Amid a global pandemic, Citizenship by Investment is on the increase – and the UK is high on the list for overseas investors, thanks to benefits such as education, healthcare and quality of life
Words Sophia Charalambous
The potential for second or third waves of Covid-19 has led to ultra-high-net-worth families finding innovative ways to prepare for the future, against the backdrop of the ongoing pandemic. Preparation increasingly involves acquiring citizenship as many look to access the benefits of being a UK citizen, which includes healthcare.
This isn’t just a UK phenomenon – more than half the world’s nations now have citizenship programmes. The technical term is known as Citizenship by Investment or CIP, where money can buy a second passport – there are also other programs known as Elite Residency, which works as an extended visa with perks.
The UK is one of the highest-priced CIP programmes – aTier 1 investor Visa requires an investment of at least £2 million in either British corporate bonds, share capital or loan capital in active and trading UK-registered companies.
Citizenship by Investment used to be about ease of luxury living – holidays, business travel, tax exemptions – but now it seems to be more about holistic living, particularly in terms of healthcare.
Henley & Partners, the Grosvenor Place citizenship broker, is one of the biggest players in the nearly $4 billion-a-year (£3 billion) “identity management” business, known as “passports for sale”.
The firm’s latest figures show a 42 per cent year-on-year increase in the number of people filing a formal application for a new nationality during the first three months of 2020. Dr Christian Kaelin, chairman of Henley & Partners, is considered one of the world’s foremost experts in investment migration and citizenship-by-investment.
He explains how it is now a global industry: “Investment migration has shifted from being about living the life you want in terms of holidays and business travel to a more holistic vision that includes health, safety and security for all the family.”
“WHAT IS WRONG WITH ADMITTING TALENTED PEOPLE WHO WILL CONTRIBUTE?”
Westkin Associates, on Maddox Street, offers Citizenship by Investment help to high net worth individuals who have substantial sums to invest in the country.
Adel Abozaima, senior associate, explains that how much you’ve invested determines when you can get indefinite leave to remain (ILR), which then leads to citizenship; an investment of £2 million would result in ILR in five years and citizenship after six years, but an investment of £10 million means ILR after two years and citizenship after five years.
“The UK is essentially the financial capital of the world” he says. “It’s attractive for ultra high net worth who are maybe in a third world country, who have money but the lifestyle is very different.
Adel explains: “The clients that have their money in right now, a lot of them want to try and withdraw that money because they want to either keep cash in their pocket or invest it in something else.”
“As bad as it sounds there are a lot of opportunities whenever there’s a financial crisis, so someone with money could benefit from investing in technology, which is booming right now because people are switching work from face-to-face to Zoom or Microsoft Teams.”
“It’s slowed down slightly for new investors because they want to see what’s going on over the world.” Despite this, there are huge advantages to having UK citizenship, and Westkin advises clients all over the world.
“Their children could benefit from the education system and healthcare in the UK,” adds Adel. “And citizenship, once passed on to children under 18 years old, they can essentially pass it on to their children, so it affects generations to come – it’s forward thinking not, ‘what can I get right now’.”
Astons, on Albemarle Street, also offers consultations to discuss investment routes, then sources the best property projects to acquire residency and citizenship.Konstantin Kaminskiy, project manager and associate director for Astons, says the company is seeing investors from across the world including the US, Latin America, the Middle East, China and Russia.
“Investors globally consider the UK as a more politically and economically stable jurisdiction than their home countries,” he says. “They wish to diversify their investments (developing countries’ currencies are hit particularly hard) and what is more important, wealthy families want their children to get the best education possible.
IT’S FORWARD THINKING NOT, ‘WHAT CAN I GET NOW?’
“The prices and the quality of life in the UK are still one of the highest in the world. “The UK economy is still comparatively large and for the investors to make a difference for the better they would need to invest a lot more than in the less-developed countries.” Konstantin explains that the UK has been desirable for years and up until 2014, the minimum investment requirement was £1 millon.
Such was the popularity among the investors, the Home Office increased it to £2 million to cool down interest. He doesn’t think demand for citizenship will decline after the end of Covid-19: “At the same time as the UK suffers from Covid, many other countries are suffering a lot more because their economies and healthcare systems are more fragile (for example, the US, India, Hong Kong, Russia).
“Wealthy families from developing countries are leaving their countries to have a Plan B and London is still one of the key destinations.” The investor visa route doesn’t require the applicant to speak English, nor does it require any previous links to the UK, such as employment or education.
It also doesn’t require active participation of the applicant in the invested business. Despite some believing being a citizen should be based on birthright, Dr Kaelin is a fan of the notion of Citizenship by Investment, calling the previous system “outdated”. “What is wrong with regarding citizenship like a membership,” he adds. “And what is wrong with admitting talented people who will contribute?”