This week, the government announced that they were suspending the Tier 1 Investor visa scheme over money-laundering concerns. Known informally as the “golden visa”, foreigners who invest £2 million in the UK gain the right to live and work here and can apply for permanent residency after five years (or sooner if they invest more).
Recently, there have been fears that rather unsavoury characters linked to human rights violations and corruption have used the scheme to enter the country. As a result, the scheme has been suspended and in the meantime, the rules around who can and can’t get the visa will be tightened.
The reforms will also restrict the categories of investment that can be used to qualify for the visa. In the past, the most common form of investment was in gilts. The ultra-safe investments may have reduced the cost of financing the UK’s budget deficit, but not by much. Sir David Metcalf noted in 2014 that “the annual aggregate loan via the investor route is equivalent to less than two days of our budget deficit”. This is a welcome reform but there is opportunity to do better.
The crackdown on investor visas has arguably come at a bad time. Britain should not be pulling up the drawbridge to foreign investors on the eve of Brexit. We’re also facing stiff competition from overseas. Malta are selling EU citizenship for €650,000, while Portugal, Ireland, Spain, and Hungary offer residency for better value. The UK still has advantages, such as world-class private schools, but depending on the outcome of Brexit investors may look elsewhere.