The new visa rules announced by the Government to speed up the permanent residency process are likely to shoot foreign investors in the foot if their main goal is citizenship says Philip Barth, who heads the immigration law team at Penningtons Solicitors LLP.
From 6 April 2011, foreign investors who bring £5 million or £10 million into the UK will be able to achieve Indefinite Leave to Remain (ILR) within three and two years respectively. They will also be allowed to be absent from the UK for up to 180 days a year without it affecting their eligibility for ILR.
While the initial reaction to these changes is that this fast-track route will encourage more super-rich investors to the UK, Philip Barth warns that there are two major downsides that potential investors need to consider.
"The most attractive incentive for many wealthy people relocating to the UK is the acquisition of a British passport but, at best, these rule changes will shave just one year off the usual six year path to citizenship and, at worst, could seriously jeopardize their chances of obtaining citizenship. This is because, if they take advantage of the new rules allowing lengthy absences (180 days a year), they may exceed the 450 days (over a five year period) they are allowed to be outside the UK to be eligible for citizenship.
"In the absence of a corresponding change to the rules for naturalisation, the carrot of the increased amount of time that can be spent outside the UK is likely to actually make it much more difficult to qualify for citizenship."
Barth also believes that the accelerated permanent residence will also accelerate the departure of investment funds. "Once people have become permanent residents, there is nothing to stop them from moving their money out of the country. This 'easy come, easy go' scenario could wipe out any financial benefit for the UK that the Government hopes to achieve with these changes."
Foreign investors should also be aware that, due to the UK's European 'opt-out', permanent residence does not give any extra rights of residence or establishment in the rest of the European Union so they will still need to apply for a Schengen visa to travel to most European countries.
"While the new rules appear to be a sensible quick fix for the Government to attract much needed funds into the UK, we would advise anyone considering this route to take expert advice that provides them with a 360 degree look at their aspirations, assets and objectives for planning their move to the UK. As with most things in life, if the deal looks too good to be true, it probably is," concludes Philip Barth.