The UK's Migration Advisory Committee (MAC) has recommended that there should be changes to the Tier 1 (Investor) visa because they say it is of questionable benefit to the UK taxpayer. One of their recommendations is that the UK should auction off 100 premium investor visas each year in a sealed auction.
The UK has had an investor visa since 1994. The Tier 1 (Investor) visa was instituted as part of the UK's five-tier visa system in 2008. The MAC's chairman, Professor David Metcalf has previously questioned the value of the Investor visa route.
The MAC report says that 'the underlying policy objective of the Tier 1 (Investor) route is not readily apparent'.
Tier 1 (Investor) visa good for wealthy non-EuropeansThe report, which was released on 25th February 2014, says that the people who get the best deal from the Tier 1 (Investor) stream are wealthy citizens from outside the European Economic Area who get to qualify for permanent resident status fairly quickly for a fairly reasonable cost.
Those that meet the residency requirements over a period of five years (or less in some circumstances) and pass the life in the UK test can then apply for citizenship.
At a press at the release of the report, Professor Metcalf told journalists 'The present system, it seems, is designed to minimise the gains to UK residents and maximise the gains to the migrants'.
'The UK is open for business'The MAC does say that the Tier 1 (Investor) visa doesn't seem to do any harm to the UK and sends out a signal that 'the UK is open for business'.
The UK instated its first investor visa in 1994. The Tier 1 (Investor) visa currently allows wealthy foreign nationals to qualify for temporary resident visas if they invest a minimum of £1m in an approved investment in the UK.
Generally, Tier 1 (Investor) visa applicants make the qualifying investment in UK government bonds or 'gilts' though they can invest in other investments such as shares providing the investment is held in a regulated financial institution.
Permanent residenceA Tier 1 (Investor) visa lasts for three years and four months but can be extended for a further two years. Tier 1 (Investor) visa holders can apply for permanent resident visas after holding their Investor visa for 5 years however, if they invest £5m, they can apply three years after that investment and if they invest £10m, they can apply two years after the investment is made.
The report notes that the visa is growing in popularity. In 2008, when the UK's five-tier immigration system was set up, about 100 Tier 1 (Investor) visas were issued. That figure has risen to about 500 a year in 2013. The presence of wealthy people and their families in the UK probably does create a small economic benefit, the report says, though it would be difficult to quantify.
But the report says that the investment made by Investor visa applicants is 'a loan not a gift' so is of little financial benefit to the government which is able to sell UK gilts to investors very easily in any event.
Premium visasThis is why the MAC recommends auctioning off some 'premium' visas each year. The professor told journalists 'When people say 'Isn't it awful to sell visas', I reply that it is better than giving them away, which is what we're doing now'.
The report also notes that the minimum qualifying investment; £1m, has not been increased since 1994. In the twenty years since then, the value of £1m has more or less halved.
The MAC recommends that the minimum qualifying investment should, therefore, be doubled to £2m.
RecommendationsThe committee's other recommendations are
- Investors should be encouraged to invest in something other than gilts. The MAC recommends that investors should be able to invest like investors in general
- Applicants should not be able to use funds that they have borrowed as a qualifying investment
- Residence requirements for applicants making larger investments should be relaxed. Currently, Tier 1 (Investors) must be in the UK for 185 days per year to qualify for resident status. This should be relaxed for those making larger investments to 90 days per year. As yet, few people make higher investments because there is little benefit to them in doing so. They will qualify for permanent resident status in the end in any event.
- The government should auction off a number, perhaps 100, of 'premium route' investor visas each year to applicants who will submit sealed bids. There should be a minimum price of £2.5m. This money would not be a loan but a purchase price. Any money raised should go to good causes. Applicants would still need to be cleared by due diligence checks before receiving UK resident status.
- The government should consider an accelerated citizenship process for premium visa applicants.
The Home Secretary will now consider the MAC's findings and will respond later this year.
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