New tax regime could result in influx of French buyers in London, agents believe
The London property market could seen an influx of French people looking to rent or buy as a result of Francois Hollande winning the election as he has promised to increase taxes.
London already has a sizeable French expat population and an election pledge by Hollande to increase the upper income tax to 45%, bring more people under the annual wealth levy, and introduce a hotly contested 75% super tax band for anyone whose annual income exceeds £1million.
The tax increases could see even more French people seeking to move to the capital, according to real estate agents.
‘We may well see an influx of French investors and tenants. London is already a favourite destination for the French with the Lycées brimming full, so it will be interesting to see what happens,’ said Lucy Morton, senior partner and head of lettings at central London estate agency W A Ellis.
Knight Frank has found that in areas like South Kensington French investors were the second biggest group after British buyers in the first quarter of this year, accounting for 8% of property purchases. So far this year they say enquiries from French clients have increased by 19%.
‘There is anecdotal evidence of increasing interest, both in terms of the number of walk-ins reported by our offices and of prospective buyers searching online,’ explained Knight Frank’s head of residential research Liam Bailey.
‘By looking at search activity on Knight Frank's Global Property Search website, we see that the number of French web users viewing prime central London properties on the site began to increase as the eurozone crisis hit in May 2011,’ he said.
‘Although this activity began to tail off later in the year, there was a significant spike in February with a 68% year on year growth in property searches which coincided with Hollande's proposal for a 75% tax on top earners,’ he pointed out.
‘Interestingly, the year on year change in visits for the three months to April shows that, while French searches in the sub £1 million sector have dropped off over the past year, down 14%, interest in the £5 million plus bracket has surged and is up 30%,’ he added.
Kensington agents Douglas & Gordon have had so much interest from French buyers that they are hiring four French staff. ‘The French have always loved this area and we are seeing more and more,’ said director Ed Mead.