Home search for international assignments
Expatriate housing benefit provision is one of the major costs in the total package of a common international assignment. Despite this fact, it often receives considerably less focus in an assignment policy than other components, like tax planning for instance. Big international companies usually take a very structured approach to this matter, whereas companies with smaller expatriate populations are often flexible and determine their budget individually. In any case, establishing some basic policies can not only redeem the costs but also help to manage expectations.
The challenge of home search overseas
As for any part of the international assignment, there are a variety of issues regarding home search abroad. Let’s describe them in more detail.
Companies tend to take into consideration two facts when determining the value of financial assistance:
- Family size – assignees with partners and children get bigger allowances compared to single members.
- Seniority level – senior managers get better conditions than juniors.
It might seem unfair to provide a bigger allowance for an assignee with a partner and children, because single assignees may feel like they are penalized for not having a family. In fact, when a company considers family size the intent is not to enrich the assignee with the larger family, but simply to cover the larger costs for renting a suitable property.
Housing options in the host location
The main issue of keeping housing equivalent to the home country is that the size and style of properties can vary considerably from one country to another. North American nations offer larger apartments than Asian ones. Even within nations, there is differentiation: room size differs between American states for example. In some countries, there’s simply not enough land to offer private houses at reasonable prices, so the assignee may need to adjust to living in apartments.
Host country issues
There is a handful of issues to factor in when creating a housing policy for ex-pats:
- Deciding which city districts are suitable, considering commute type, traffic congestion, and public transport.
- Which area fits with the company’s image and the employee’s status
- Security concerns
- Tax considerations: depending on how the assignee’s financial assistance and salary are received, there may be taxes related to property ownership and rental.
And there’s one more significant issue: the demand for expatriate-type properties. A good example here is Kenya’s capital, Nairobi, where demand for foreign assignees is way higher than supply, so there are significantly higher costs. A company may deem only certain properties acceptable for its employee, due to location, security, and other factors, meaning a single member of staff occupies a 3 bedroom apartment. The company pays a high fee but there is next to no choice.
Consistent implementation of the policy
A consistent approach in all locations must be well thought of, where the company is considering all local issues. It is important to review policy on a regular basis to ensure they are still reflective of market conditions and no overpayment takes place (for example if the rental prices have decreased since the allowances were set). Look at Myanmar: in its former capital, Yangon, rental prices increased by a staggering 46% in early 2014, but next year they subsequently decreased by 13%, when the market altered to an increasing ex-pat population. In this case, companies who worked with Burmese offices had to review their policies regularly to keep up with the rapidly changing market.
Things to consider for the policy
The company must ensure the assignee is aware of the role of the policy and the risks they undertake. The policy is for assistance ultimately. The policy should state clearly its role regarding the property, whether relocation assistance comes as a base pay or an absolute amount before relocation, whether it assists at all in the process of purchasing and selling, or covers the assignee if there is a loss and why. The assignee should understand what the company covers and that they are responsible for certain risks, such as loss of property value due to market and currency fluctuations and other non-essential costs incurred in the moving process.
As part of Clearmove’s key services provided to their clients and assignees is a defined home search function. This is to support and assist the assignee and their families with the smooth relocation and settlement in the new location.
Clearmove consultants will discuss in-depth with assignee their key requirements in the search and securing of a new home. We undertake a needs assessment and Clearmove will coordinate a full home search itinerary. We offer our assignees an overview of the market and potential properties. Once a suitable property has been identified Clearmove supports and oversees all contract/lease negotiations in a step-by-step process. We provide all relevant documentation, conduct negotiations, and communicate between parties such as landlords, brokers, lawyers, etc and ensure all compliance and legal matters are dealt with.
If you are an HR professional looking to streamline the process of relocation of your employees there is no better solution than Clearmove. Our software consists of several platforms, which include the app for assignees and a special app for you to keep each part of the process under control. Clearmove is your magic wand to deal with relocation fast and easy.