In the third quarter of 2020, the programme brought the country 317% more investments than in the second quarter of 2020. And twice as much as in the period from July to September 2019.
Programme income in 2019-2020
As the graph shows, the residence permit programme contributed £608 million to the country in the first 9 months of 2019. The figure for the three quarters of 2020 is half as much - income was 328 million pounds sterling.
The programme showed a historic low in the second quarter of 2020. According to the UK Home Office, only 63 applicants received a residence permit for investment between April and June. Revenue from the programme was 46 million pounds sterling. Thus the department of the program has not rejected any application. We told about it in the material "Great Britain: the residence permit programme has shown a historical minimum, banks can stop servicing EU citizens".
The government links the drop in demand in early 2020 to quarantine and the financial crisis. The number of applications is expected to increase in Q3, when countries lifted restrictions and opened borders.
Citizens of which countries most often applied for a residence permit in the UK
In the third quarter of 2020, Chinese citizens were the leaders in terms of the number of residence permits issued for investments. Hong Kong residents are in second place, and Russia and America are in third place.
National composition of applicants in Q3 2020
Chinese citizens have been ranked number one in the number of applications since the programme was launched in 2008. Demand from US investors is explained by the unstable political situation on the eve of the US presidential election.
The Russians took third place in the third quarter of 2020: 17 applicants from Russia received residence permit status. During the programme, Russian citizens have issued about 900 residence permits in the UK. Thus, by the total number of participants in the programme, Russians are in second place.
Future of the UK residence permit programme for investment
In 2020, an investor can apply for a residence permit in the UK if he invests £2 million or more in the country’s business. This is one of the most expensive programmes among Western European countries.
The record-high performance in the third quarter of 2020 did not allow the programme to approach the 2019 level. The situation may change for the better by the end of the year, but it is unlikely that it will reach pre-crisis values.
In our view, demand from overseas investors may be affected by three factors: the pandemic, Brexit and the UK migration policy review.
Quarantine and closed borders. The pandemic had a particularly strong impact on the programme's results in early 2020. Since March, European countries, including the UK, have closed borders and introduced quarantine. Many British businesses have found themselves on the verge of bankruptcy. It is therefore no surprise that foreign investors have postponed their investments in British companies until better times.
The number of residence permit applications for investment rose sharply between July and September. At this time, the UK lifted the quarantine and began to renew flights with other countries.
The second wave of the pandemic and new quarantine measures are likely to lead to another drop in demand for the programme in the fourth quarter of 2020. In the new year, investor interest may recover with economic growth. For example, the European Commission forecasts the UK to grow GDP by 3.3% in 2021. We talked about the forecast in the material "European Commission: the EU economy will start to grow from 2021".
Entry and residence in the country after Brexit. In 2021, new rules will begin to apply for citizens and residents of EU countries who wish to enter or live in the UK.
From 1 October 2021, entry into the UK is only possible with a passport. ID cards from European countries will not be accepted at British Customs. We talked about this in the material 'Britain has announced new entry rules for EU residents after Brexit'.
By 30 June 2021, EU citizens must be granted resident status in the UK. This is necessary in order to remain legally resident in the country. A special EU settlement scheme (EUSS) has been developed for this purpose. We talked about this in the material "How to live in the UK with EU citizenship from 30 June 2021".
Wealthy citizens in the European Union can ensure the growth of the residence permit programme in the UK in the coming months. Under the EUSS scheme, residents are required to live permanently in the country. There is no such requirement under the investment programme. The holder of the residence permit status for investment may reside in any country in the world without restrictions.