29 Feb Cost, Proximity and Security are Housing Concerns for Assignees
When your international assignee tells you the information they found online (read: Google) about housing varies from your claims (misread as: pricey), what do you do? Right at bat, it’s imperative that you point out how online rates differ when it comes to housing expatriates. You can take the time to explain the costs, but just for their reference.
To explain why it can be pricey, they must realize that rents are generally higher versus paying mortgage while also considering the different needs of an assignee. If the assignee comes from another country with children in tow, housing would normally be chosen based on these two important considerations–proximity to an international school, which would be more expensive, and security, especially in this most volatile of times.
Security is on the top of the pecking order, because they are not familiar with the location, no matter what type of information they’re getting online.
Learning about different cultures is part of this job, as your international assignee may just prefer to live close to their communities–a nearby Chinatown would help if they’re coming from China. While some may not mind being close to their communities, it’s better to give them this option as it only reflect well on your sensitivity and knowledge of your domain. Still, one must know that in some cases, the housing will be expensive if Chinatown is located downtown or in the center of all the business activities of a city.
They say there’s a balance sheet approach to housing wherein some employers generally take the cost of housing for what it is, while others choose to call it financial assistance in the form of an allowance. The hiring employer gives them an allowance to pick their accommodation themselves with the help of, say, California Corporate Housing. It’s not surprising if some employers take out the housing costs from the paycheck of their talents, so make sure to make clarifications.
The employer or the global mobility professional works with California Corporate Housing with their own checklist, making sure housing for their talent is suitable based on their qualifications or credentials. As a result, the apartment that assignees get may differ from one to another with the following considerations: compensation level, proximity to office, safety, access to colleagues and their community, and the image the employer needs its talent to project at the location.
Who signs the lease? It really depends on the local custom and practice and whether there are important tax considerations to keep in mind. If the employer signs it, the rent may be higher. In some places, they may not rent out to a foreigner right away, so if the employer signs it, the rent may just be higher. No matter who signs it, there must be a personal liability insurance for their protection.
If assignees ask you why they cannot purchase a home in their move, there’s a simple explanation for that. It would be unfair for renters to find out the homeowner is building equity.
Housing allowance is a sensitive issue. Look into information from KPMG and how it handles this in many ways as discussed here briefly while also checking reports by Mercer on expat accommodation from Mercer in 50 major cities worldwide.
Mercer’s detailed reports on expatriate accommodation costs include full descriptions about locations of international schools. The reports cover three different categories of areas–noise, loitering, security in the area, security of the property, convenience, pollution, public transport, social surroundings, sports facilities and the general characteristics of the area.
Mercer also has current housing-related cost survey data to help you apply them. The research involves gathering and analyzing data based on latest national statistics on family expenditure patterns in covered countries, including the United States.