When the Home Office announced that they were closing the Investor Visa route over “security concerns,” that decision raised many questions. Here is our attempt at answering the most frequently asked ones:
What are “Golden Visas”?
Very simply put, Golden Visas or Golden Passports allow applicants to buy residency or nationality, respectively, in a country based on their significant investment in that country. The idea is that these wealthy applicants bring the country in question economic benefits. It supposedly attracts foreign investment, increases international mobility, and simplifies tax planning. However, reports by the UK government as well as the IMF have cast doubt on how effective these economic benefits truly are.
Does the UK have a “Golden Visa route?
Not officially under that name. In the UK, this type of visa is called the Tier 1 (Investor) visa. Until last week, the Investor visa allowed foreign citizens who invest £2 million or more in the British economy to live and reside in the UK and for their families to join them. The investment could take different forms, such as shares or bonds issued by UK companies.
The more the applicant invests, the faster they can obtain indefinite leave to remain (ILR). For £2 million, the applicant can apply for ILR after five years. For £5 million, the eligibility period is shortened to three years, or two years if they invest more than £10 million.
In the past, the Tier 1 (Investor) visa has attracted wealthy foreign investors from many different countries, especially Russia, China, and oil-driven economies like Saudi Arabia and the UAE. These Russian oligarchs and Chinese entrepreneurs contributed to the past decade’s rise in residential and commercial real estate pricing in London.
Is the Investor Visa route new?
This type of visa has existed in some shape or form since 1994, when the then-Tory government introduced it. However, some requirements have changed since; the investment amount was heightened in 2008. In addition, as the government became increasingly concerned with money laundering and fraud, the attitude towards foreign investment became less relaxed and compliance requirements more stringent. Since 2015, for example, investors applying for the Tier 1 (Investor) visa had to open a bank account and pass standard money laundering checks before applying.
Why did the Home Office close the Investor visa route?
The Home Office states that this decision is in line with its New Plan for Immigration, namely that the UK aims to be “firm against those wanting to abuse the immigration system while those who want to come to the UK and play by the rules will have that opportunity.” This seems fair enough – if the Home Secretary wants to crack down on those who own nothing and who she says “cross into the UK illegally via sea,” she should extend the same treatment to those who have everything and try to access the UK with illicit money. But, as is often the case, it seems to be not consistent policy but political ideology driving the Home Office’s sudden decision.
Tier 1 investment visas had been under review for a few years. The route was under increased scrutiny after Russia-UK ties turned sour in 2018, when former Russian agent Sergei Skripal was poisoned in Salisbury. Now, under mounting pressure to act against Russian actions in Ukraine, the Home Office seems to have made a final decision.
What does this mean?
Closing the Investor route means that no new applications can be made. The Home Office has emphasised the need to act immediately to avoid a watershed of applications in anticipation of closure. Therefore, they are not giving prospective applicants a waiting or warning period. The Immigration Rules have been updated to reflect that the changes are effective immediately.
As practitioners have pointed out since the Home Office announced its decision, many investors obtain their money in legitimate ways. By closing off the route entirely, the UK risks putting all investors in the same boat no matter where their money comes from. The Home Office has said that they are reforming the visa category to make it more transparent and reduce the risk of illegal activity. As they are working on those reforms, however, there is no alternative for investors. Some talent may be lost as a consequence, especially as other High Value visa routes such as the Entrepreneur visa have been cut down over the past few years. Few visa routes with similar flexibility remain open for applications; it remains to be seen how that will affect the attractiveness of the UK in the eyes of foreign nationals.