Prior to June 2016, the number of wealthy foreign businesspeople looking to become UK residents by virtue of financial investment dropped by a staggering 80% as the fear of Brexit and the UK’s departure from the EU loomed. As Brexit is now a reality, has the appeal of the UK’s investor visa program dried up altogether?
There is a strong feeling among those Brits who voted to remain in the EU that the bulk of the “leave” campaigners who voted for Brexit did so to stop mass immigration. What the Breixteers probably didn’t reckon on was that their actions would also put off those immigrants whose wealth would immediately benefit the economy, those high-net-worth foreign investors intending to use the UK investor visa program to gain British residency and spend even more money in the country.
Dramatic Drop In Chinese And Russian Investors
The fear of Brexit becoming a reality and the possibility of Britain no longer being part of the European Union forced hundreds of wealthy Chinese and Russians to shun the UK and invest their money elsewhere, figures reveal. According to the Financial Times, by early June 2016 the number of wealthy foreign investors – specifically from China and Russia – intending to use the UK investor visa program had fallen dramatically. In 2015 there were 488 Chinese investors granted visas via the program, in 2016 there were only 35. The number of Russian investors granted visas also fell sharply, from 196 in 2015 to 34 in 2016.
Tellingly, while the UK investor program fell by 80%, the Portuguese Golden Visa investor program saw an 87% increase in investors in 2016. Coincidence? We think not.
As of yet the figures for the rest of 2016 have not been released, but one can only assume that if there was such a dramatic fall in investors based purely on anticipation, now that Brexit has become a reality, will there be any demand for the UK investor visa program at all?
The UK investor visa was already underperforming in comparison to EU rival programs like Portugal, Hungary and Malta, primarily because it is extremely expensive, especially considering it is not a citizenship by investment program, and UK citizenship and a passport is not guaranteed. The minimum required investment is £1 million, of which £750,000 must be invested for a minimum of five years in UK Government Bonds. In addition, an investor must show that they have at least £2 million in usable assets. That is an initial outlay of at least £3 million for a five-year residence permit.
After five years, the investor is granted ILR (Indefinite Leave to Remain), which is basically the same as permanent residence. After one year of permanent residence, an investor can apply for UK citizenship. If an investor is prepared to invest £5 million, ILR is granted after three years, and if the figure is £10 million, it is granted after two years.
UK Program Outshone By EU Rivals
When one considers that the Malta citizenship by investment program has a refundable outlay of €1.2 million, with Maltese passport and citizenship delivered after one year, and that Malta are a full EU member state, the UK investor program appears both overpriced and obsolete. The Austrian CBI program calls for a minimum €2 million charitable donation, but full Austrian citizenship and passport are guaranteed, with fast delivery in a matter of months.
As for EU investor residency programs, the Programs of Portugal and Hungary are far more popular than that of the UK, and considerably cheaper. The Hungarian residency permit is obtained via a refundable €300,000 government bond purchase. Since its inauguration in 2013, more than 3,600 foreign investors have signed up for the Hungarian investor residency bond program, the majority of them from China.
Portuguese residency is secured with a €500,000 real estate purchase. Portugal began their Golden Visa program a year earlier than Hungary in 2012, and have already issued over 4,200 permits to investors, more than 3,000 of them from China. The program has netted Portugal some €2.5 billion in real estate sales alone.
Even if an investor carries the UK investor visa program to its ideal conclusion and gains British citizenship and a passport, thanks to Brexit its benefits may soon be severely lessened. Chances are a British citizen will no longer have the right to live and work in any European Union country without restriction, a privilege currently enjoyed by all EU member states. And the UK passport, currently the joint-third most powerful in the world with visa-free access to 175 countries could suddenly find that tally reduced by 27 to 148, which would drop it to 48th in the rankings.
A Microcosm Of Things To Come?
The British politicians that have been the key figures behind Brexit like Nigel Farage, Michael Gove and Boris Johnson (pictured above) have been bullish in interviews about the UK’s chances of securing plenty of trade agreements with non-EU countries, like the USA, India and Australia, to name just three. Of course this is misleading, as Britain already has long established trade deals with those countries, plus pretty much every country willing to deal with them. Britain has always been a trading nation, but the big difference will be potentially they will be LOSING 27 trading partners from the EU.
Will the likes of China and Russia be willing to step up their dealings with the UK in the coming years? If what has happened on a smaller scale with individual Chinese and Russian investors choosing not to go with a UK no longer in Europe, and instead looking at other EU options, it could prove to be microcosm of British trade – or lack thereof – with those two countries.
Maybe Great Britain will prove all the naysayers wrong, maybe Brexit will be proven to have been the correct choice, and maybe the British economy will thrive outside of the EU. Or maybe within a few years, the British public will be desperate for a second referendum, this one possibly codenamed “Brentry”?