Westkin Associates – The History of the Golden Visa Part 1 – the position before March 2019
The UK Golden visa, aka the Tier 1 (Investor) visa as it is officially known is the top tier visa category currently offered by the UK Government as a mean to enter and eventually settle in the UK for a migrant. In this article we will explore the evolution of the visa and explore the reason behind the several key changes that were made over the years. Although these changes may be seen as reactionary from the Home office, they do point to a general direction of travel and will give us a strong idea of what the future holds for the much debated visa category.
The Golden visa, a brief history
The UK Golden visa was introduced in June 2008, which itself replaced the previous Investment Visa which began in 1994. The aim of the new Golden Visa category was to simplify the application procedure together with the requirements themselves, in order to make it more attractive to the “High-Net worth” applicants. This was most likely in response to two main factors. Firstly the UK was in the midst of a global recession that had been sparked by the US sub-prime mortgage scandals which caused a tidal wave so high that it bankrupted several countries. As such the Tier 1 Investor visa was seen as a simple way to inject funds in to the UK economy. The original requirements allowed for Investment in to a UK company or the purchase of UK Government bonds. The latter if course being a cheap way for the UK Government to service the ever increasing national debt. In true trickle down economics it was also predicted that although the benefit of granting just one visa would bring in £1 million GBP to the UK economy, the wider spending of “high-net worth” persons would be far more beneficial in the long run. In simple terms, well of people spend their money on expensive things. The second contributing factor to the oversimplification of the visa rules was the competition the UK was facing from other EU countries. This was of course a global recession so many countries wanted to attract the golden goose. Countries such as Portugal were offering the same Golden Visa for more than half the investment amount the UK were requiring. The Portugal program (one of the most popular to this day) also had some advantages to the UK program in that it allowed for travel within the UK travel zone (known as the Schengen Zone) which the UK had opted to be outside and therefore could not offer to Tier 1 Investor visa holders.
The original UK Golden visa rules allowed a migrant to invest a minimum of £750,000 in to the specified investment categories and allowed for the remaining £250,000 to be used to purchase a residence in order to stimulate the falling housing market.
The Golden Visa Changes – 6 November 2014
Fast forward six years and a now Conservative government with its new Home secretary Theresa May, decided to make the first significant change to the Tier 1 Investor visa. Part of the now infamous “Hostile Environment” policy that May championed as Home Secretary and later as Prime Minister, the idea was to squeeze as much benefit from migrants at the top and making life hostile for migrants at the bottom of the economic scale, because of a incorrect assumption that high-networth persons are a greater benefit to the UK.
Buoyed by the UK having officially come out of recession and the fact that a new housing bubble was starting to form the new rules were introduced. The Home office announced that within two weeks all new applicants would be required to invest £2 million as a minimum and were no longer allowed to invest a portion of their investment total in to a residence. This was the UK metaphorically puffing out it’s chest to say “we do not need to compete with other EU countries, we are in a league of our own”.
The rule change drastically reduced the number of applicants that would qualify for the visa and put the UK in direct competition with top tier programs in Cyprus and Malta whom were offering an EU passport in a matter of months rather than just a visa. Savvy migrants realised that for a smaller investment they could obtain an EU passport from a country like Cyprus for less than the Investor visa and enter the UK with the said passport.
To be concluded in Part 2, a focus on the events of 29th March 2019.