JP Breytenbach: What likely “soft” Brexit means for would-be SA emigrants to UK

LONDON — JP Breytenbach’s firm specialises in helping people who want to relocate to the UK. His team has been doing a lot of research after the UK election shock where the British public sent the “hard” Brexiteers packing. In this insightful discussion Breytenbach unpacks the key issues of a rapidly moving landscape for would-be emigrants into the UK. Specifically his fellow South Africans who are considering moving to the country. – Alec Hogg

I’m with JP Breytenbach; we meet in the most interesting places.

That we do indeed. We seem to have a bit of a craving for coffee every time we meet, but it’s always fun.

Well from the steps of St Paul’s to Tasha’s in Hyde Park and you’re looking well for the South African winter so far, but I’m not so sure there are so many people looking well over the ocean in the UK where you do a lot of your business. Things are still up in the air there.

Things are up in the air, besides weather wise, everybody complaining about how hot it is. You know, 30 degrees is terribly hot in the UK. Businesswise things are up in the air a little bit, but I wouldn’t say necessarily in a negative way.

We had the election. In fact, last time we spoke was some months ago and much has happened since then. Going into the election, it looked like there’d be a landslide for Theresa May. It didn’t work out that way. How is that affecting your business?

Well, of course, Theresa May’s plans to get a very large majority and then be able to effectively try and have a very hard Brexit. In other words, just to basically say, “We’re going to leave the European Union and that’s it”, that now of course, won’t happen. She is sort of, in our view, precariously clinging to the power as it is, maybe to what is very much a poison chalice really and she’s going to have to negotiate a very soft Brexit, which I think’s good. Sanity has sort of prevailed.

Why do you say that?

Well, we’re primarily an immigration company, so we move people and businesses around. So, a hard Brexit could potentially have been seen to favour South Africans because logic would dictate you have a certain labour market and economy that relies to a large extent on immigrants, mainly from Europe. If you were to exclude them from the UK market and economy, you’re going to have to fill many of those roles with non-EU citizens. There simply aren’t enough British citizens who can do the job. That’s been evidenced hundreds of times, so it’ll generally then be Commonwealth citizens like it used to be prior to 2006. So, in that sense it would have been good, but we can often forget there are other things, national security, trade, things like that, where a hard Brexit, I think would have been pretty bad for the UK economy, which would have had a knock-on effect for all of us.

It was interesting to see Philip Hammond, the Chancellor of the Exchequer saying that in Brexit, the British didn’t vote to become poor and that penny seems to have dropped.

Yes, I think it was a very clever way of saying it and I think it’s a very accurate way of saying it. I think that’s what the result would have been, especially in the initial 18 to 36-month period.

But what now, there’s a lot of turbulence. We had the Queen’s speech the other day, what did you make of that?

We did indeed. It’s interesting. Of course, the idea behind the Queen’s speech, especially on this occasion was to give the British populace an idea of what legislation is proposed to come up in Parliament and what they will be voting on. Of course this particular important time period, because of all the Brexit negotiations coming up and the only way that the UK will be able to exit would be for an act of Parliament. So, the first interesting thing there is they have a sort of a double session of Parliament, so normally Parliament would be for one year and then we’d have another Queen speech of what’s going on the next year.

It’s double, so it’s actually a two-year Parliamentary session, and they’ve started to split up the various bills that they want to pass. The first one would be a repeal bill, repealing the previous acts that would have taken them into the European Union and then they have various different ones, of course, of serious interest to us is, the immigration bill proposed new legislative change surrounding immigration and then there were also others ones surrounding a national security trade, things like that.

So, it’s going to be a very busy time for the British Parliamentarians.

Massively so, some would argue they’re going to be earning their Pounds for a change, but yes, it’s going to be interesting and I don’t know whether Theresa May will still be there at the end of this specific two years, but I will see.

What about EU citizens, before we look at the South African impact?

It’s an interesting one. I think they can breathe a little bit easier than they would have been able to breathe had Theresa May’s planning come off with a landslide victory. I believe there’ll be a soft Brexit. If you look at the proposed changes in this new bill I’ve mentioned, a lot of that would deal with European citizens. Eventually European citizens would have to qualify for a visa, the same as South African citizens or American citizens and so forth. I don’t think that’ll ever really change unless the whole of Brexit, the whole idea is scrapped.

But for now I think it’ll be soft in the sense that there’ll be a grace period extended to them where they’ll be able to regularise their stay. There are certain things European nationals really need to do in any event, that was simply never enforced that we would recommend they do now to make sure that whatever happens, they would have really satisfied any requirements under European law as it stands currently so that there will be able to remain whatever changes come into force.

In a perverse way, the result of this election with no outright majority for the conservatives might be good for the economy and even stimulate further desire to get into the UK.

Definitely, we’ve already seen the Pound gain a little bit yesterday, I believe so. Look, from the majority of our client’s point of view, business corporate clients’ point of view, they’re all very positive about the UK. Mind you, they’ve always been very positive about the UK even if Theresa May had her victory. I think over sort of a long-term view people are positive about the UK. There are some of our clients who’ve really been sort of waiting to see what happens with this election prior to them going ahead with serious investment into the UK, which they will now be actually going ahead with.

So they are going to put the money in because of what happened?

Yes, I think they feel they have a bit more security now, about as much security sort of from as geopolitical a point of view as you’re going to get for the next 18 months and he who hesitates is lost of course, in business as in life, for too long, so I think they feel it’s prudent now to go ahead with the investment in the specific company I have in mind, yes.

It’s an interesting take on it and I heard somebody from the Economist discussing this issue and she said, “Once again the British Electorate has been much smarter than maybe the British politicians in putting this through”. Listening to you, it sounds like this election result was actually maybe the best of all worlds for society, if not for the Conservatives.

I would agree with that. Certainly, I think it’s not always the case that the middle way is the right way, but I think in this case it’s as close to middle way as there could have been, given what the politicians did prior. It’s probably the best solution. If one had to manufacture one, this would be the one you’d want to have manufactured.

So what about your South African clients, how are they now viewing first their own country and secondly, the UK?

Oh Alec, what a question. I think the answer to that on how my clients would view South Africa would change almost on a weekly basis, I think. At the moment we’ve seen, with the whole Zuma/Gupta email leaks and all these kind of things and the way they are seemingly coming towards the end of their particular rope, so to speak, people are positive again, but I think there’s always a 5% or 10% slide to positivity or negativity. There’s sort of a baseline of positivity, but cautious optimism, I’d say.

I’m talking about my business clients and high net worth clients. The vast majority of them don’t want to go to the UK because they want to go live there forever and ever. For many of them it’s really a business opportunity. Many of them feel (us as a family, inclusive) that there are many business opportunities in the UK that one could take benefit from at the moment. The Rand is relatively strong at the moment still, seen against the Pound and they’re very positive. I think it’s more a case of what can be achieved in the UK for the benefit of our business as opposed to, “We have to get out of South Africa because our business is going to fail”, if that makes sense.

It’s so interesting to look at your own story. We’re sitting here in Johannesburg. It’s a first world pimple in very much a sea of the third world, if you go outside of the Hyde Park Shopping Centre, but your family is actually living exactly what you were articulating a moment before. You’re still very much a South African business.

We are. As a family we have different interests, I suppose, but we love South Africa. We also, having said that, love the United Kingdom and we don’t feel that the two are mutually exclusive. We feel a certain social responsibility in South Africa and we do our best to do our part as we do in the UK. The world really has become a much smaller place. Home would always be where the heart is, but it doesn’t necessarily mean that one can’t further one’s horizons and gain other experiences abroad and if your heart sort of immigrates with you and the UK is where the heart is. Then I suppose that’ll be home. For us, South Africa is a very special place, always will be and we’ll never be negative about South Africa. Of course, we’ll be realistic about it, but not negative or pessimistic about it.

But there are great opportunities outside of the border of this country.

Certainly, I think we touched on this the last time we spoke. I think with our given skillset as a nation, as a people of South Africans, we can do very well abroad and many of our clients and many people who aren’t our clients, people you’ve interviewed do incredibly well abroad. Equally, we do immigration for people coming into South Africa and many foreigners come to South Africa and do very well in South Africa as well. I think it’s easy for many South Africans to knock their heads a little bit against the headlines. Each morning they read is very negative and there’s crime and there’s violence and of course those things are very much real, but inherent to any country like South Africa, there are opportunities as well and I think the key really would be to grasp opportunities both sides of the ocean if one can.

Okay, so let’s just have a look at the real world now. Is your business booming? Are you still finding that there’s a huge demand for people wanting to leave this country?

I think there’ll always be a demand for people wanting to leave South Africa, as there is a demand for people wanting to leave the United Kingdom, wanting to leave the United States of America for whatever reason. Of course there is more pressure, I think on a lot of South African families at the moment, being concerned about their children and their children’s education, things like that. So yes, I mean demand is great. It’s not as easy to immigrate as it used to be, but there are certainly opportunities still out there, quite a lot of them.

We see many high net worth clients establishing themselves, I’d rather want to say in the United Kingdom, for a period at least as opposed to them leaving South Africa, selling up, and that’s it. Visa wise, things like the tier one investor, where South Africans go and invest in the United Kingdom, the tier one entrepreneur is a very popular visa still. We do a lot of tier one entrepreneur applications and our clients meet with genuine success in the UK as a rule and of course, then we also do a lot of visas for businesses wanting to send representatives over to the UK for a period. Not necessarily for that representative to go live there, but simply to go and open up a branch of their existing South African business with a view of expanding into the UK and Europe eventually.

So those all sound business related. Is that the major area of demand, the South African economy kind of flat lining at the moment, people looking elsewhere?

I personally deal with high net worth clients and business corporate immigration, so I see a lot of that. As a company, we still do a lot of work for British citizens, by birth or by descent or whatever the case might be, wanting to go to the UK for a period with their families. There are still many European citizens. South Africa of course, have a large expat European community, a lot of them wanting to go to the United Kingdom. For them, I’d say if they want to go, they might want to go sooner rather than later because at some stage it’s going to become more difficult for them and of course, then we do a lot of work for people with United Kingdom ancestry.

Many of them have claims to British nationality that they might not be aware of, so we do quite a bit of that, but the demand will always be there, Alec. But many people come back as well and then we might have done an ancestry visa for Johnny six years ago, now Johnny and his family are British citizens, he’s married a British citizen, now Johnny and his family are coming back to come and settle in Pretoria or wherever the case might be and now we do a visa for those British non-South Africans to come back. So it really is migratory.

What are the complications of dual citizenship?

Well, if you don’t have it, you’re in trouble I guess. What happens is, a lot of times people don’t realise, in order to retain one’s South African citizenship, if you obtain citizenship of a second country, say in Britain in this case, generally, if you make that decision as an adult, so you elect to obtain British nationality either by naturalisation or by late registering yourself as British citizen, you have to ask the South African government for permission prior to doing so. Otherwise you’d forfeit your South African citizenship and then you’re only a British citizen. Then it’s quite a process, Alec. You’ve got to then come back to South Africa, apply to be issued with a permanent residence stamp in your then British passport and then go through a whole cycle again to obtain your South African citizenship.

So, it sounds like, if you want to go and try over there or start a business over there, make sure that you get your affairs in order.

Certainly, the key thing is just get solid advice. Come to us or to someone like us, but get solid advice. It’s a stitch in time saving nine to say the least and I think the same thing goes for tax advice. Many of our clients just don’t take tax advice and then it comes back to bite them rather seriously later on and there are a lot of little things one has to be aware of that are pretty easy to deal with, but if you don’t deal with them, the repercussions later on can be quite severe, such as not protecting your South African citizenship prior to obtaining British citizenship.

Just as a matter of interest, how long would it take to get through the process? You’ve gone over there, you’ve given up your citizenship by not asking for the required letter, now you want to come back home, what will that process, how long will that process entail?

Well, the first step would be to get that permanent residence re-endorsement. So born South African citizens would always be able to get that permanent residency re-endorsement, and then thereafter you have to apply for South African citizenship again. That could take years.

And the entrepreneurial visa, you’ve spent a little bit of time on it, if you can unpack that a little more.

Yes, sure. Look, the idea behind the entrepreneurial visa is for, generally speaking, business persons. You don’t have to be a business person, but generally it’s business people who want to go and open up or invest in a business in the UK, the required amount of investment’s £200 000.00. If you and I were to have been business partners, we wanted to go and open up a business, we can each pop in £100,000 and us, and our respective families can go. It’s called and entrepreneurial team application. It’s a very popular visa at the moment.

You obtain your visa in the first instance and you have a whole three years in which to invest all £200,000 to a UK business or businesses. It’s incredibly flexible. You can also invest in a business, sell that business, as long as you then reinvest that money in a different UK business, you can go on. You can be absent from the UK for up to 180 days per year and still obtain permanent residency after five years or after three years indeed, if you create ten new job slots in your businesses in the UK or you have a turnover of £5m. So, it’s very good, it’s very flexible, it’s very popular, and our clients are generally meeting with great success.

Do we have something similar inward bound into South Africa?

No unfortunately not.

So we’re looking to maybe give our own people the entrepreneurial opportunities here rather than needing to bring them in from elsewhere.

Yes, pretty much. There are similar visas but more on a retirement basis, where you can, if you then purchase assets in South Africa, come and retire here, but yes, I think the South African government wants to protect the South African labour market as much as they can.

JP, just to close off with, we’ve had these events in the UK, have they turned people off or turned them on, those who might have been looking to relocate or at least to go and try another part of the world?

Well Alec, it’s a very interesting question. I think if you look at us in South Africa and you look at what happened in the UK, the past 12 to 18 months in the UK, many things happened. In the past month in South Africa, more things have almost happened I want to say, so I think for your average South African entrepreneur and business person, you know, or normal is already pretty chaotic, so no, I don’t think it has put people off, to the contrary, to be honest. I think people see opportunity where there is chaos and South Africans, as a rule are very good, I feel at making sense out of a very complicated situation on the face of it and taking benefit thereof and going for it, being very bold and taking advantage thereof, I think.

So, the advantage of living through change is that you become resilient and you see opportunities where others perhaps bank.

Exactly yes, and that’s a South African story in many ways, we feel and it’s going to be very interesting to see, you and I will have a chat again in a couple of years from now to see whether South Africans that would be going across now, what would’ve happened to them and their businesses and I have a feeling that many of them would actually become household names in the UK over the next five to ten years.

We’ve certainly see that from those in the past. We’ve spoken about the UK, but what about other parts of the world for South African relocation?

Well, other parts of the world have actually become a little bit more difficult. The Aussies have become pretty strict on their immigration system. I think we all know about President Trump and the American system having gotten a lot more complicated. We have clients going to New Zealand first, once they’ve been in New Zealand for a while, and then trying to get into Australia. We feel that over the next five years or so, the UK will probably become the place to go because of Brexit; ironically there will be more opportunities because they’re going to have to open up the borders for non-EU citizens. There’s just simply no way that they will be able to do what they need to do as an economy and have the skillset just from the local British populace as they stand at the moment.

If the Europeans don’t have free access as they do at the moment, to the UK labour market, then well, it’s going to be up to us Commonwealth citizens to do our bit again and so inherent to that, there will be opportunity. Of course, a country like Australia, they don’t have European citizens at the moment that they can stop to create way for other citizens, so they’ll probably stay strict. I think in conclusion on that point, Alec, I’d say Australian countries like that, a lot of it has to do with their economies. You know, once your economy grows, well then there will be more opportunity. The UK, of course, the economy does play a huge role, but it has this other factor with Brexit, where they’re going to have to replace what they have with something else and therein will lie opportunity.

That was JP Breytenbach and this special podcast was brought to you by Breytenbach’s.