt mountain which has been compounded by the rescued banks and European contributions. There have been rumblings for a few months now which started with a member of the monetary policy committee of the Bank of England stating their concerns.

Like Japan in the 1990′s, Britain gorged on more than a decade of booming growth which was helped along by aggressive bank lending and property investment binging. Japan’s economy stagnated for well over a decade in very similar circumstances and has still not fully recovered.

Small Signs?

Analysts fear  that the few positive signs such as an increase in retail sales, a small export uptick and a slow down of jobs being lost may be just smoke and mirrors because the UK’s economy has many deep rooted structural flaws which would extend the possibility of a lost financial decade.

The banking sector, which many businesses became so dependent on, has fueled a debt mountain of epic proportions. Alongside that the tax base is collapsing and our population is getting older. Quantitative easing, whereby the central bank buys billions of pounds’ of government bonds ( gilts), was supposed to inject liquidity into the economy has only pushed the end further into the future. Many believe that this crisis is so bad that even our grandchildren will still be paying for it.

Although the Office for Budget Responsibility for 2015-16 would like to think the growth rate for the UK will be 3%, this is more likely to be around the 1% mark.

Over in the Euro zone things are even worse. Their debt stock has increased from 70 per cent of GDP in 2008 to an estimated 94 per cent in 2012, whilst in the UK its increased from 52% to 89%. This is roughly 8% of GDP. Many feel that Georges Osborne’s route of adding 600 billion pounds to the national debt over the course of this parliament, when growth does not follow suit, is too high, and proves that austerity measures do not work.

Whichever way you look at it, the UK’s lost decade is in no way over yet, and depending on the start date chosen, the UK has a way to go before any real growth is witnessed.

Investing in Micro CHP, or to put it another way,  Combined Heat & power is at the forefront of a new wave of green energy. Combined Heat and Power , has been left at the bottom of the pile, but, what most people do not realise is that it benefits from the FIT tariff ( Feed In Tariff).

And, even more good news is that unlike the FIT for solar PV, the CHP tariff is set to rise.
Basically the new CHP boiler is a dual energy system. They provide gas central heating and hot water as normal together with up to 1kWh of electricity. The CHPA (Combined Heat & Power Association) say:

CHP systems use a single fuel source to concurrently produce electricity and thermal energy. Heat is a byproduct of most electricity generation—but while traditional power plants waste that heat by releasing it into the air or nearby water, CHP systems capture it and put it to productive use, such as generating steam that is then used in manufacturing processes.

By encouraging utilities to invest in CHP on customer sites, states could more easily meet future demand and offset some or all of the need to invest in new expensive power plants.

Domestic Use Of CHP

Currently there are a few issues with CHP for domestic use in that;

1). There are only 4 MCS accredited micro CHP systems available.

2). Three of the four are designed for the domestic market, and are primarily designed to deliver heat and not power. In other words, if you don’t
require heat, then you don’t get power.

Things are set to change in the near future with new systems that primarily designed to deliver power first, with heat as the secondary benefit and will deliver a constant 1.5kw – 2kw of electricity every hour, with 200ltrs of hot water provided daily.

With this much generated, it would not suit most domestic homes but is ideal for businesses, leisure centers, care homes, or blocks of flats, or anywhere where the base load is relatively constant. The CHP units take up about the same space as a washing machine, and as such, can fit almost anywhere with ease.

Additional benefits include:

1. No need for an EPC rating of D or above.
2. No need for planning consent.
3. No need for structural surveys.
4. Higher electrical efficiency than other generators (60%. Compared to National Grid at under 30%).
5. Can be “daisy chained”. (You can have more than one, if base load is high enough, and space permits.)

Investing In Micro CHP could be the next big thing in green energy for companies to help the planet and drive running costs down, which ultimately leads to more profit.

The recent double whammy of higher fees and a a tighter restriction on EU students allowed in the UK have meant that student lets are no longer the safe investment they used to be.

This is particularly true in London where nearly 50% of all student lettings are located. Government rules that tripled the cost of student fees started the decline.

Student lets have always been seen a the safest property investment due to the continual high demand for rooms. Reuters reported that there has been an estimated 12% drop in students applying for places since the new charges were put in place.

The situation has been compounded by a massive rise in new build high end student accommodation which was built to meet demand. Large development firms have been selling whole portfolios and shares their student accommodation schemes.

London property has fared the worst with owners and developers offering various inducements to students to enable them to sell the vacant rooms.

Mid Range Rooms Hit Hardest

Middle range London student rooms at between £200-£300 per week have been the worst hit. Rooms at the higher and lower end have had the highest demand. Banks spotted the potential problem early on and began backing out of lending on new developments.

Developments that offer high rates of return for investors will see a drop in the yield which has a knock on effect of less investors willing to put money into the student housing schemes. Many are hoping that the government will relax the rules a little on students from the EU to ease the situation. Big institutions and wealthy individuals often have student lets in their portfolio, these will be the first to sell up and pull out when investment values drop.

This should act as a warning to would be property investors. Any investment scheme which relies on sectors where the government can make drastic changes should be approached with caution. A couple of new rules can easily make a profitable investment into one of much lesser value. Investors contemplating this area should stick with established developments that have a well documented proven demand with good management.

They need also to be aware of a potential difficulty for selling the investment, should they need to, as student lets can be a difficult investment to sell on due to lack of available finance forcing mainly cash buyers.