Following a period of consultation, the Migration Advisory Committee (MAC) has now published their report into the Tier 1 (Investor) route, commissioned by the Government on 9 October 2013.
The Minister for Immigration asked the MAC to consider the following question:
“At present, the minimum level of investment for the Investor category is £1million but accelerated settlement status can be achieved by investing either £5million or £10million. Migrants may use money loaned to them by UK banks when making their investment. The MAC is asked to consider whether the investment thresholds are appropriate to deliver significant economic benefits for the UK, in particular the minimum of £1m threshold?”
The main recommendations made by the MAC in their report are as follows:
1. Increase the minimum £1 million threshold to £2 million. This would involve the following changes to rules on permitted investment types:
- Relax the current restrictions on permissible investment instruments so as to permit wider investment activity;
- Remove the topping up rule, which requires underperforming investments to be topped up with funds if the value falls below the prescribed amount. (Consequently quarterly valuations would no longer be required for extension or ILR applications);
- Remove the provision permitting the investment funds to be sourced by way of a loan against assets.
The report also found that the current rules restrict investment principally to Government bonds as these constitute a low risk investment vehicle. It was considered that greater flexibility would lead to a wider range of investment activity, which would in turn deliver a great economic benefit to the UK. The report proposes alternative investments including in private UK companies; Venture Capital schemes; Angel Investments; Infrastructure Bonds and Property Developments.
2. Introduce a ‘premium route’ instead of the current £5 million and £10 million routes. The premium route would be limited to around 100 applicants per year and places would be available through an auction, with a reserve price set at £2.5 million. The reserve price would comprise of an investment of £2 million by the applicant plus a gift of £500,000 donated to the UK Government to be put into a specific ‘good causes’ fund. Any excess above the reserve price would also be put into the “good causes” fund. This could be similar to the arrangements for the National Lottery.
In addition, the residence requirements for those on the ‘premium route’ would be relaxed, so that the person would only be required to be resident in the UK for a period of 90 days per year, rather than 180 days as is currently the case.
Overall, the MAC’s recommendations appear to be attractive to potential applicants to the route. In particular, applicants would benefit from greater flexibility, which may yield them higher returns. There would also be less cause for concern that fluctuations in the value of their investments could impact on their immigration status. However, holding an auction to sell off places to the highest bidder creates uncertainty for potential applicants for whom their UK immigration status is of huge importance.
The government must now decide whether to implement the MAC’s recommendations.