The concept of selling London hotel rooms to investors, which has become a popular alternative to buy to let property in the past couple of years, has taken off nationally claims one developer.
Plans for what is believed to be the first scheme of its type in the North of England have been unveiled by a The Skelwith Group in York.
Construction work starts soon on its £100 million Flaxby Country Club centred on a 27-hole golf course – already completed and tipped to become a PGA tour destination – set in 114 hectares (283 acres) of countryside between Harrogate and York.
Cambridgeshire agent Now Property Ltd is selling a mix of 300 rooms ranging from luxury double rooms to presidential suites at off-plan prices starting at £110,000 for a 999-year lease.
The company’s managing director Mark Lynn explained that, under a leaseback scheme for owners, guaranteed annual returns of 7.5 percent of the purchase price will be paid for each of the first eight years following the opening of the hotel in 2011. In subsequent years owners will receive 50 percent of the net revenue from their rooms.
A bespoke computer software package used by the hotel management company will ensure equal letting of all rooms. Returns will be paid to owners monthly.
Room tariffs are expected to start at around £120 per night.
Lynn said: “While it is still a relatively new concept in the UK, it is an investment vehicle which has proved popular in the USA for many years. The appeal for UK investors is that it is linked to the buoyant global hotel and travel industry, and not buy to let in the troubled UK property market.”
The developer is confident that the growing popularity of UK holidays combined with constant demand for prestigious venues for corporate and golfing events will ensure high occupancy rates throughout the year.
Lynn predicts that the growth of the capital value of a room purchased this year could be as much as 100 percent after eight years.
The three-stage investment process is as follows. A deposit of £1,500 secures a room; 20 percent of the purchase price is paid on exchange of contracts, and the balance is paid on completion. The investment qualifies for inclusion in a SIPP to make it tax efficient.
There are no maintenance charges and no council tax is payable. Service charges are waived for the first eight years and the room can be sold at any time.
On completion of the eight-year guaranteed period, owners will be permitted to occupy their rooms for up to 52 nights each year for a nominal charge of £25 in respect of cleaning costs. They will also qualify for benefits which include discounts on golf as well as treatments in the spa.
Other plans for the The Flaxby include conference facilities, a 24-hour golf driving range, three restaurants, a health club, indoor pool and a network of nature trails.
The country club will have helipads for use by visitors.
Early investors include England cricket captain Michael Vaughan.
