Relocation benefits that include a destination home-finding trip is a domestic relocation best practice across industries. The home-finding trip allows employees and their families to familiarize themselves with the area, explore potential homes for purchase or rent, and visit schools if needed. This helps relocating employees select a new neighborhood and residence swiftly, reducing temporary housing costs and minimizing work disruptions. Expediting the settling-in process mitigates stress and enhances the overall employee experience.
How Long Should the Home Finding Trip Be?
Trip length and family inclusion vary based on employee level and homeownership status. Best practices:
- For homeowners and mid-level employees is a 5-day/4-night trip (including travel time), with the spouse/partner included.
- For executives (both renters and homeowners), best practice is 7 days/6 nights, often split into two separate trips.
- For renters and lower-level tiers or grades, best practice is a 3 day/2-night trip, including travel time.
Typical relocation benefits usually include airfare, airport transportation, and a rental car at the destination. Employees are reimbursed for mileage, tolls, and parking if the distance is close enough to drive. Either way, benefits include lodging and a per diem allowance for meals. Weekend travel is encouraged (often with a Saturday overnight stay required) to minimize missed work.
Employees planning to buy in the destination location will meet with local real estate agents. These agents will offer tours of potential homes, neighborhoods, and school districts, providing invaluable insights to employees and their families. For renters, best practice is to include a one-day rental tour benefit in the destination location.
Trend(s) to Watch in Destination Home Finding
Some sustainability-focused employees skip the extra travel of a home-finding trip, waiting until they are in temporary housing for in-person tours. Extensive research and virtual tours of potential homes, neighborhoods, and schools are becoming more popular. If opting for this approach, meticulous planning is crucial to ensure you complete adequate research and mortgage pre-qualification before arrival at the new location. Closing on a home purchase with a mortgage is taking longer than in recent years, so it is essential to be able to act quickly upon arrival.
Moreover, elevated home prices and higher mortgage rates might prevent some homeowners from qualifying for a mortgage in their new location. Others might prefer renting to taking on a new, higher-interest mortgage. Regardless, ensuring a positive employee relocation experience remains vital, whether the employee is a homeowner or renter.
For homeowners enjoying low-interest mortgages, high property prices and steeper interest rates at the destination are significant obstacles to relocation. The 2017 Tax Cuts and Jobs Act limits home-related deductions and provides a further disincentive for employee relocations. Companies must help soften the blow to persuade these employees to move.
Best practices for new home purchase benefits include providing referrals to real estate agents and mortgage lenders and covering normal and customary closing costs via direct billing or post-closing reimbursement. Most companies continue to offer new home purchase benefits only to those employees who were homeowners in the departure location.
Trend(s) to Watch in Destination Home Finding
Several mortgage assistance benefits, some old, some new, can help employees facing higher-interest mortgages.
- A sliding scale benefit permanently reduces the interest rate on a new home.
- Mortgage Interest Differential Assistance (MIDA) is designed to help close the gap between current market rates and the transferee’s existing, lower-rate mortgage.
- An interest-based mortgage subsidy gradually raises a transferee’s interest rate over time, allowing them to adjust to the payment.
- A dollar-driven mortgage subsidy, in which the employer specifies the dollar amount for individual transferees or bases the assistance on the transferee level.
As we emerged from the pandemic and companies began to re-initiate paused moves, the demand for corporate housing soared. The combination of permanent relocations and increased project-based, short-term domestic assignments led to full occupancy rates nationwide. Temporary housing providers hurt by the pandemic took the opportunity to increase prices.
Temporary housing availability and prices have begun to stabilize, and for most relocations, these accommodations are a necessity. Coordinating the disposition of the current home and the move into a new home, including the delivery of the employee’s household goods, can be difficult. The employee and family usually need to spend at least some time in temporary housing while all the pieces of the relocation puzzle come together.
Best practice for time spent in temporary accommodations:
- For executives, mid-to-high-level positions, and homeowners: 60 Days
- For renters and lower-level positions: 30 Days
- In managed cap programs, the temporary accommodations benefit should be provided in 30-day increments with the option to extend it based on the budget. Sometimes, individuals needing accommodations for only a week or two can opt for an extended-stay hotel.
Corporate housing should be fully furnished and equipped with a complete kitchen, all necessary amenities, utilities, and technology, including basic cable and internet. Ensuring that accommodations are equipped with modern technology brings comfort and enables productivity during a relocation, particularly for remote employees. Ideally, companies should present several housing options to employees, allowing them to choose a location that best suits their needs.
If the employee’s family remains at the departure location, including at least one return trip home is customary. The best practice is one return trip per 30 days in temporary accommodations. Companies can also offer the option for one family member to visit the destination location instead of an employee’s trip home as a cost-neutral alternative.
Trend(s) to Watch with Temporary Housing
Airbnb and other online rental companies now have a presence in the corporate housing market and can offer flexible and often less expensive alternatives to traditional corporate housing. However, some companies explicitly state in their policies that they do not reimburse employees who choose these housing options. In such cases, employees bear the responsibility for any issues that may arise since neither the employer nor the relocation management company can ensure the quality of these properties. The value of prioritizing the employee experience, which is challenging to manage with these providers, often outweighs the cost factor.
Finally, sustainability is becoming more critical in the corporate housing market. Providers are updating their properties with energy-efficient appliances, LED lighting, water-saving fixtures, and solar panels to conserve resources and reduce utility costs. While recycling has long been widespread among corporate housing providers, composting initiatives are also gaining traction. Many providers also incorporate local and organic items, such as cleaning supplies and food, to support sustainability and the local economy. The properties ensure guests know about their sustainable practices since many are inclined to support businesses with an environmental commitment.
Shipment of Household Goods and Automobiles
The household goods industry has had its share of issues in recent years. Within the U.S., a shortage of drivers has proven to be the most significant obstacle, closely followed by a scarcity of packing and delivery teams. Globally, the moving industry has grappled with ongoing supply chain disruptions, including port congestion, container shortages, and worker strikes across multiple sectors. These issues have resulted in delays and cost fluctuations, affecting relocating employees and their employers.
Despite these concerns, best practices for full-service household goods moves have remained stable. These include:
- Contracting with a professional national van line, which provides services like full packing, partial unpacking, and third-party appliance servicing.
- Insurance coverage up to $125,000 is considered standard. Personal auto shipments are also standard, with mileage thresholds determining if the employee can ship one car or more.
- Storage time is 60 days for executives and mid- to high-level homeowners and 30 days for renters and lower-level tiers (typically mirroring what the company offers for temporary accommodations.)
Emerging Best Practices with Shipping
Self-move or containerized solutions are becoming an alternative to full-service moves. These options are popular for lower-tier moves, smaller shipments, and those seeking greater flexibility and lower relocation costs. They can work particularly well for employees moving under a managed cap program or a budget. Some companies allow their employees to choose between a full-service move and a self-move, with incentives for the self-move option.
Reduced contact services launched during the pandemic, like remote surveying, have become standard practice. Modern technologies allow close tracking of household goods during transit, with real-time updates. Household goods carriers are adopting sustainability practices, using eco-friendly packaging materials, optimizing routes for fuel efficiency, and exploring electric vehicle options.
Discard and donate programs continue to be an emerging best practice. Professional organizers work directly with the transferring employee to discard, sell or donate unneeded items before the move. This is a win for all involved: the shipment size is reduced, the donated items go to worthy organizations, and the transferee gets a charitable tax deduction. Decluttering the home allows it to show better and sell faster, and a smaller shipment reduces the environmental impact of the move. This service reduces the cost of the move by 5–15 percent, offsetting the service’s cost.
Finally, with the 2017 Tax Cuts and Jobs Act’s removal of the long standing moving costs deduction, most companies are providing tax assistance to mitigate the impact on their employees. The mobility industry is collectively lobbying to bring back the moving expense deduction before the slated expiration of the Act on December 31, 2025. However, because the IRS still permits companies to deduct relocation costs as a business expense, employers have found that the tax changes are not as costly for them as initially expected. The cost burden falls on the employee.
Trend(s) to Watch with Shipping Household Goods
As in other sectors of the mobility industry, sustainability is a hot topic. Discard and donate is at the top of everyone’s list as it is a win for everyone involved, but there are other areas where sustainability efforts are making a difference. For example, some moving companies are implementing solar panels, skylights, and LED lights in their warehouses to reduce energy consumption. Research is also underway to develop more energy-efficient shipping containers.
Additionally, some employers offer a furniture cash allowance to relocating employees as an alternative to traditional household goods shipment. However, the question remains: How far are companies willing to push their sustainability requirements, considering the higher cost associated with truly sustainable household goods services?
Ready to Learn More About Relocation Benefits and Program Best Practices in 2024? Download TRC’s latest ebook, to explore:
- New ways to make your employee relocation package both competitive and cost-effective;
- Relocation benefits that might be worth reconsidering;
- Steps to jump-start your corporate relocation policy review process; and
- How to improve your current domestic relocation policy to produce successful outcomes.
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