Changes to the UK's investment visa regime a few years ago seemed to have blunted its appeal, but recent figures show it remains in rude health.
The number of high- and ultra-high net worth persons coming to live in the UK rose 40 per cent in the 12 months to the end of March, reaching a total of 248 and apparently shrugging off worries about last June’s Brexit vote.
Figures from the Home Office show that Chinese holders of UK investor visas make up 36 per cent of all such visas, a rise from 20 per cent in the 12 months to end-March 2016.
Tier 1 investor visas, as they called, are granted to individuals who invest at least £2,000,000 in the UK who pass certain due diligence checks. When the visa minimum was raised from £1.0 million in 2014, it was feared – with perhaps some justification – that this change will hit takeup. The change has coincided with tighter rules on non-domiciled residents, changes in tax treatment of foreign-owned real estate, as well as uncertainties around how the UK will execute its departure from the European Union.
The data, however, suggests that enthusiasm for such visas hasn’t waned. “In reality the UK’s reputation as a favourable destination for international HNWs and UHNWs remains undiminshed by Brexit. There had been a lot of apprehension amongst the high net worth advisory community but the UK’s huge gravitational draw is still there,” Charles Filmer, partner and head of the private office at LJ Partnership, said.
“A year on, the UK continues to be seen as a positive platform for doing international business. It also continues to offer a very desirable lifestyle to HNWs and UHNWs,” he said, arguing that visa-holders seek education for children, a platform for doing business globally, and a relatively benign tax code, despite certain changes.
“Relocating to the UK also allows ambitious entrepreneurs from China, Singapore or Vietnam to turn their business from just doing deals at regional level to being able to access global markets and a larger pool of cross border deals. That is hugely important for ambitious business owners,” he said.
Another firm, Penningtons Manches, which has specialists working on areas such as immigration, was not quite so enthused over the data, however, and argued that the fall in the value of sterling after last June's Brexit vote might have encouraged visa applications, given that UK real estate became cheaper for foreign buyers as a result.
“We are seeing a revival of the Tier 1 Investor visa category with an increase in instructions from HNW clients seeking to come under this route. This is reflected by the ONS figures which show a 40% increase in visas granted under this category in the last year. The figures are still well below those of 2014 when the initial investment threshold was £1 million, instead of the current £2 million, but it’s a promising sign,” Hazar El-Chamaa, partner in Penningtons Manches immigration team, told this publication in an emailed comment.
“We believe the increase can be attributed to Brexit given the dramatic drop in the pound and the loss of appeal of the alternative route of the European citizenship by investment programmes. The latter has been impacted by the fact that the status of EU nationals, especially those who arrived/arriving in the UK post 29 March 2017, remains uncertain,” el-Chamaa said.
A Tier 1 (Investor) visa allows applicants to remain in the UK for a maximum of three years and four months - with the option of extension for a further two years. Applicants need to invest £2,000,000 or more in UK government bonds, share capital or loan capital in active and trading UK registered companies. They can apply to settle in the UK after two years if they invest £10 million; they can apply to settle after 3 years if they invest £5 million.