Summary

Since the end of 2003 an increasing number of Brits have been homing in on a revitalized visa option, the EB5 visa which provides a number of advantages over the alternatives,

• A direct route to a green card
• Permanent residency via the green card for the family including children under 21
• Freedom to live and work where you want, or indeed to retire.

Despite the required minimum investment of $500,000 there has been a steady increase in applicants opting for this route. The most popular programme which has been operated for some years by a US based company, which has a proven track record in investment in commercial property in the designated regional centers.

Each property designated under this investment programme is a limited partnership in which investors own a share proportionate to their investment. The properties undergo a thorough refurbishment prior to letting and rental cheques are distributed monthly. The management company looks after the whole process from acquisition through letting and ongoing management

Investors receive about $25,000 (5% per annum) after management charges and under the visa rules are entitled to sell after approximately two years after receipt of their green card.

Visa processing takes approximately nine months and to date every EB5 regional centre investor has received a green card. 

The current scheme is due for review towards the end of 2008

More detail

Whether you are planning a move to Florida or indeed are already running a business and living in Florida you will probably be familiar with the E2 and L1 visa programmes. For many they offer a satisfactory arrangement although no doubt for  those who have resided in America  for a number of years there is a degree of anxiety as well as cost, the time for renewal comes round.

Many accept this renewal scenario phlegmatically, however there are concerns particularly if you just wish to retire from the visa qualifying business or indeed have children approaching that critical 21st birthday, if so which visa option will you find for them?

For those looking for freedom to work in whichever way best suits them, or even to retire to the USA, the EB5 job creation investor visa is again the immigration route of choice. The first EB5 UK applicants for US visas under new rules, which effectively enable people to retire to America, were approved over two years ago.

This rule change has made it easier to apply directly for a Green Card, which provides a lifetime's Legal Permanent Residency for the applicant, his or her spouse and any offspring under the age of 21. They do so without the usual requirement of having family connections, securing a job or running an actively traded business - making it an ideal route to retirement.

The 'freeing-up' of the EB-5, an investment visa for the purposes of job creation, no longer insists on the direct employment of ten people but qualifies you if the investment 'indirectly' stimulates employment.

This allows investors to make a more passive type of investment into commercial real estate, rather than managing an actively trading business.

To comply with the law, a minimum investment of $500,000 is required (approximately £263,000 at the current rate of exchange). Furthermore, the investment must be in a 'Regional Centre' - an area which has been approved for immigrant investor capital by the US Citizenship and Immigration Service (USCIS).

There are currently four structured immigrant investor programmes formed specifically for EB-5 visa applicants. The companies concerned are offering either commercial properties or managed farm investments.

It is up to each visa applicant to select a programme, although professional investment advice can be sought. However, to date, all UK investors have chosen the same programme. This is probably because it offers freehold commercial properties and has been doing so to both immigrants and non immigrants (local Americans) for around ten years, whereas the other offerings are relatively new and less tested and proven.

The company in question specializes in buying and managing commercial properties in the  City of Seattle restricted by either mountains or water on three sides, leaving only the ageing industrial area to the south - which was developed between the two world wars. Much of it comprises factories and warehouses, many of which served Boeing, still a dominant local manufacturer and major employer.

By buying a warehouse, for example, dividing and refurbishing as 'out of town' retail units, investors achieve two important things: increased indirect employment, which qualifies the investor for the visa, and higher rents to produce a return claimed to be between six and seven per cent after refurbishment. The company states an average occupancy level of 96 per cent across its portfolio.

The area can be seen to be improving as buildings and the local rail infrastructure are being upgraded. Costco, the giant retailer, has built a store in the old industrial area, and Starbucks has its head office there, too.

Application and timing

For those making such an investment, the application process and the rules governing how long they must keep the business are as follows. The investment is made before the visa petition is filed and processing by the USCIS is currently running at four months.

The applicant must attend an interview at the US Embassy in London and this takes the whole application process to between nine months and one year, perhaps less. A conditional Green Card is then issued allowing the investor to emigrate with his immediate family. The investment must be held for a further two years, bringing the total to approximately three years. At that stage an application is made to the Immigration Service office for 'Removal of Conditions', which takes a further two or three months, after which the investment may be sold.

Successes so far

When the EB-5 visa was once again made open to people to use it for retirement, we expected around one application per month from the UK to date the number is running at three a month.

Most people need between four and 12 months to investigate their options, make the decision and then organise their affairs. We are now receiving three applications each month from the UK. Interest has been increasing and looks likely to continue growing over the next year at least as the desire to emigrate gains momentum, stimulated no doubt by increased television coverage of living overseas.

Outside the UK there have been more EB-5 visa applications.

Weak currency, right time?

At the moment those planning to live in America are on the right side of the exchange rate, or at least it's a great deal better than a year or so ago when $500,000 equated to £290,000 instead of around £263,000 at present.

Yet, whether now a good time to apply for an investment-based visa is really dependent on what you want to do in the US. If you want to work, are degree qualified and can secure a job - not easy, but achievable - then apply for an H1-B visa. After a time you can apply for a Green Card and avoid the large investment required to qualify for an EB-5.

Many young people like to start or buy a US business and do so using an E-1 or E-2 visa. This is a cheaper route, on the face of it. There's no minimum sum for the investment but we would advise around Â£100,000 to be sure of an approval. The downside is that it had 'non-immigrant' status. There are thousands of E visa holders living in the US, but sooner or later they are going to have to confront their status and sort it out for the long term, for if they sell their business or it ceases trading, their visa won't be renewed. Also, their children at 21 will need their own visas or be forced to leave the US. Such a lack of security may not suit everyone looking to reside in the US for the long term.

For those wanting security and the flexibility to work, run a business or to retire, the EB-5 has distinct advantages. In addition to the comfort of securing Permanent Legal Residency, living costs are lower in the US even after taking account additional healthcare insurance. Many of our clients are selling homes in the UK and are able to divide the proceeds between a new home in the States and an EB-5 visa-related investment, thereby enhancing their retirement income in the process.

As for whether it's a good time to apply for an EB-5, I am mindful of the fact that the visa rules are changing all the time and that this aspect of the EB-5 was withdrawn once before, this particular programme is scheduled to expire in September 2008 unless extended.