The number of UK visa applications by wealthy foreigners has collapsed after the government doubled the required investment threshold from £1m to £2m late last year.
In the first nine months of 2015, there were just 136 applications for “tier one” investor visas, for which residents from outside the European Economic Area and Switzerland can apply provided they have access to at least £2m in investment funds. This compares with 780 applications over the same period last year, an 83% decrease.
The number of visa applications under the tier one investor scheme had previously increased every year from 180 applications in 2009, the first full year in which the scheme was in operation, to a record 1,290 applications in 2014.
The 2014 peak in applications was partly driven by more than 510 applications received in the final quarter of 2014, almost four times the number received in the first nine months of this year.
The drop in applications has been particularly marked among Chinese and Russian investors. In the last three months of 2014 alone, there were 295 applications from China compared with just 20 recorded in the first six months of 2015. Similarly, there were 65 applications from Russia between 1 October and 31 December 2014 compared with just 20 between January and June of this year.
London’s property market has experienced a similar drop this year in investments from Russia and Asia, which once made up a third of those buying property in the capital’s wealthiest areas.
The Home Office gave no official reason for doubling the investment threshold to £2m. However, a source close to the policy said the change was mainly due to upward pressure on property prices.
In addition to the change in the tier one visa rules, the fall in numbers from both countries is likely to have also been influenced by the slowing of Russia and China’s economies and the weakening of their currencies against the British pound.
Sergey Litovchenko, an associate at law firm Pinsent Masons, said: “The level of the investment required for a Russian national to apply for a tier one visa has increased four times in comparison to pre-November 2014. GBP to rouble exchange rate has gone up from 50 rouble to £1, to 100 rouble to £1, and the level of the minimum investment increased from £1m to £2m.”
The UK government has recently launched more stringent criminal checks on the people applying for investment visas which, according to several experts, will have also contributed to the drop in applications.
Josephine Goube, director of partnerships at consulting firm Migreat which assists people through the immigration process, said: “Before April 2015, UK banks used the fact that individuals were granted a UK investor visa as a qualifying evidence to overcome due diligence concerns when assessing the individual’s legitimacy. Criminal checks have only been implemented from this September 2015.”
This view is shared by Litovchenko, who added that there was now increased competition for high net worth migrants from countries such as Malta, which offer very competitive routes to obtaining an EU nationality and passport.
A breakdown of the nationalities of the 3,340 applications to the scheme between its introduction in June 2008 and the end of June 2015 show that Chinese people accounted for 37% (1,220) of applicants. A fifth of all applications were made by Russian residents (705), followed by citizens of the US (205) and the United Arab Emirates (170), according to data published under the Freedom of Information Act.
Between June 2008 and June 2015, almost 91% of processed applications were granted, 8% were refused while the remainder were withdrawn or lapsed.
Up until late last year, applicants needed to have access to at least £1m in investment funds to apply. However, under new rules introduced in November 2014 the minimum threshold was increased to £2m, excluding investment in companies mainly engaged in property investment, property management or property development.
Darya Luganskaya has contributed to RBC, Forbes and BBC Russia. Granted a Chevening scholarship, she has moved to London to complete MA in multimedia journalism at the University of Westminster.
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