Great Britain’s exit from the European Union could mean a homecoming for many French expats currently living in London — and new business for real estate agents competing to relocate them.
Brokers in Paris and elsewhere in France foresee lower sales to Brits as a historic-low pound dampens their purchasing power. The British currently own more second homes in France than any other European country, thanks to France’s proximity and currency advantage in recent years, according to data from Knight Frank.
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However, at the same time, agents expect renewed interest from French nationals in their homeland, as employers seek to relocate operations currently based in the U.K. to a European Union member country with intact diplomatic and trade relations with the bloc.
“Many [French expats] still have their heart in Paris and could now regard it as a good time to move back,” said Laurent Lakatos, director of Databiens, a London-based data and market analysis provider.
There are an estimated 300,000 French citizens living in the U.K. and in particular, London’s posh South Kensington neighborhood has attracted large swathes of French families in recent years, many of whom work in the financial services sector, pushing up prices and resulting in it being dubbed “Little Paris”.
But if those living in ultra expensive South Kensington move back to the likes of Paris, due to their employers’ relocating plans, they will find a more affordable real estate market than London’s.
“Prices in London are two times more expensive than in Paris,” Charles-Marie Jottras, president of Daniel Féau, an affiliate of Christie’s International Real Estate based in Paris, said.
According to this year’s Knight Frank Wealth Report, $1 million would buy 22 square meters (237 square feet) in London, and 57 square meters (613.5 square feet) — more than double — in Paris.
In another point of comparison, home prices in the United Kingdom increased by 5.3% in the first quarter from the same period in 2015, while in France they went up just 0.5% over the same period, according to the Knight Frank Global House Price Index.
And while the falling pound could mean lower house prices in Great Britain for euro- or U.S. dollar-holders, planned changes to the British tax law could reduce the appeal of U.K. real estate for foreign buyers, Mr. Jottras said.
Coming April 2017, the British government intends to end the permanency of non-domiciled status for individuals who choose to make the U.K. their long-term residence, meaning that they will pay tax on the same basis as U.K. residents starting on their 16th year.
Conversely, a potential new government in France could mean good news for international buyers, as opposition presidential candidates vow to end the wealth tax on high-end properties, Mr. Jottras said.
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For the time being, however, Paris’ stance isn’t all that friendly. The city council introduced new measures that, if approved by the country’s parliament, will increase property taxes for second homeowners fivefold.
—Kathryn Hopkins contributed to this article