Surge in wealthy Russian investors obtaining visas to stay in the UK

13 Feb 2012 | 04:30 pm | 3 min. read

The number of wealthy Russian investors being issued visas to stay in the UK has surged over the last three years, according to data obtained by international law firm Pinsent Masons.

  • Six-fold increase in investor visas issued since April 2008
  • 21% of all visas went to Russians in 2011

The number of wealthy Russian investors being issued visas to stay in the UK has surged over the last three years, according to data obtained by international law firm Pinsent Masons.

Of those, the largest number (21%) was issued to Russian nationals, with Chinese investors comprising the second largest category of investors (15%). Surprisingly, U.S nationals were only the third largest category of investors. Almost a third (30%) of investor visas went to high net worth individuals from the Former Soviet Union ('FSU') states, including Armenia, Azerbaijan, Kazakhstan, Russia and Ukraine.

Investor visas are a new category of visa introduced in April 2008. The visas enable high net worth individuals with at least £1 million to invest in the UK to enter and remain in the country for three years. Investor visas are seen as a fast-track process for wealthy foreign nationals to acquire British citizenship.

According to Pinsent Masons, many of the high net worth individuals from the FSU entering the UK under investor visas are what can be termed ‘stability migrants’.

Yuri Botiuk, Partner at Pinsent Masons and head of the firm’s Russia and Ukraine desk, comments: “Many of the Russians and FSU clients that I work with are what I call stability migrants. They want an EU passport and the UK is seen as the premier safe haven.”

“A few years ago the current protests and social unrest in Russia would have been unthinkable. What we have seen over the last year or so will have pushed many more wealthy Russians to seek a ‘bolt hole’ of stability abroad.”

“The investor visas’ rules are designed to reduce speculation in prime central London property, which is so favoured by wealthy Russians, and channels money into other areas. Many of the Russian investors I have advised have invested in commercial property, boutique hotels being a current favourite.”

He adds: “Fears that the non-dom levy and the 50p tax rate would deter ultra-high net worth foreign nationals from coming to the UK appear to be unfounded. For these people an annual £30,000 or £50,000 charge is acceptable and most derive the majority of their income from outside the UK, so the 50p tax rate is an irrelevance. As with all investments, tax planning will need to be considered.”

Pinsent Masons points out that the stability and transparency of the British legal system, together with a large diaspora of Russians and people from other FSU states already in London, are additional factors drawing wealthy Russian investors to the UK.

Nick Thomas, Partner at Pinsent Masons, adds: “The nationality of the applicants for investor visas reflects those who are buying prime property in London. Many of these Russians will put their children through school in the UK and will use the investor visa mechanism as a means of acquiring British citizenship for those children once they reach their majority.”

Pinsent Masons points out that the rules relating to investor visas were changed in April 2011 to encourage more applicants. Investors will now be able to get indefinite leave to remain (ILR) more quickly, based on their investments. People investing £5 million in the UK can get ILR after three years. People investing £10 million or more can get ILR after two years.

Unrest in Egypt leads to four-fold increase in high net worth Egyptians coming to the UK

The number of high net worth Egyptians obtaining investor visas has increased four-fold over the last year, from four visas in 2010 to around 12 in 2011 (annualised projection).

Nick Thomas says: “Despite the increase in the number of Egyptians entering the UK under investor visas, the so-called Arab Spring has not yet led to a huge surge in wealthy individuals from North African or Gulf states. It remains to be seen whether this will change over time.”

*An annualised projection based on 240 investor visas issued in the first three quarters of 2011.

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