Aegon has added buy-to-let company GuestInvest to its Sipp as part of the expansion of its Sipp property portfolio.
The deal will enable investors to buy a room in a hotel at a commercial rate on a 999year lease and get a return by letting it out, plus any capital appreciation on resale.
GuestInvest manages the hotel and splits room revenue 50-50 with the investor. A minimum 6 per cent return is guaranteed in the first year of the hotel’s operation.
Under Sipp borrowing rules, investors can borrow up to 50 per cent of the value of their Sipp fund to buy the hotel room. Investors can also club together to buy rooms.
Aegon says the move is the first step in a phased expansion of its Sipp property portfolio and it will give investors exposure to the commercial property market, with greater liquidity and less hassle.
Head of individual mark-eting Douglas Jones says: “Growth projections for the London hotel sector are strong over the next three to five years. People are looking for greater levels of sophistication and we aim to expand our property portfolio over the next few months to give investors a broad spectrum of options.”
Richard Jacobs Pensions and Trustee Services director Richard Jacobs says: “Property is very attractive to clients because they know it and understand it and it will continue to be popular, particularly with uncertainty over the equity markets. But to me this is just a marketing gimmick and if it is promoted now, as sure as eggs is eggs, the Treasury and the Revenue will put a stop to it in the Budget.”
But an Aegon spokeswoman says: “This is not a loophole we are exploiting. Hotel rooms are classed as commercial property so it is all perfectly above board in the simplified tax regime.”