French rich look to London as tax fears grow
LONDON, April 12 |
LONDON, April 12 (Reuters) - The plushest neighbourhoods of central London are attracting increased interest from a new wave of super-rich migrants from France, scared by a rising tide of tax threats from presidential candidates as the election campaign comes to a climax.
Upmarket British property consultant Knight Frank said it has seen a 19 percent spike in online enquiries from France about homes located in London's priciest districts in the first quarter of 2012.
The surge in French interest contrasts sharply with a 9 percent fall in enquiries about central London property from elsewhere in Europe.
"It is early to see the impact of the proposed wealth taxes in France in terms of actual purchases ... but there is compelling evidence from our web search statistics," said Liam Bailey, Knight Frank's global head of residential research.
"This evidence from web search activity backs up a noticeable spike in anecdotal comments from (our) office network, where French applicants have become much more noticeable in recent months," Bailey said.
Socialist candidate Francois Hollande, favourite to win a runoff presidential election in May, has said he will target the rich with a 75 percent tax rate on annual incomes above 1 million euros ($1.3 million).
Incumbent Nicolas Sarkozy has also moved to counter a reputation for favouring the rich with promises to tax dividend income, apply a minimum 15 percent tax on major French corporations and introduce a levy on tax exiles who seek refuge abroad from high French rates.
Sarkozy has already raised taxes as part of austerity measures, notably scrapping a provision that prevented anyone from paying more than 50 percent of their income in taxes which had been criticised as a "gift to the rich".
Still, most of the worry about a surge in taxes has focused on Hollande, whose advisors promise a reign of tax "justice".
The Knight Frank data suggests interest in relocating to London is limited to the super rich, as enquiries from France into central London homes worth less than 1 million pounds dropped sharply this year.
But enquiries from France about homes valued between 1 million pounds and 5 million were up 11 percent, against a 15 percent fall from the rest of Europe.
In the highest price bands, from 5 million pounds to 15 million and above 15 million, French interest was up by more than 30 percent.
Interest in buying London property is likely to reflect plans to leave France rather than simply moving money abroad, which would not put it beyond the reach of French tax authorities who tax rich residents on worldwide wealth.
The UK levies no tax on foreign residents' overseas assets if they remain "non-domiciled" for tax purposes, though recent reforms mean a levy is charged after seven years of residence.
"If you've got a French domicile of origin, and you leave France and come out of the French tax system into the UK system ... you've got seven years without having to declare any French or any foreign income," said Ronnie Ludwig, Edinburgh-based partner in the private client team at accountants Saffery Champness.
The "non-domiciled" status has made the UK a popular tax haven for thousands of international tycoons and oligarchs, many of whom have set up home in London.
Prices for the best central London homes rose 11.3 percent in the 12 months to March this year, Knight Frank said, with demand fueled by the weakness of sterling, the UK's relative political stability and the transparency of its property market.
House prices elsewhere in the UK have continued to fall or stagnate since the financial crisis.
Interest has also surged from southern European countries such as Greece and Italy, whose wealthy citizens sought to shield their assets against a possible break up of the euro zone. Italians overtook Russians as the largest buyers of London homes in the first two months of this year, Knight Frank data showed.
According to a survey of Citi private bank clients with at least $25 million in assets, London was rated the "most important" city in the world. It also ranked top out of global cities for quality of life, knowledge and influence and economic activity and came second to Washington in terms of perceived political power. ($1 = 0.7644 euros) (Additional reporting by Christian Plumb in Paris and Tom Bill in London; Editing by David Holmes)
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