The number of wealthy migrants entering the UK on specialist visas designed to attract millionaire investors jumped by over three-quarters last year, led by people from China and Russia seeking to put down roots in London.
Tier 1 visas were introduced in 2008 to allow individuals with at least £1m to invest to remain in the UK on a long-term basis. They are seen as a speedy way for wealthy foreign nationals and their children to become British citizens.
London appeals to well-heeled foreign nationals because of its global transport connections, stable property market and good private schools. A crackdown on dissent in Russia following the election of Vladimir Putin as president is also thought to be one factor behind the increase in visas being issued to Russians.
Take-up of the visas has increased sharply since April 2011 when the rules were changed to encourage more applicants. The number of visas issued jumped by 78 per cent to 419 in the 12 months to the end of June 2012 compared with 235 in the same period a year earlier.
Russian millionaires represented 24 per cent of successful applicants in the year to the end of June, according to information obtained from the UK Border Agency by law firm Pinsent Masons. Chinese foreign nationals accounted for 23 per cent of the total while migrants from the US accounted for 5 per cent.
Following last year’s rule change, investors can get indefinite leave to remain in the UK more quickly. People investing at least £1m can win the right to stay within five years, while those investing at least £10m or £5m can qualify within two or three years respectively.
The minimum amount that must be invested to qualify for the investor visa is £1m. Of this, a maximum of £250,000 can be invested in property, while the remainder may be invested in other UK investments such as shares or bonds.
“This means someone who has bought a £5m property in prime central London could include part of the property’s value towards their investment,” said James Badcock, head of the Geneva office at law firm Collyer Bristow.
“The UK, and London in particular, remains hugely attractive to wealthy individuals from around the globe,” said Simon Horsfield, head of Pinset Masons’ business immigration team. “Foreign nationals still see London as an expat friendly gateway to Europe.”
Expatriates are attracted to London’s political stability and transparent legal system, he said. “Investors also see prime property in the capital as a very attractive and liquid asset,” he added.“Prime property prices in London have remained stable or even increased despite the global downturn, which is a real lure for wealthy individuals.”
Estate agents have recently reported a dramatic rise in the number of wealthy overseas buyers looking to invest in London property.
Liam Bailey, Knight Frank’s head of residential research said: “The property boom in prime central London is being driven by overseas buyers. More than 60 per cent of all sales above £2m are currently going to overseas purchasers.”
Linda Penny, partner at accountancy firm Wilkins Kennedy, said many investors satisfied the visa requirements by investing in UK stocks and shares or UK government bonds as well as prime residential property.
“Investors from the USA or India, in particular, tend to favour these investments,” she said. “However, Chinese investors typically see these investments as too risky. They often prefer to invest in an asset-backed trading business.”
Yuri Botiuk, partner at Pinsent Masons, added: “Many of the Russians applying for these visas are ‘stability migrants’. They want an EU passport and the UK is seen as the premier safe haven.”
Another reason for the rise is that the other opportunities for gaining UK visas are becoming more restricted, which makes the investor visa a more popular option. “For wealthy individuals, the criteria for the visas is easy to meet,” said Mr Horsfield. “They’re essentially a fast-track for migrants who have money.”
Additional reporting by James Pickford