Out-Law News | 27 Jan 2014 | 3:23 pm | 2 min. read
Over one third of investor visas issued in 2012/13 went to Chinese applicants, according to figures obtained by Pinsent Masons, the law firm behind Out-Law.com; while there was a 25% increase in the total number of these visas issued, up from 423 last year to 530. The number of visas issued has nearly doubled since 2010/11, when only 235 applications were granted.
"High net worth individuals (HNWIs) continue to pick the UK over other major international cities as they seek a safe haven for wealth that they have usually worked very hard to build up," said employment law expert Jill Turner of Pinsent Masons, the law firm behind Out-Law.com.
"The UK benefits from a very stable, liquid economy, and is free from any governmental interference in the assets of private individuals or any political instability. The UK Government is also pro-business, with relatively low tax rates imposed on businesses. By contrast China and Russia, where so many of these investors now come from, has a fairly volatile stock and housing market that can make it a risky place to invest, and many of the Chinese investors who flock to the UK feel that their wealth is better protected in a democratic and transparent country," she said.
Investor visas allow wealthy individuals to obtain UK residence if they wish to make a substantial financial investment in the UK. In order to qualify, an applicant must have at least £1 million of their own funds and must invest no less than £750,000 of this into Government bonds, share capital or loan capital in UK registered companies within three months of arrival. Unlike other categories of visa, applicants need not meet an English language requirement and are able to bring spouses and dependents to the UK to work or study.
According to the figures, the number of investor visas issued to applicants from the US also substantially increased last year, which employment law expert Jill Turner said was driven by the UK's "booming Silicon Roundabout" and growing high-tech sector. The number of visas issued to Egyptian nationals almost doubled in the same period, from just 10 visas issued last year to 19 this year.
"The ongoing political and economic instability in Egypt has prompted many wealthy families to divert their funds into the UK," she said. "The UK offers Middle Eastern investors a settled lifestyle in a jurisdiction with economic and political stability. Investors with families are also allowed to bring dependent children under the age of 18 to the UK, where they can benefit from an education here."
She added that it was unlikely that the Government's recent announcement that it would begin charging capital gains tax (CGT) on the sale of UK properties owned by foreign investors from April 2015 would discourage foreign investment into the UK property market. The Government is due to publish a consultation on how it will take forward this change, which was announced as part of last month's Autumn Statement, shortly.
"HNWIs continue to be attracted to the UK to invest in property, especially at the moment with house prices and rents soaring," she said. "While the CGT levy may discourage some smaller investors from investing in UK property, it seems unlikely that the majority will be put off by a relatively low fee - especially as the benefits of investing here far outweigh the negatives."
The Migration Advisory Committee (MAC), which advises the Government on immigration issues, is currently reviewing whether the current investment limits required for an investor visa to be granted are appropriate to deliver significant economic benefits for the UK. It is due to present its findings to the Government next month.