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Expat Briefing Editorial Team
19 January, 2015
For a variety of reasons, the United Kingdom is not usually to be found gracing the top end of the numerous league tables which attempt to measure the most attractive location for expats in terms of quality of life. The weather is bad; the cost of living is high; the cost of property is even higher; the transport system is expensive and overcrowded; the public health service is creaking at the seams; and crime is higher than in many peer nations. Yet, wealthy foreigners continue to beat a path to its door, as another surge in applications for the UK’s investor visa (the rules and requirements of which are outlined below) shows.
The Chinese And Russians Are Coming
According to international law firm Pinsent Masons, the number of investor visas granted to Chinese and Russians has soared in the year to September 30, 2014.
The report shows that the number of investor visas issued to wealthy Chinese nationals doubled, from 178 to 357. Chinese nationals now account for 43 percent of all investor visas issued by the UK in the last 12 months, the biggest share of any country, up from a 10 percent share just five years ago.
The UK Government has also increased the number of investor visas granted to Russian nationals, up by 57% from 117 in 2013 to 184 in 2014.
It is being suggested that that the increased interest in investing shown by international high-net-worths in the UK is indicative of the shift away from investment in some emerging markets, such as China, after a prolonged period of rapid growth. Both Chinese and Russian nationals have been looking to reduce exposure to their domestic economies as those economies face a slowdown in growth, and those investors are now looking for security by investing in lower risk assets in the UK.
Recent volatility in the rouble has also illustrated the risks of being over exposed to one emerging market’s currency.
The increase in visas issued to Chinese HNWs is part of a broader increase in investment in the UK from China, according to research commissioned by law firm. This estimates that Chinese annual investment flow in the UK is set to rise to GBP30bn annually in 2025. Over half of this investment will be directed at infrastructure and real estate.
But why the UK? Jill Turner, Senior Associate at Pinsent Masons says that HNWs are attracted to Britain because of its traditional status as a safe haven.
“Investors in UK assets are attracted by the country’s long history of secure private property rights. Strong codes of corporate governance in the UK also offer greater investor and creditor protection”, she observed.
“A lot of Chinese HNWs have had almost all their wealth linked to the fortunes of the Chinese economy. That has served them very well but with Chinese economic growth slowing after a tremendous run some HMWs are rebalancing their portfolios away from China”, she added.
UK Investor Visa: A Summary
The UK investor visa is for people from outside the European Economic Area (the European Union plus Iceland, Liechtenstein and Norway) and Switzerland. Seemingly, only those from North Korea cannot apply!
As its name suggests the investor visa is aimed at high-net-worth individuals. Applicants must have at least GBP2 million available to invest in UK government bonds, share capital, or loan capital in active and trading UK registered companies. However, investor visa holders cannot invest in companies mainly engaged in property management or property investment. They also can’t work as a professional sports person or coach, and cannot receive public funds.
Other eligibility requirements include that applicants are at least 16 years old, and can prove that they own the money they intend to invest, or their husband, wife, unmarried or same-sex partner does. Funds must be deposited in at least one regulated financial institution and “disposable” i.e. free to spend. The money can be either in the UK or abroad at the time the application is made.
Evidence that the applicant has the required investment will need to be presented in the application process. If this is to be the applicant’s money, they must show:
If the money belongs to a partner, the applicant will need to provide the following documents:
However, additional documents may be required depending on the applicant’s circumstances.
Any documents that are not in English or Welsh will have to be accompanied by a certified translation.
Students with financial sponsorship may also be eligible for an investor visa if they are already in the UK and are:
However, applicants falling into these categories must have an unconditional agreement in writing from their financial sponsor to re-enter or stay in the UK if their course fees and living costs were paid by either a government or an international scholarship agency.
Those applying for an investor visa must do so online. However, applicants will need to have their fingerprints and photograph (known as ‘biometric information’) taken at a visa application centre as part of the application process.
An investor visa entitles the applicant to remain in the UK for a maximum period of three years and four months. It is possible for a visa to be extended for an additional two years, but different rules apply depending on when the first successful application was made.
For visas applied for prior to November 6, 2014, the individual must meet the following requirements:
This sum should include the GBP750,000 (or more) investment and GBP250,000 (or the balance needed) to bring it up to at least GBP1 million. These funds can be either the applicant or their partner’s money, or in the form of a loan from a UK-regulated financial institution provided that the minimum GBP2 million asset threshold is maintained.
A successful visa application made after November 6, 2014, can be extended if the applicant has at least GBP2m under their control, has invested it in UK government bonds, share capital or loan capital in active UK companies and has invested it within three months of the visa start date.
An investor visa holder can apply to settle in the UK after two years if they invest GBP10 million, and after three years if they invest GBP5 million.
Dependents, defined as a husband, wife or child under 18, can also accompany the investor visa holder and enter the UK. However, they must also undergo an online application and have their biometric information taken at a visa application centre.
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