UK tightens rules for obtaining residence permit
The UK government is increasing the minimum investment threshold required for the investor visa, which gives non-residents the right to obtain residence and citizenship, a source at Henley & Partners, which advises the British government on the "Investor" program, told Gazeta.Ru. The minimum investment threshold will be raised from £1 million to £2 million.
Official confirmation later appeared in a statement from the UK Home Office. "The changes were adopted to strengthen discipline and further enhance security. The reform will emphasize the UK's status as an excellent place for business and investment," said James Brokenshire, Minister of State for Immigration and Security.
The new rules will come into effect on November 6. Those already in the UK on an investor visa will not be affected.
Discussion of the new conditions began long ago, said a Gazeta.Ru source. These changes received preliminary approval from the British government earlier this year. The Home Office insisted that the program was not sufficiently represented in terms of investment component.
In the government's view, £1 million is insufficient capital to grant citizenship. According to discussion participants, even raising the minimum investment threshold to £5 million and introducing an auction for the right to invest in the UK economy were considered. Ultimately, it was decided to settle on the amount of £2 million.
It is expected that this will increase the amount of money entering the country, but at the same time somewhat reduce the number of program participants, which annually increases by 50%.
The United Kingdom lives in part from a large number of foreign investors, and no one planned to cut off such important sources of capital investment, experts note. But the UK is now aiming to attract investors not by quantity but by quality, especially as London attracts more foreigners amid political and economic instability.
As Gazeta.Ru was told at Henley & Partners, today about 40% of "immigration" investors in the British economy are from China. The remaining 60% come from residents of Europe, CIS countries, and the Middle East, with Russians making up about 20%.
"Dissatisfaction with the large number of wealthy immigrants in London is growing. City residents are forced to compete with huge foreign capital when buying real estate, paying for schools, and so on, while wealthy immigrants do not pay local taxes on their income outside the United Kingdom and mostly bring in capital before obtaining resident status," explains Anya Levitova, Managing Partner of international real estate agency Evans.
The second amendment adopted by British authorities prohibits the use of borrowed funds under the program. Having assets of £2 million in any country, it was previously possible to borrow £1 million against collateral and invest these funds in the UK economy. However, this contradicts the very idea of investment, London decided.
The third important innovation is the elimination of the possibility of investing in real estate when obtaining an investor visa. Previously, part of the amount, but no more than £250,000, could be invested in the purchase of land, housing, or non-residential buildings. However, now all investments must be directed into funds and stocks, the list of which is determined by the government.
Experts surveyed by Gazeta.Ru agree that the overall volume of capital investment in the British economy will not change, but the number of participants in the "Investor" program will decrease. Moreover, the amendment banning the use of borrowed funds will have a greater impact, as more than half of the program participants, primarily Chinese, used this option.
According to Henley & Partners, 90% of program participants invest exactly £1 million, with the remaining 10% being those who use other schemes, investing £5 million or £10 million.
Investments of £1 million allow obtaining permanent residence (PR) after five years and UK citizenship in the sixth year. With investments of £5 million, PR can be obtained after three years, and Her Majesty's passport in the fifth year, and with investments of £10 million, after two and five years respectively.
433 Russians invested £1 million in the UK economy from 2008 to 2013 to obtain a UK residence permit, according to Evans. Only a very small percentage of investors can afford larger investments, so experts predict changes in Russians' preferences, who will likely seek less costly options.
"When it comes to EU countries, the greatest interest for our compatriots is in countries such as Cyprus, Portugal, and Greece. Until recently, Latvia was also in the top five most popular countries," says Elena Yurgeneva, Regional Director of the Elite Residential Real Estate Department at Knight Frank Russia and CIS.
However, as Gazeta.Ru previously reported, Latvia raised the minimum investment threshold for real estate to obtain a residence permit from €143,000 to €250,000 as of September 1. In addition, the issue of banning the issuance of residence permits to Russians due to the situation in Ukraine is being discussed.
Russians are among the most active foreign investors in expensive housing in the British capital. According to estimates by the international company Savills, in 2013 Russian buyers spent £180 million on real estate in London. Experts predicted a fourfold increase in investments by our compatriots in this market in the current year.
In addition, against the backdrop of political tensions, Ukrainians have become active buyers of real estate in London, who in April took first place in the top 5 homebuyers among immigrants from CIS countries, even surpassing Russians.
Ekaterina SAKHAROVA,
Olga KHOKHRYAKOVA.
«Gazeta.ru»