Are you allowed to buy a home when you are posted outside of Canada?
Yes we could buy a home. However, when posted outside Canada there is no entitlement to reimbursement of costs related to the purchase or sale of a home. Real estate and legal services are expensive. Legalities and taxes are complicated and for a posting of 3 years we feel it just isn’t worth our while to deal with the hassle of buying and selling.
Rental fees are very expensive in some cities! How will you be able to afford something decent?
The intent of the Foreign Service Instructions is to ensure that a member can acquire suitable accommodation at the post for the family that is generally comparable to (but does not necessarily equal to the size and nature of) the accommodation the member would have obtained in Canada.
On arrival at the new location, members automatically set to Opt-In* to the Rent and Utility Share. This means a pre-determined amount of money is withdrawn from the member’s pay on a monthly basis to pay for rent. The Rent and Utility Share is calculated based on pay level and family size and equivalent housing costs the family would pay in Ottawa. The amounts are recalculated annually.
Each area to which a member could be posted has a designated Rent Ceiling. The Rent Ceiling is based on the member’s pay level, family size and local area. It is recalculated every year. The member cannot rent a home with a monthly rent greater than the rent ceiling. Certain exceptions can be made but it needs approval from several different departments.
In exchange for the withdrawal of the Rent and Utility Share, a Rent Allowance to cover the rent (up to the Rent Ceiling amount) will be automatically deposited into the member’s bank account and the member is then responsible to pay the rent directly to the landlord. Utilities are paid directly by the member to the utility companies but many are repaid to the member as a Utility Allowance.
- A member is renting a house in England for £2000/month.
- Rent and Utility Share is $1500 is withheld from monthly pay (approximately £805)
- Rent Allowance of £2000 is deposited to member’s bank account for the member to pay to the landlord directly.
- In effect, the member only pays £805 for rent, the military pays the balance of £1195.
Items that would be covered if you “opted in” include rent, water and gas charges, cost of fuel for heating, including cost of fire wood/coal if is the primary source of heat, charge of fuel for cooking, electricity, furniture and appliance purchase or rental (conditions apply).
What if you found a rental house and it cost less than your rent share?
If this is the case (as it is with us here in England) the member can “Opt-Out” of the program. In doing so, he/she is responsible for paying his/her own rent and utilities for the duration of the posting. Members cannot opt-in and opt-out whenever they want. It is important to factor in the exchange rate when determining if the rent and utilities are less expensive than the rent share. The Canadian dollar lost 25% of its value compared to the British Pound during the time that we lived here. Fortunately, we are still paying less than the rent share.
There are also other benefits to remaining “opted-in” including:
- Furniture and appliance rental fees
- Costs of buying specific furniture and appliances
- Expenses to settle disputes between member and local landlord
- Local moving expenses if member is required change permanent leased accommodation for reasons that are beyond the member’s control
What if you need to pay for rent in advance?
If we are required to pay rent in advance of move in order to hold accommodation we can be reimbursed up to one month’s rent and on approval from the Gaining Support Unit (prior to signing the lease) an additional two months.
It sounds really complicated!
There are a LOT of restrictions on what we are entitled to rent. We are only entitled to rent a home with a certain number of bedrooms and square footage both of which depend on our family size. The rent ceiling is in fixed for our entire posting. That means if our rent is increased beyond the rent ceiling, we are responsible for paying the extra amount. If we rent a house that has a pool, we would not receive reimbursements for the portion of the utilities used by the pool.
It is very important to consult with the clerks and staff at the Gaining Support Unit and clearly understand what the entitlements are before you sign a lease because you might not be able to break a lease and you’d be stuck with expenses you could not afford!
*Note: This is a simplified summary of the opt-in/opt-out program. Please see the Foreign Service Instructions for in-depth, accurate details.