Responding to concerns that existing Investment Immigration programs in the UK have not resulted in significant benefits to the UK economy, the Home Office has doubled the minimum investment requirement to £2 million.
Currently, immigrants can opt for fast track access to permanent residence in the UK by investing £1 million, £5 million or £10 million in UK-government bonds or British enterprises. These investment visas have been very popular amongst Chinese and Russian investors desirous of becoming a permanent resident in the UK.
The minimum investment requirement of £1 million, which has remained unchanged for two decades, is being increased to £2 million with effect from November 6, 2014. Further, the Home Office is introducing additional restrictions and conditions related to the nature of the investments being made by the immigrant investor.
A significant change that is being introduced is the restriction being introduced on investment in property. As per existing rules, investors could spend up to a quarter of their total investment towards purchase of property. Reacting to fears amongst the public regarding foreigners buying up vacant London properties, the Home Office has disallowed the option of investing in property.
Further, immigrant investors will no longer be allowed to use loans to finance their investments. This was a preferred option for investors from China who are subject to restrictions regarding removal of capital from their home country.
A controversial investment immigration plan submitted by independent immigration advisers of the Government involving a minimum investment requirement of £2.5 million as a reserve price and auction of investor visas in a bidding war seems to have been rejected by the authorities. The scheme proposed to use funds in excess of £2.5 million received from the immigrant investor towards charitable purposes.
The advisers justified their proposal, which was panned for being an eBay-like setup for visas, by indicating that the current scheme attracts annual investment of £ 500 million into government bonds, which is less than 0.55% of the nation’s deficit.
The authorities are expected to make further changes to ensure the Investor Visa program offers real and significant benefits to the economy of the UK.
Reacting to the changes, immigration lawyers and experts opined that the hike in minimum investment will not deter high net-worth clients. According to immigration firms, the possibility that investors may not be allowed to invest in Government bonds may deter investors seeking a low-risk option.
Authorities are yet to take a call on suggestions like issue of infrastructure bonds targeted towards construction of hospitals and educational institutions to immigrant investors or use of the investments from immigrants to raise venture capital.
The changes introduced to the UK investor visa program is expected to have an impact on programs of other countries like Portugal and Cyprus that offer residence permits in exchange of property investments.
The changes to the UK program come close at the heels of a new investor visa program announced by Australia. Offering permanent residence in Australia in exchange of investment of A$15 million, the scheme is set to come into force from July 2015.
Source: www.ft.com