One recent autumn morning, the harsh realities of life in today’s London hit one wellborn gentleman over the head. It was damp and chilly outside, the skies were a mottled gray, and the man, who works in the art world, was on his way to a breakfast appointment. “I was in Notting Hill, and I saw the little children in their uniforms walking to school at Pembridge Hall and Wetherby,” says the consultant, referring to two top private elementary schools, the latter of which was attended by Princes William and Harry. “And there was my own kid, going to state school down at the bottom of the hill. For the first time in my life, I felt working class.”
The Eton-educated Englishman, who asked not to be named, runs his own company and earns about 125,000 pounds a year, or $250,000. But that’s nowhere near enough to support his wife and three children in the style to which he was accustomed. When he was growing up in Kensington, a full staff manned his family’s seven-bedroom home; weekends were spent at his grandmother’s country estate; and trust funds took care of his tuition. But the trusts dried up, and he opted for a career in the arts rather than in banking. Now he’s fretting over expenses big and small, from school fees to dinners out. “I am desperate to give my kids the same kind of opportunities I had—and I’ll feel a total failure if I don’t,” he says.
Says one art collector who just bought a new vacation home, “In London we’re ’comfortably’ poor. We’re swimming on the edges of real wealth.”
Lady Kinvara Balfour, whose father is an earl and whose uncle is the Duke of Norfolk, is another member of the increasingly pauvre posh set. A playwright and London editor of dailycandy.com, she knows she’ll have to “work my socks off,” as she puts it, to give her children an upbringing like her own. Balfour has seen several friends with new babies move to once unfashionable (and not always safe) neighborhoods such as Hammersmith and Brixton. Nowadays, of course, central London real estate is only for the very, very rich: The average price of a prime property there is 1.6 million pounds, or $3.2 million, and rising by the hour. “Gone are the days of poodling up to Sloane Square with the pushchair,” says Balfour with a wry laugh.
It happened slowly and sneakily, over the past five years or so: While America was licking its post-9/11 wounds and watching the dollar decline, the British economy was booming. UK housing prices have increased 52 percent since 2002. The pound has touched 25-year highs against the dollar, and billionaires from Russia, India and the Far East have been planting roots in London, their new tax haven. (Part-time residents pay next to nothing.) Bankers, hedge fund wizards and private-equity moguls have been raking in billions thanks to the relatively unregulated financial services industry. Such is the wealth being generated by the City, London’s financial district, that some skilled clerical temp workers there are earning up to $400,000 a year—more than double the typical salary of the editor in chief of a British fashion magazine.