CONTROLLING EXPATRIATE HOUSING COSTS...16 Scotiabank –Brief History •Scotiabank first opened for...

CONTROLLING EXPATRIATE

HOUSING COSTSDavid Gugliotta

Rita Hernandez

Roger Herod

Laura Levenson

Host Housing34%

Education22%

Airfare9%

Shipping9%

G&SA9%

Location Premium6%

Incentive Premium4%

Transportation4%

Relocation3%

Controlling Housing Costs

A key element of expatriates’ assignment packages

Largest controllable cost

Critical factor in determining satisfaction

Often negotiable

Highly visible

Subjective

Major Annualized Expatriate Package Costs*U.S. to London | Salary $175,000 | Family of 4

* Excludes base salary and taxes

3

The Housing Decision Team

• Mercer

• Global Mobility Team

• Relocation Firm

• Assignee

• Local Realtors

• Local Management

• Local HR

• Local Administrators

• And Last But Not Least: Spouse/Children

4

Housing Decision Tree

Relo Firm

Mercer

Global Mobility

Destination

Providers

Assignee

Family

Local Mgmt

Local Admin

Local HR

5

ESTABLISHING HOUSING GUIDELINES

7

Is this your expatriate housing standard?

8

Or this?

Mining and General Industry

9

Reducing Traditional Balance Sheet Costs

SAMPLE MERCER HOUSING TABLE

Developing a Housing Guideline Framework

10

JOB LEVEL SALARY RANGE FAMILY SIZE1–2

FAMILY SIZE3

FAMILY SIZE4+

Vice President $200–$300Expensive 2 bedroom

Expensive 3 bedroom

Expensive 4 bedroom

Director $100–$200Moderate 2 bedroom

Moderate 3 bedroom

Moderate 4 bedroom

Manager/Professional

$50–$100Inexpensive 1 bedroom

Inexpensive2 bedroom

Inexpensive3 bedroom

Expatriate Housing

11

• Mexico City Housing Costs (3BR) in Pesos

• Monthly rental costs: Tier 1- ExpensiveTier 2- ModerateTier 3- Less Expensive

• Mercer Housing Data March 2015

5,750

4,1004,100

3,000

Tier 1 to Tier 2 Tier 2 to Tier 3

Reducing Traditional Balance Sheet Costs

IMPACT OF CHANGING STANDARDS

MANAGING HOUSING EXCEPTIONS

MERCER 2012 WIAPP SURVEY(North American responses)

13

Controlling Housing CostsHousing exception requests

75%

63%

44%

38%

Who Approves Housing Exceptions?

The higher the level of approval, the more reluctance on the part of expatriates to insist on the Taj Mahal

14

ASSIGNMENT HOUSING

16

Scotiabank – Brief History

• Scotiabank first opened for business in Halifax on August 29, 1832

• Since opening for business in 1832, Scotiabank has grown to become Canada’s third largest Bank and is Canada’s most International Bank

• Scotiabank’s growth over the years is attributable through acquisitions and expansion into new markets.

Interesting Note: A Scotiabank branch was opened in Kingston, Jamaica before a branch was opened in Toronto, Ontario

Human Resources // Recursos Humanos

Private & Confidential

17

Scotiabank – Statistics – As of October 31, 2014

• Canada’s third largest Bank

• Canada’s most international Bank serving over 55 countries

• 86,000 Employees and 3,100 Branches / Offices worldwide:



18

Scotiabank – Statistics – As of October 31, 2014

• Scotiabank serves more than 21 million customers globally

• Net earnings of $7,298 million

• Major Accomplishments in Fiscal Year 2014:─ First Canadian Bank to be named World’s best multinational workplace

─ Canada’s Bank named the soundest in the world, 7th year in a row

─ Best corporate institutional internet Bank in 16 international markets



19

Scotiabank – Assignment Housing

• Scotiabank places a very high priority in ensuring that our Assignees have safe and comfortable housing in their host countries.

• Short-Term and Long-Term Assignees are provided with housing while on assignment

• Assignees are provided with “Leased Accommodations.”

• The Bank owns homes in several of the Caribbean Countries that are available for the Assignees’ use.

• Housing arrangements for Scotiabank Assignees are made through our Relocation Vendor (Weichert) and DSPs (Destination Service Providers) on the ground provide local support in finding accommodations for our Assignees.



20


• Prior to our Relocation Vendor engagement with Weichert in 2008, Assignee housing was arranged by the local HR team in the host country.

• The local HR team in the host country would arrange the Assignee’s accommodations and set housing budgets.

• Housing budgets were set by the local HR teams in the host countries up until January 2014 at which time we engaged Mercer to provide the Bank with Housing tables.

• The use of the Mercer Housing tables has brought consistency. The housing budgets are based on current market data and is based on the Assignee’s Job Level and Family size.



21


Sample of Housing Table



22

Short-Term Assignees Long-Term Assignees

Scotiabank – Assignee Housing

• 1 bedroom fully furnished accommodation (typical corporate housing)

• Within walking distance to the office or close to public transit

• DSPs (Destination Service Provider) provides assistance in finding the accommodations

• Budget is based on availability

• Provided with a COLA (Cost of Living Allowance)

• Temporary accommodations (30-60 days)

provided until permanent accommodations

can be found in the host country

• Type of housing and the housing budget

is based on Job Level and Family size

• Housing budget is based on Mercer data

• DSP (Destination Service Provider)

provides assistance in finding the

accommodations



23

Scotiabank – Assignee Housing in Jamaica

• The first Assignees that the Bank sent on assignment outside of Canada was to Jamaica in August 1889

• Many of the early Assignees were young menHuman Resources // Recursos Humanos


William E. Stevart (left) was the first agent (head of the operations in Jamaica). He

was replaced by William P. Hunt (right) in 1894 when he was recalled back to Canada

24


• Bank Officers were required to find “respectable” boarding:

Manual of Rules & Procedures: Sec 1- Sub Sec 11.18 reads:

• The Bank leased a small bungalow for the Bank Officer in charge of the Jamaican Operations



“ It is undesirable that members of the Bank’s staff, especially young officers, should board at hotels where they are unavoidably subjected to the temptations incident to such places. It is required that young men

shall live at respectable boarding houses in preference “

25


• Assignee turnover was high

• Assignees did not have a lot to engage in outside of business hours

• Popular activities in Kingston in the late 1800’s:─Horse Racing / Gambling – Bank Clerks not encourage to attend

─Horse Riding / Biking – Many Bank Clerks could not afford

─Cricket

─Dances

• The Bank Officers were not accepted by Jamaican society and were often ostracized

• Many of the Assignees were sent back to Canada - illnesses ( tropical diseases ) or requested to be recalled back to Canada



26


• Assignment housing in Jamaica changed in 1907.

• An Earthquake devastated Kingston destroying many of the buildings. A fire then destroyed any remaining buildings.

• Assignees were moved into a boarding house on the outskirts of Kingston.

• The Officer in charge was placed in Aylsham House – a property owned by the CEO of the Bank at that time, H.C. McLeod. The house was situated on 33 acres of land.

• H.C. McLeod sold the property to the Bank and the home became the residence of the Bank Officer in charge in Jamaica.



27

Agenda



Previously owned by the Scotiabank’s CEO –

Mr. H.C. McLeod. Became the Manager’s home after

the earthquake in 1907.

28


• Immediate concern was the accommodation of the Assignees.

• The neighboring property, 147 acres, was purchased in 1907. This was the birth of the “Arcadia Club.”

• An employee residence was built on the grounds for the growing Assignee population in Kingston.

• The Arcadia Club offered various amenities to the Assignees.

• Assignees would have a place to invite friends and associates to dine, dance, play golf or tennis or go horseback riding.



29




A Golf game on the Arcadia Club grounds – circa 1911

A tennis party on the Arcadia Club grounds. Scotiabank Assignees and guests

– circa 1912

30




The Bank assisted employees with the purchase of horses. A stable was built on the grounds of the Arcadia Club to allow the Assignees house

their horses and to take advantage of the trails on the estate.

31


• By the 1960’s, 90% of the 600 employees in Jamaica were locals.

• With the decreasing number of Assignees in Jamaica it was decided to convert the Arcadia Club into a training centre in the mid to late 1960’s.

• With the exception of the Employee Residence, a swimming pool and a training centre built in 1965, the original property of Aylsham and Arcadia are no longer owned by the Bank and have been converted into residential areas.

• Today we have 4 Assignees in Jamaica living in leased premises in the Kingston area.



IMPORTANT HOUSING MARKET FACTS São Paulo, Brazil

Case Study

São Paulo, Brazil

33

Rental Market Practices• Standard Lease Term: 30 month agreements.

• Rental Payments: Paid monthly in arrears. Tenant responsible for rent, taxes (IPTU)

and administration fees (Condo).

─ Currency is controlled and Landlords require rent to be paid in ‘Reais’ unless they have a bank

account abroad.

• Diplomatic Clause: Local law states that if a tenant needs to vacate due to company

relocation/transfer (leaving city), a 30 day written notice must be given and no penalty

will be incurred.

─ It is not recommended for the lease to be in the companies name; otherwise this clause would

not apply since the company is not transferrable.

• Annual Increase: (%) based on the IGPM (General Index of the Market) or IPCA (Índice Nacional de

Preços ao Consumidor Amplo) which can vary each month.

34

Rental Market Practices

• Commission: Landlord pays the commission equivalent to one month’s rent.

• Furnished Units: Basic furniture, appliances, curtains, lighting fixtures.

• Unfurnished Units: does not include furniture, appliances, curtains or lighting fixtures.

• Security deposits are not common in Brazil.

• All Leases must be in Portuguese in order to be legal documents.

• It is very important to have clear expectation on the security guidelines if any from the corporate perspective.

• Most Expat markets in Brazil are very dynamic. In São Paulo for example, housing costs rose by 12.3% in the last 12 months. For Rio de Janeiro, cost rose even higher - by 12.5% during the same period.

35

Types of Guarantees• Company Guarantor

The assignee’s host Corporation serves as guarantor.

• Insurance Bond (Porto Seguro)

Insurance company will provide a 12 month insurance guarantee, renewable. Cost is between 1.5 - 3 times property expense values and could be paid in up to 4 installments.

• Title of Capitalization

This product consists of a one payment that can be used as a lease guarantee. The title amount is definedbetween the assignee and the landlord and it can be up to 15 months of the rental amount.

• Advanced Payment Guarantee

In lieu of company guarantee, advance rent up to 6 months could be paid to cover in the event the tenant defaults on monthly payments. Very few Landlords accept this option and it is completely up to their discretion. Funds returned to assignee at the end of the contract.

36

Most Common Expat Areas in São PauloVila Nova Conceição

Price Range US$4,000 to US$18,000 including IPTU & Administration

• High status and luxury

• Most houses are in gated communities

Moema, Brooklin, Vila Olimpia & Itaim Bibi

Price Range US$2,800 to US$7,000 including IPTU & Administration

• Newer areas, smaller apartments

• Condominiums with security, houses not available

• Apartments with amenities

• Mixture of business and residential buildings, lots of night life

Alto da Boa Vista & MorumbiPrice Range US$4,000 to US$18,000 including IPTU & Administration• Big variety of apartments and a few houses

in gated communities

Jardins, Paraíso, HigienópolisPrice Range US$3,500 to US$10,000 including IPTU & Administration• Close to one of the best commercial areas• Older areas, larger apartments, lack of amenities

37

Vila Nova Conceição

38

Vila Nova Conceição - 4 bedrooms (4 suites), 5 parking spaces, Overlooking the Plaza Milan with a beautiful view of Ibirapuera Park - Rent: BRL$35.000, Condo Fee: BRL$5.000, IPTU: BRL$1.500 per month (Approx. $14,000USD)

39

40

Chacara Flora & Alto da Boa Vista - 4 bedrooms (4 suites), private pool, nice garden, playground, gated community. Rent: BRL$22.000, Condo: BRL$1.800 & IPTU: BRL$1.000 (Approx. $8,300 USD)

41

Moema, Brooklin, Vila Olimpia and Itaim Bibi - Price Range US$2,800 to US$7,000 including IPTU & Condo. Newer areas, smaller apartments. Condominiums with security, houses not available. Mixture of business and residential buildings, lots of night life.

42

Recommendations for a Successful Relocation Know the destination and how the mobility policy affects the assignee/family.

Prepare prior to assignment by speaking with the country experts.

Educate your assignee prior to departure, set the correct expectations from the policy/company perspective.

Plan on how the company will make payments due to currency restriction

Provide security training prior to arrival to modify behavior, this will help in avoiding any possible situations.

Do not send your assignees too early to search for properties, in general 30 days is sufficient.

Have clear instructions on the lease process, who signs as guarantor, whether the DSP needs to use a lease template, follow any security guidelines, etc.

43

Date post:	14-Apr-2020
Category:	Documents
Upload:	others
View:	3 times
Download:	0 times

CONTROLLING EXPATRIATE HOUSING COSTS...16 Scotiabank –Brief History •Scotiabank first opened for...

Documents