On 17th February 2022, the UK government put an immediate stop to Tier 1 Investor visa applications. There is no doubt that this rather sudden announcement came as a surprise to many immigration lawyers.
The Investor visa, also known as the “golden visa” allowed those who could show that they had funds of at least £2 million to invest in the UK through bonds, share capital, or loan capital a route to settlement and British citizenship. If applicants are able to show that they invested more, their pathway to settlement could be shortened.
The golden visa was introduced in 2008 to try and attract rich foreign investors and bring money into the UK, but, it could be said that this route has done more harm than good to Britain. The truth is, we will probably never know the full extent of the type of harm the UK has been exposed to as a result of this visa route.
Why did the government suddenly close the golden route?
This is not the first time that the UK has had doubts about the golden visa, in fact, in 2018 the visa was suspended when concerns were raised about it being open to money laundering. So why then has the government chosen now to close the route?
Since the invasion of Ukraine, the UK government has been made to crack down and question the cleanliness of the money flowing into the country from Russia. It is said that at the end of March 2020, the Home Office granted a total of 2,581 Investor visas to Russian nationals since 2008, and now, there is information to suggest that the route has opened up opportunities for corruption and money laundering, which ultimately harms the UK taxpayer. Data from Transparency International UK has discovered that at least £1.5 billion worth of UK property is owned by Russian nationals who have been accused of financial crime and have been linked to the Kremlin.
However, the government has been considering the potential security threat that Russia poses even before the Ukraine humanitarian crisis. A report was published by the Intelligence and Security Committee of Parliament in 2020 which mentioned that the UK was a top western target for Russia and that the Tier 1 visa process needed to be made more robust as a result.
What risk did the Investor route bring to the UK?
The UK is one of the most open economies in the world which makes it highly attractive to foreign investors. Whilst investment helps to boost the economy, it means that there is more overseas money floating around and more risk of corruption. The Overseas Company Ownership database for England and Wales shows that 94,000 properties are owned by overseas companies. This makes it difficult to find out who actually owns the property which can be a strategic way of cleaning dirty money.
Since the Investor visa route allows foreign nationals to fast track their way to British settlement in three years if they have £5 million and two years with £10 million, it seems like an easy way in for very rich Oligarchs.
The chairman of the government’s migration advisory committee, Sir David Metcalf suggested in 2015 that the golden visa was not so golden since it was only harming the British taxpayer as investors were simply putting the required £2 million into government bonds, benefiting from the interest and then withdrawing the money after receiving British citizenship.
What impact does the sudden closure have on the legal industry?
For UK immigration lawyers, the Tier 1 closure has come as a dramatic shock. Not only this, there is now uncertainty surrounding this visa route. Whilst the route has now closed to new applications, it is still open to settlement applications until 17th February 2028. It has already been suggested that the Home Office will be looking at genuine job creation for permanent residence applications and that simply holding investments will no longer be enough. But, it is unclear exactly how stringent they will be.
As such, it is likely that immigration lawyers will be treading more carefully with such applications in the hopes that their clients will not be refused visas due to the pressures that the government is under to scrutinise who they are allowing to settle in the country. For those lawyers representing Russian applicants, there will probably be some nervousness surrounding making extension and settlement applications since there are already major security concerns about Russian investors in the UK.
Where does this leave investors wanting to invest in the UK?
The Investor visa was a popular route and there are many other countries around the world that have their own golden visas for high-net-worth individuals. As such, it is likely that the UK will not miss out on an opportunity to come up with a new investment visa. It is however probable that future visas will have stricter rules that will dive deeper into the source of individuals’ wealth and ensure that applicants are bringing genuine benefits to the UK.