Atef Elmarakby: One of the urban routes now is the sponsorship route. Many businesspeople coming to the UK to set up their own company, hire a local manager, someone to help them kick the business off the ground. Apply for a sponsor licence for that business and ultimately they can sponsor like their business associates and themselves. You're allowed to own shares in your company. You could have a position like an accounts manager, a CEO. So this route is definitely very attractive and it costs a lot less than 200,000 if you calculate the cost over five years. It's nearly half of that and it's definitely better than the Tier one investor visa.

Salman Siddiqui: Welcome to the Investment Immigration podcast by you Uglobal.com with weekly in-depth interviews with the world's leading investment immigration professionals. Welcome to the Investment Immigration podcast by You Global. This is your host, Salman Siddiqui. And today we are going to focus on the UK's program. Now, the UK doesn't really have a citizenship by investment program, but it does offer a lot of options to businesspeople and entrepreneurs to make a base there. But how exactly that happens, what's going on there? This is something which we will discuss in this episode. We are going to talk about the UK's Tier one investor visa program, which was shut down. We're also going to talk about what kind of new measures the government there is taking to attract entrepreneurs or highly skilled workers. And what is this new thing that we're hearing about? Some new restrictions on investors from certain parts of the world. So to help us unpack all of this, we have today a very special guest. His name is Atef Elmarakby. He is the founder and managing director of Good Advice UK. Welcome to the show, Atef.

Atef Elmarakby: Oh, hi Salman. Thank you so much for hosting me. Pleasure.

Salman Siddiqui: Thank you. So Atef, let's talk a little bit about what's going on right now in the UK. I heard this really crazy story about some Chinese spies supposedly trying to use the UK's investment migration program or the visa options to gain access there. You know, the UK Government is supposedly presenting some evidence to support the claim that Chinese spies have been using the UK's program as a way to gain access to sensitive information. What's going on?

Atef Elmarakby: Yes, as you rightly said in the beginning, the UK government doesn't have citizenship by investment programs. However, they have a number of routes and a number of residence programs that lead to indefinite leave to remain settlement and British passport, consequently. The news that you're referring to about the closure of the Tier one investor program, which was one of the main investment route that attracted a lot of high net worth individuals, mainly from the Middle East, China and Russia in the past. This was closed just in last February 2020, just around the start of the war in Ukraine. And in terms of your specific question and what's happening with the Chinese spies, no one will tell you what's happening for sure. However, what I can say is that the UK government has an immigration system like so many other countries, and those immigration systems lead to obtaining residence by investment and those routes can be used or can be abused. So while I'm not politically savvy, so my opinion here is just very generic. I'm aware that there were some allegations were made by the UK government that some Chinese spies managed to reside legally in the UK under or through the Tier one investor visa route. And those allegations are obviously very serious and they should be investigated. However, we all know that it's not uncommon for governments to play political tricks and use tactics to deflect the attention of the public from certain political issues. So if the UK government would present evidence, obviously that wouldn't be public. But yeah, this is all what I can say with obviously my limited information on the topic.

Salman Siddiqui: Of course, and I'm glad you also mentioned the background of the UK's Tier one investor visa program, which was shut down. And let's talk a little bit more about that. From my understanding of the situation was that this was all had to do with the Ukraine war, which happened. And then, you know, there's a clampdown against Russian investors all over Europe. And in that background, the UK's Tier one investor program was basically shut down. And it seems like the UK is now still pursuing in that direction of basically targeting certain nationalities of certain countries to stop them from coming to the UK. So is that how it is now?

Atef Elmarakby: Well, there were so many rumors at the time when the route was closed that it was a political pressure on the Russians to prevent them from moving to the UK. Whether there is much truth into this or not, nobody will find out. However, I would like to highlight that immigration policies have always been seen as discriminatory in a way or another. They are politically triggered and at the time of good relationship with certain countries, you will find that immigration routes open for that and at the time of political tension, you will find restrictions on certain nationalities. So they have always been seen as discriminatory in many situations, however, and ultimately, immigration is a way for the government to exercise its sovereignty over its borders and to make sure that their policies are aligning with their economic and political aims. So I'm not sure if I did manage to answer your question here or not, but yes, it was definitely one of the big topics at the time it was closed that it was mainly because of the Ukrainian war to apply pressure. And to prevent Russian wealthy individuals moving to the UK.

Salman Siddiqui: Thanks for sharing that. You know, the reason why I'm asking is because I'm reading right now actually, that there's a lot of criticism about this new visa restrictions on on which is being basically said that it's now a visa restriction on Chinese citizens as you know it's being and they say it's like potentially discriminatory. And as you also mentioned that, of course, there are other factors at play in these sort of political decisions. And that's what I want to understand from you, is where is this heading? Is this now restriction a blanket ban on Chinese citizens? What does this mean?

Atef Elmarakby: Well, as far as I'm aware and as far as the immigration rules are concerned, there isn't any clear or published guidance to state that Chinese nationals should be given a hard time. That's not the case. And the recent history will tell us that just after Tony Blair left office, the Chinese were so welcome in the UK and they were getting a visit visa by default. If they apply for Schengen visa to attract shoppers and tourists from China and investors. And if now the political climate is moving in the opposite direction, I would say this cannot be reflected in the immigration rules directly. Because an application is an application. You have to meet a certain criteria to get into the UK, whether they are coming to study, coming to invest, coming to join family or coming to set up a company. If they meet the rules, you will never find a refusal to a Chinese national simply because they are Chinese. That will be challenged in the court by way of judicial review.

Salman Siddiqui: Thank you so much for clarifying that because as you know, in the media, there's a lot of fear mongering about this specific issue. And I've read a range of comments from potentially scared Chinese nationals that say: Hey, what does that mean? Am I not going to be able to make it to London for summer? You know.

Atef Elmarakby: I'm not surprised that you're reading this because even when the war started between Russia and Ukraine, all the Russian clients in the UK were panicking that they will be deported or their visas would not be renewed or they will be prevented from coming to the UK. This was all media talks. And while so many British companies and British magic law firms issued publicity news that they will not be assisting Russians, but what was happening on the ground that Russian clients in the UK were continued to be served by us as an immigration firm and by many other law firms because it will be discriminatory if we deny our services based on nationality. If the client complies with the anti-money laundering regulations and the ID checks and he has a legitimate application to make, we cannot deny the service. However, the media were portraying at the time a totally different picture.

Salman Siddiqui: And I'm sure that must have made your job harder, a little bit.

Atef Elmarakby: I had to do a lot of reassurance for my Russian clients and Ukrainian clients equally that, you know, we continue to serve them. If they qualify for a certain route, we will do the application. Obviously, it was a lot easier for people who were already inside the UK, like students switching into the graduate visa or graduates who are getting a work permit or people who are reuniting with their family. In the UK, however, new applications from outside the EU were definitely delayed. However, you would never see a refusal of an application based on nationality that would be outrageous and can be easily challenged.

Salman Siddiqui: Great. And one other reason I also want to know more about this, because these restrictions have an impact on the popularity of UK's programs among investors from other countries. You know, they are all looking into the developments there. So if an investor from any other country from I'm not saying China, but other countries are looking at these developments, what would you say to them? That there's nothing to worry about? You know, it's business as usual.

Atef Elmarakby: Yeah, business as usual. The UK will always be a popular destination amongst other nationalities. Even when the UK economy was struggling and is currently struggling. The values, the way of life, the diverse UK culture, the historic, educational, legal and judicial infrastructure and the current systems in place remain very attractive for so many people from so many different countries. While a typical British people in the UK are and Londoners are crying out loud from the rising and the cost of living and the energy bills that are hiking high and all this. But you still get lots of people moving scientists, workers, professionals, bankers, students moving to the UK because there is a lot more to offer here. So despite all the political hiccups and all the economic bumps, you still have the UK as a very popular destination. And we see this firsthand as immigration lawyers on the volume of clients we get. Every day.

Salman Siddiqui: Right. And but you talked about the economy, but there was this huge development of Brexit. Right. What was the impact of that on the investor confidence in the UK? Because a lot of people were worried and I'm sure they're still worried when they look about Brexit and they think, you know, I don't know if I should put my money in the UK because everything is so volatile. So what do you have to say about that?

Atef Elmarakby: Yes, that's a very good point. Definitely Brexit has changed the landscape and changed the game. Certainly Brexit impacted the UK position as a gateway to the EU, and many international businesses were upset and concerned and investors that they couldn't trade within Europe through their UK entities. So yes, this has been a massive drawback. However, it also opened other opportunities for the dynamics of the market that changed and those changes creates opportunities by default. So exiting the EU single market, yes, it has led to dramatic and drastic changes in trade customs investment agreements. However, as I just said, in a way, it created a new window of opportunity for other nationals from other countries outside the EU, such as India, China, Australia, New Zealand, Japan. And we've seen this in the trade agreements that were signed following Brexit, for example. From my perspective as an immigration practitioner, I so much welcomed the UK government scheme launched for Indian young people. So the UK government established a new visa route, a new visa scheme, it's called the Indian Youth Scheme, which allows young people in India to move to the UK to work. It's like through a belt system. Also, I would like to point out that we have the youth mobility visa, which is triggered toward Canadian Monaco and Japanese Hong Kong nationals, which allows our nationals, the young Nationals, to come to the UK to work in the UK for up to two years. So, yes, while Brexit affected us negatively, however, the UK has been very dynamic at recovering from Brexit by opening other channels.

Salman Siddiqui: Right, that's good to hear. But are you also hinting that maybe you lost some clients post Brexit?

Atef Elmarakby: Certainly, yes. As our client base were made of so many nationals, including Europeans living in the UK who are applying for permanent residence, applying for British nationality to naturalize at the end of their stay after they get the permanent residence or settled status. Also, those who have non-European family members living abroad like around the globe. However, yes, yeah, we were affected certainly by this because lots of Europeans left the UK mainly based on emotional hurt that they didn't like the fact that after living here. However, a big number. I would say over a million people continued to stay in the UK because you were so rooted into the life with kids, schools, businesses and the continued to live. But yes, we lost a bit of business. Yeah, that's true.

Salman Siddiqui: And what about the impact of not just Brexit, but the entire political situation that's now going on in the UK on the investors from the US? Are you seeing investors from the US coming to the UK or what are they saying in this current climate?

Atef Elmarakby: Personally, through my practice and through my observation of the of the immigration landscape in the UK. I haven't seen a massive influx or massive number of US American nationals moving to the UK through the investment routes, mainly because of the FATCA. They have a very strict tax rules for Americans earning money and operating businesses abroad. However, there are American workers who come here under the skilled worker visa to join financial institutions and engineering companies. There are also, through my practice, I have assisted lots of American coming to join family married to British spouses. But if you look at the statistics of the Tier one investor visa before it was closed, you will find that every quarter the UK government issued about 380 Tier one investor visa. Okay. So the proportion of US nationals of those 380 from the top of my head and this is historic, don't quote me, we have to look at the national statistics again. They were about 30 to 40 out of the nearly 400 each quarter, which is, I would say, a small number.

Salman Siddiqui: And that's 10%, right?

Atef Elmarakby: Yeah. Compared to the Russian, the Chinese and Persian and Middle Eastern clients.

Salman Siddiqui: I see. Okay. And you know, the Tier one investor visa has been shut down. Do you think the UK is going to revive that at some point? Do you think they should?

Atef Elmarakby: That's a very good question, but I'm not sure if my answer will be fair. I'm unbiased. Of course I'm biased. Of course. Sorry. I cannot give you an unbiased answer as an immigration practitioner and as someone who studied human rights and have a master's degree in human rights. My background is more tending towards open door policy, encouraging the movement between borders, encouraging individuals and businesses to move and settle into different jurisdictions. But also, if I look at this from the side of the UK government, they have to serve a political and economic goal and they have to have an aim. So if it will make sense for them and have a way to regularize how people are coming and they are filtering the applications in a healthy way and it will benefit their economy, it will move more cash into the economy. Wealthy individuals will be moving their assets here. Yeah, I see no reason why not. But that's only my opinion. But looking at the news, the UK government and the spokesman declared they have no intention to reopen the Tier one investor visa anytime soon. However, there are other routes and, here I'm wearing my immigration lawyers hat, there are so many other routes and let's talk.

Salman Siddiqui: About these other routes now. Like you mentioned that so much is happening in the UK. I recently read that there is now new startup visa called the Innovator Founder Visa, which is aimed at the entrepreneurs. Let's talk about that and what are the eligibility requirements for this visa? How it differs from other investment immigration visas? So please talk about that.

Atef Elmarakby: Yeah, yeah, that's a very good point. So, so to give our audience a bit of a history here, the UK government had a route called the Tier one Entrepreneur, which is coming to the UK with 200,000 and hiring to British or to settled workers. This route was closed forever on the 19th of March 2019 and it was replaced a couple of days after with the innovator route, the innovator route, which was just been replaced a few days ago with the innovator founder. So now I will show you like I'll explain to you the developments. We have the Tier one entrepreneur, 200,000 coming to the UK to start any business and hire two settled workers. The statistics showed that not so fantastic business people moved to the UK. They started petty projects and they didn't move significant amounts of money into the economy and those businesses did not contribute significantly to the growth of the economy as a whole. Then the UK government introduced the innovator visa. The innovator visa required three main conditions access to £50,000. A business plan that is innovative, viable and scalable, plus an endorsing body letter from a designated body that the UK government tasked to do this. The intentions were great. I think the policy makers had a good idea, but the execution was so wrong because in a way they created a back door by allowing the endorsing bodies to assist applications and business ideas in a way that is very subjective. Okay, it wasn't objective. Anyway, the UK government very dynamic. They react very quickly and they decided to close the route and the rebranded the route as the founder innovator or innovator. Founder. Okay? The innovator founder. Same conditions like the innovator. Except you don't need £50,000. The cancelled this requirement. It could be good news for people who have a fantastic or a viable and innovative idea to start and they only need 10,000. But what if your idea needs £1 million? Now you are obliged to show that you have this money ready, or at least you have a plan how you're going to raise this money. So the cancelled the threshold of £50,000. I'm talking about the entry, how to get into the route. But you still have two main conditions. You have to have a business plan that is viable, innovative and scalable. And this business plan must be assessed by a new endorsing body. They call them the new endorsing bodies. Now, the the other endorsing bodies, they are called the legacy endorsing bodies. And now they are urging the UK government is designating or issuing new licences to those new endorsing bodies. So far we have four that have been identified and published. However, in my opinion this route is still tricky while it removed the investment funds threshold, but it was never been the problem. The main problem is that the route is very strict and few people would qualify under the route and also the criteria to get indefinite leave to remain. It's still fuzzy that you have to meet two criteria out of published ten criteria.

Salman Siddiqui: What exactly in the criteria is so difficult to meet?

Atef Elmarakby: Okay, well, like you have to meet two of ten criteria. One is to invest. You continue to be endorsed to hire settled workers, at least five people paying them 25,000 plus, or you hire ten settled workers, paying them the national minimum wage, which is about 13,000, or have a turnover of £1 million or have a 500,000 of turnover, was 100 of that exporting services or to double your sales or the customer base or to engage into significant research and development activities leading to registration of patent and intellectual property.

Salman Siddiqui: That sounds complicated.

Atef Elmarakby: Yeah, they are challenging and some of them are not clearly defined. However, the route is still very attractive for young entrepreneurs. Young entrepreneur who is looking to move to the UK and have limited amount of funding. But they have a fantastic idea and a genuine idea and happy to be endorsed. One of one of the drawbacks of this is endorsing bodies do charge money. While the immigration rules prevent this, however, they managed to get around it by creating a mentoring agencies that look at your business plan and definitely provide certain value. But they end up charging significant amount of money. And applicants wouldn't know this until they actually start the application and go about the process. But no one would write this online. You wouldn't find it publicized that there is applicants will have to pay significant amount of money to the endorsing bodies or to their associated mentoring and incubating agencies.

Salman Siddiqui: Wow. And even I didn't hear about this, so I'm glad you mentioned that in the show. And yeah, that sounds not right.

Atef Elmarakby: Well, it makes sense if the incubator or the mentoring organization is taking personal or direct interest in the business they are funding or maybe taking a stake taking a share. However, what we've seen on the ground is totally different from this.

Salman Siddiqui: I see. Okay. Glad to know about this and I'm sure a lot of our listeners would be happy to be well informed. But let's now also talk about the other options that are available now. I read somewhere that business investment in the UK has typically been driven by the services sector, but are there any other sectors that foreign investors and business people should be paying attention to? Like I don't know. I mean, real estate is not an option, but maybe there's some other investment option that is available.

Atef Elmarakby: Well, I would say the real estate is an option because one of the urban routes now is a sponsorship route. And the skilled worker, so many business people coming to the UK to set up their own company, hire a manager, a settled worker, like a local manager, a director, someone to help them kick the business off the ground, apply for a sponsor license for that business and ultimately they can sponsor, like their business associates and themselves and create genuine vacancies and invest in the UK through this way of creating a company, getting a sponsor license and creating a job. It could be for yourself that you're allowed to own shares in your company. You could have a position like an accounts manager, a COO or a business development manager or a regional director of certain region. But you have to have settled people in the UK working for your company and you have to have a genuine and tangible trading activity. So this route is definitely very attractive and it costs a lot less than 200,000. If you calculate the cost over five years, it's nearly half of that. And it's definitely better than the Tier one investor visa, which under this route you would have blocked your funding into the stock market, into stocks and shares or before that into government bonds, which yielded so little. So coming back to your question about the sectors, and I'm not an expert on the economy or businesses, but I will tell you from my small window of assisting my immigration clients, the hotels and the hospitality sector is booming now. Construction on a smaller level, like doing certain repairs, architecture work or refurbishment work. This is also going up. I would also say that the engineering consultancy sector is booming. I've assisted many founders and investors who started applications or general trade or consultancy. I would say across the sectors I've assisted, almost every route has been possible.

Salman Siddiqui: So tell me this, for example, you mentioned the hotels and the hospitality industry. Now foreign investors listening to our show and he says, okay, I want to put my money into some hotel in London. And he comes to you or she comes to you or they come to you and what are you going to say to them? Like, how will you say which route exactly they have to apply to make this possible?

Atef Elmarakby: Well, we'll have to look at the deal from a commercial point of view. First, I would advise them to contact a real estate broker specialized in hotels. You can buy a hotel in the UK for as little as 100,000 and in Blackpool or on the coast in the north or in Brighton for about half a million. Okay. Obviously you can go up. I have clients who purchase hotels for five and 10 million around London as well. So that's the first step is to identify a property that is already has a license as a hotel. And you look at whether you can add value to it by improving it, upgrading the stars, hiring more workers, get a sponsor license for that company to hire more workers from outside the UK that are able to boost your services and improve your offering.

Salman Siddiqui: How much time would mean the timeline that you give to your clients? Is it like a one year or. No?

Atef Elmarakby: I would say 4 to 6 months. Perhaps subject to them finding is we don't recommend business opportunities. You have to come to us at least with a solid idea what they want to do, and then we give them pointers. But once they settle on a hotel or on a restaurant or a care home, then we can tell them how to go about it from a commercial and legal point of view. Then we do the immigration side of things, right?

Salman Siddiqui: And we are talking about commercial properties. But are you also seeing people who may just want to buy a residential villa and then they just want to somehow find a immigration route that way?

Atef Elmarakby: No, owning a property in the UK wouldn't automatically give residence rights. It's not like Portugal or Spain and Greece and those lovely countries because however, there is obviously owning a property wouldn't give you residence entitlement. However, setting up a small business or going into partnership into a small company or persuading someone to find a business opportunity and create a job for you to pursue this business opportunity, that's cheaper and also more realistic. And it will lead to permanent residence and British citizenship rather than investing into a residential property. However, speaking of properties. Many people come to invest into the buy to let. So they set up a company as a special purpose vehicle. They set up with the government, HMRC, open a business account and then they start buying properties into this company and renting it out in the market and expand their portfolio. That's a business that. Would lead at some point to getting a sponsor license and hiring workers under this company.

Salman Siddiqui: That's a smart way to go about it. And I'm glad you also mentioned that real estate is not technically an option. And the reason why I also mentioned the business opportunities is because, you know, of course a foreign investor are especially risk averse. You know, they don't want to risk in some business they don't know about and put their money in it. So they're always going to be wary about it. So how do you I mean, we are also coming to the end of our show close, But so I want you to briefly also talk about how do you talk to investors about, hey, the risk is manageable in the UK and how do you go about that?

Atef Elmarakby: Well, advising on investment and risk is way outside my remit as an immigration or a legal specialist. So I would definitely advise them to seek advice from a tax specialist or from a banker or investment specialist. But once they are settled, their mind and their heart is settled on on an opportunity. My role is to structure this legally. And yeah, so I always distance myself from this and I have to as a lawyer.

Salman Siddiqui: But do you understand like a foreign investor is of course wary about you must have heard the feedback that, hey, why should I do this? Isn't there any other easier way?

Atef Elmarakby: I would say for entrepreneurs and established entrepreneurs and investors, risk runs in their blood so they wouldn't need persuasion to run a new venture. However, it's on them to make their assessment. And with every business venture, there is a risk of failing or the risk of little appreciation. And you wouldn't realize the return on investment that you would have expected at the beginning. But also, if the venture works well, the return would be high. So it's yeah, it depends on so many factors. The sector, the area, the funding, the background of the entrepreneur and the risk appetite.

Salman Siddiqui: And of course, if you could also clarify like what happens if the business doesn't succeed. That's also possible. Do they lose residency status immediately or is there some leeway in the law?

Atef Elmarakby: Well, no. If they are sponsored under a company and this company is investing in a trading activity and this company goes through trouble or this company is not making profit, these still maintain their residence. Many companies are not making profits for five or ten years. And we've seen so many startups from around the world are still making loss while their valuation is in the billions. So no, their residence and their visas wouldn't be affected as long as the business continues to have the basics registered with HMRC. There is a business account, there is a genuine activity and trading and there is premises without making profit or not, that's not a requirement under any legal or immigration rules.

Salman Siddiqui: Okay. That must be music to the ears of a lot of investors. Thank you so much for clarifying all those points for us, Atef. Now we are coming to the end of our show. And before I end it, I want to give you an opportunity of 30 seconds to talk to our network of investors and our audience. And how would you tell them to see UK's opportunities in the UK for investors and entrepreneurs? So please go ahead.

Atef Elmarakby: Well, yeah, I would say during my, let's say, years of practice, I started practicing immigration in the UK since 2008. So that's nearly nearly 20 years now and I have always found the UK to be a fantastic place and a land of opportunity for many people investors, students, entrepreneurs, families. So I would definitely say that the UK remains to be that fantastic destination. And I have witnessed this firsthand myself and my team here at Good Advice UK in London through over 10,000 cases that we've assisted from 2008.

Salman Siddiqui: Wow. Thank you so much, Atef. And there you go, listeners. You know, you've heard that the UK is still in the fight to be the top destination for investors and entrepreneurs from all around the world. Thank you.

Atef Elmarakby: Definitely. It's been a pleasure that I had the opportunity to chat with you today. It's a nice discussion. I will follow your news and yeah, I'd like to participate in future sessions as well. Thank you.

Salman Siddiqui: You've been listening to the Investment Immigration podcast by Uglobal.com. Join us again soon for more in depth conversations exploring investment immigration opportunities from around the world.

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