Vive Londres! French Buyers head East
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• The French population in London has increased by 75% over the last ten years
• The tax regime in France is still a reason for wealthy French expats to live in London, but the poor French economy makes London attractive to other groups too
• The French population in the East of the capital is now 85% of that in the ‘21st arrondissement’ of Kensington and Chelsea
• Continued turmoil in the eurozone means that interest in London property among the French is unlikely to wane

You’d expect to hear La Marseillaise and to see the Tricolore out in force on the other side of La Manche this weekend, but parts of London will be giving the French a run for their money. Census data tells us that there are 75% more French people living in the capital now than there were 10 years ago, so it could be quite a party.

We are used to wealthy French ex-pats in Kensington and Chelsea, but it seems that there are other communities springing up, and not just in the west. EU passports mean there are no barriers to prevent relocation to the UK and with the French economy in poor shape expats in different income groups are taking advantage the opportunities.

The current French government is minded to fix some of its financial problems by taxing the richest in its economy. France has the sixth largest population of High Net Worth Individuals (HNWI)[i] in the world. In 2012 there were over 400,000 of them, up 6.5 per cent on the previous year, despite the fragility of its economy.

If looking to reduce their tax burden, the UK’s regime is certainly one attraction to wealthy French people. The top income tax rate and thresholds aren’t much different to the UK. But since the problems in the eurozone there is an additional “temporary” French high income tax on global (earned or unearned) income. And on top of that, French residents are subject to a wealth tax and various social taxes.

But it’s not only super wealthy that are attracted by a more forgiving tax regime. French entrepreneurs face stiffer corporation tax at home too - a rate of 33%, compared to just 23% in the UK. Add to this the bigger costs of employing labour and higher levels of bureaucracy in France, it’s no wonder the UK is attractive.

Of course, not every employee has the freedom to choose where they live, which is why it’s typically the self employed, highly skilled or wealthy who have the incentives and opportunities to relocate. But with unemployment in France at 11% (29% among young people) and a heavy bureaucracy for entrepreneurs, it isn’t surprising that other groups are drawn by the attractions and opportunities of London, even if they are not able to afford to live in an established French community in exclusive west London.

By far the biggest proportion of French people live in Kensington and Chelsea.  They account for about four per cent of the total population in the borough, compared with an average for London of just 0.5 per cent. South Kensington in particular is a popular and established community – often dubbed as the 21st arrondissement – with French schools a tribute to the commitment to staying in the UK. But French communities are growing in other parts of London too. As house prices in the SW7 area become out of reach, the French are moving to other areas where house prices are lower. French schools have sprung up in Clapham, Camden, Ealing and Fulham to accommodate this trend.

But what is more surprising is the growing popularity of East London to the French - now a hot spot for growth in London’s French population. Tower Hamlets – home to Canary Wharf and Spitalfields – has a French population three and a half times higher than 10 years ago.  Similarly Hackney and the City of London have seen the French population almost triple. Indeed the combined population of French people in these three boroughs is 85% of that in Kensington and Chelsea. The French now account for about 1% of the overall population in these three boroughs, still well above the average for French in the capital as a whole.  But there’s no Lycee in this area of London, so we can infer that the demographic is likely to be much younger and of more modest means.

House prices and indeed rents in the established West London French communities are prohibitive for younger buyers of more modest means. Across town however there is a different vibe.  House prices are more affordable and for younger people rental is a realistic and lower cost tenure choice.  

Looking ahead, new problems in Portugal and Greece are not helping a feeling of security in the eurozone, so French – and indeed other overseas buyers – will continue to see the UK as a safe haven.  And while France struggles with its national debt, its economy and tax regime are unlikely to become much more favourable.  So a more diverse set of French expats look likely to continue to enjoy their lives among the ‘Rosbifs’ in both the East and West of London.

 

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