The fast-track route to permanent residence in the UK is going to become more expensive for potential investors following a Home Office order that has raised the minimum investment requirement to £2 million.
Fast-track UK visas, which allow investors to settle in the UK in exchange for investments worth £1m, £5m or £10m in UK gilts or British businesses, have proven to be quite popular among Russian and Chinese nationals.
However over the past few years there have been rising concerns in the UK that these visas are not beneficial for the British economy, and as a result UK ministers have raised the minimum investment threshold from £1 million to £2 million. The change is set to take effect from November 6 this year.
Another change is that the visa applicants will no longer be allowed to spend 25% of the total investment on property, as was the case earlier. It is believed that this decision has been taken due to public concerns over foreigners investing in vacant London properties.
In addition the new rules will prohibit applicants from sourcing their investment money as a loan. This was a particularly favored option among Chinese investors due to the restrictions they face on transferring capital from their home country.
Additionally, UK ministers vetoed proposals put forward by the government’s independent immigration advisers to put investor visas on auction and grant them to the highest bidder. Called “eBay” for visas, the reserve price for them would have been £2.5m and any amount raised above this would have gone to charitable causes.
The advisers’ argument for the proposal was that the existing visa program brings in only £500m worth of gilts investment a year, which they argue “barely fund two days’ worth of the national deficit.”
Going forward, the UK government plans to consult on more changes to ensure the investor visas bring “real economic benefits” to the country.
Immigration experts feel that UK gilts being banned in favor of riskier investments was more of a worry for potential investors than the increase in minimum investment requirement. “At the moment people see this as rainy-day money, and they know they won’t lose the capital. If there are future changes which make the investments higher risk, then that might be a problem,” says Kamal Rahman of law firm Mishcon de Reya.
Other proposals include the idea of offering investor visas in exchange for targeted “infrastructure bonds” that are focused on good causes like education and health, and also using the investments to raise funds for venture capital.