Ireland can be a foreign country for returning emigrants

If you're one of the thousands of emigrants touching back down on home soil this Christmas, you may be wondering if next year the festive season will mean travelling down the road to visit friends and relations as opposed to crossing oceans.

Yes, as the economy has recovered, so too has the steady stream of returning emigrants. Figures from the most recent census suggest that about 100,000 people moved home between April 2012 and April 2016, and the flow continues.

But returning home is not always as straightforward as it might first appear; while the locale may be familiar, everything from finding a house to driving a car can be different from when you left.

Savings transfer

Easy things first. Typically you’ll most likely already have a current account/credit card account, which means that accessing money or going through all the hoops to open an account won’t be a problem.

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However, you’ll likely need other services.

Bank of Ireland now has a dedicated services for diaspora returning home, or those moving here for the first time. Julie Ennis, head of the unit, has noted a steady stream of returning emigrants, and finds that most people seem to be coming from the UK, United States, parts of Europe and South Africa – and not from Australia or Canada as might have been expected. Many of them already have jobs.

“Most of the people we’re seeing are moving back with a job, often a relocation with a multinational,” she says.

A key concern for returning emigrants, she says, is picking a time to transfer their savings home if it’s in a foreign currency.

Ennis says Bank of Ireland customers can also choose to be part of its complimentary indications board, which means that it watches the rate on their behalf and advises them when their chosen rate is achieved (if that comes about). As well as the rate, it’s also worth shopping around for a good rate on money transfer, if you’re bringing money home from outside the European Union.

When it comes to your phone, you should be able to get a bill-pay phone, if that’s what you want, before you secure a full-time job.

According to a spokeswoman for Vodafone, the communications company asks potential customers for occupation status, whether they’re employed, self-employed, retired, student and unemployed.

“We have handset connections suitable for all of these types,” she says.

But if you’re dreaming of going back to your old number, you can dream on. Vodafone says that once a number is inactive for six months, it is recycled to another user.

Car insurance

It’s an essential for most returning emigrants, but one that can still surprise – the cost of car insurance. While insurance premiums have soared for everyone in recent years, the problem is heightened for those who haven’t been insured previously in Ireland. This is because car insurers typically won’t take into consideration claims-free bonuses earned in countries other than Ireland. And if you’ve been away for more than two years, any Irish no-claims bonus will likely have expired.

However, the situation is starting to turn. Earlier this year, Insurance Ireland said it was putting in place a protocol for insurers to help returning emigrants get motoring cover, which sets out that claims-free driving experience in another country could be counted by a motorist applying for insurance in Ireland.

This means that if your no-claims bonus has elapsed, insurance companies will take any experience you had in another country into consideration provided that you have verifiable documentation, such as a no-claims bonus statement and/or a letter of driving experience in respect of the relevant country.

Insurance Ireland is set to report to the Department of Finance on how the protocol is working by the end of the year. Already it is leading to reduced premiums. Bank of Ireland, for example, has teamed up with RSA to offer claims-free bonuses for returning emigrants in a move that should mean lower premiums.

According to Ennis, a typical 42-year-old teacher moving back to Ireland with a full UK driver’s licence and a no-claims discount for five years or more, looking to insure a €22,000 family car, will likely be hit with a quote of €1,281 a year. With the Bank of Ireland/RSA deal, however, the costs fall to just €643.

At present, the deal applies only to those who have been driving in the UK, but Ennis hopes it will be extended to countries such as Australia in 2018.

Health cover

If you’re 35 or older, you have nine months to get your health cover in order once you return home, or you will end up paying as much as 70 per cent more for the same level of cover as everyone else.

"And there is nothing we can do about it," says health insurance expert Dermot Goode of Total Health Cover, who warns that insurance companies have no discretion in terms of how they interpret lifetime community ratings.

“It catches a lot of people out,” he says, “so don’t delay in getting a quote for cover.”

The introduction of lifetime community ratings means that someone who hasn’t had cover in Ireland before (even if they had cover abroad) will pay an extra 6 per cent – every year for the rest of their lives – if they’re aged 37 on taking out Irish private health insurance, or 40 per cent more if they’re aged 54.

A derogation currently applies only to those who left Ireland before May 1st, 2015, and have since returned, although there is talk that it might be extended from January 1st to everyone who has left since, while there is also talk of capping the loadings to 10 years.

One way of avoiding the loadings is if your insurer will recognise any cover you had in place while abroad. However, as Goode notes, most are “very slow” to recognise this, unless they have a reciprocal arrangement, which is “unusual”.

Vhi, for example, will recognise your cover with Vhi International, which means you could avoid loadings/waiting periods, etc, with such a policy.

The other issue, if your cover isn’t recognised, is that you will be subject to waiting periods, of up to five years for pre-existing conditions.

“It’s a real problem for elderly people moving back to Ireland,” says Goode, noting that he recently had some clients wanting to move home from Switzerland, where they had great cover in place, and were shocked to discover both the loadings and waiting periods could apply to them.

And even if you wait until you get a job – and potentially avail of free health insurance with your employer – you might find that you’ll have to cough up for the loadings yourself.

“What we find is most companies that are paying healthcare pay only for the plan up to the standard rate,” says Goode.

If you’re keen to avoid the loadings, you can opt for a cheaper plan for the short-term, such as Vhi Start plan (€474); Irish Life Health Select Starter (€540.20) Laya healthcare Assure Protect (€582.90). If you do upgrade, however, remember that you’ll have to wait two years for the better cover to kick in.

Taxes

Yes, taxes are on the decline, finally, after a long period of austerity measures. However, don’t expect boom-time tax rates. The personal tax burden remains high, and may compare less favourably with the tax regime you may have been enjoying elsewhere.

Despite recent reductions, the marginal tax rate in Ireland remains elevated at 48.75 per cent on earnings of between €34,550 and €70,044, and 52 per cent above that. Those who are self-employed, meanwhile, will give up 55 per cent of their income on earnings above €100,000.

The rates mean that a single person earning €30,000 will take home €488 a week, or €2,116 a month. On an income of €50,000 a married couple with one spouse working will get to keep €769 a week, or €3,333 a month, while a couple, both working, on €120,000 will get to keep €6,186 a month, or €1,428 a week.

You can calculate how much tax you will pay by using The Irish Times online calculator: irishtimes.com/business/budget-2018/budget-calculator-2018

Finding a home

Rents continue to rise to new highs in Ireland. If you’re returning from pricey Sydney or San Francisco, you may not quite have a heart attack when you find out you could be paying €2,500 for a two-bed apartment; but if you’re moving from a more reasonable location you may well be outraged by the scale of the increase in the cost of housing.

One recent returning emigrant was surprised to discover how rents had soared in his absence. When he left Dublin some 18 months ago, he was paying €650 for a double bedroom; upon his return the rate had rocketed by some €300.

You can now expect to pay an average rent of €1,198 nationwide, or €990 for a two-bed house in Cork city, and as much as €2,026 in south county Dublin for a three-bedroom house.

And that’s if you can find a property.

The other option is to try to buy a home. Again the market is tough, with supply tight and prices continuing to rise. The ESRI recently predicted that prices would rise by 20 per cent, if not by more, between now and 2020 unless supply picks up.

However, as figures from Daft.ie show, it is still cheaper to buy a property in Ireland than it is to rent it.

Getting access to mortgage finance, however, may be more problematic. If you’d like to buy while still living abroad, you may be asked to stump up 30-50 per cent of the purchase price. If you’re earning in a foreign currency, the advent of the mortgage credit directive means most banks won’t even consider lending to people who don’t earn their income in euro.

And even when you’re home, you may find that the bank will want to ensure that you’ve finished your probation period with your employer, while others will want you to be in a job for six months.

Remember, mortgage lending rules also now apply in Ireland; while first-time buyers can borrow up to 90 per cent, they are typically allowed to borrow only a multiple of 3.5 times their income. Second-time buyers can borrow only up to 80 per cent, although exceptions may and do apply.

Of note, however, is Bank of Ireland’s assertion that it will look at a potential borrower’s experience and employment history before making a decision, which means you may not have to wait the typical six to 12 months before getting a mortgage.

According to Ennis, this means the bank may be willing to process a mortgage application sooner than the traditional 12-month waiting period for returning emigrants.

Some returning emigrants may find the help of a relocation services provider useful, to help them get over the hurdle of finding a place to live. Having lived abroad in countries such as France and Germany before eventually returning home, Ciara Shaffrey now helps others find their feet quickly once they come back through her relocation service, Settle In.

She encourages people to check out portals such as Daft.ie and myhome.ie a few months before the planned move home, so people can get an idea of what’s on offer – and at what price.

“It’s all about managing expectations,” she says, adding that there often “has to be a degree of compromise”. Indeed, someone who left Ireland six or seven years ago may still be surprised at how much things have changed – even if they had kept up to date.

For many, a workable commute is a big thing.

“The commute would be a big thing. On the map, it might not look too far but then you could be stuck in traffic,” she says.

And for those with children, schools are often “the most important thing”, Shaffrey says, adding that getting children into schools will often drive the accommodation search. In this respect, she expects the opening of the new international school in Dublin, Nord Anglia, next September will help.