Global Edition

 

Attraction of investing in hotel rooms spreads north

8.17am 29th July 2008 - Courses

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.

Plans for what is believed to be the first scheme of its type in the north of England have been unveiled by a York-based developer, The Skelwith Group, which is to build the biggest hotel ever seen in the region.

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 rolling 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.

Now’s managing director Mark Lynn says that, under a leaseback scheme for owners, guaranteed annual returns of 7.5 per cent 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 per cent 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 when the hotel opens for business, reports Mark who describes the purchase of a hotel room in a high calibre British development like The Flaxby as “a profitable and hassle-free investment.”

“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,” says Mark. “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.

In view of the developer’s plans to make the ambience and quality of service match that experienced in London’s top Park Lane hotels, Mark predicts that the growth of the capital value of a room purchased this year could be as much as 100 per cent after eight years.

The three-stage investment process is straightforward: a deposit of £1,500 secures a room; 20 per cent 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.

Unlike the conventional purchase of a property, 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 quality for benefits which include discounts on golf as well as treatments in what is destined to become ‘the most luxurious spa in Yorkshire.’

Other plans for the The Flaxby include conference facilities, a 24-hour golf driving range, three restaurants – one of them to be headed by a celebrity chef – a health club, indoor pool and a network of nature trails.

Access to The Flaxby is easy. Located just off the A1(M) between Harrogate and York, and a 30 drive from Leeds, it is 15 minutes by limousine transfer from Leeds International Airport. The country club will have helipads for use by visitors.

For the developers Paul Ellis, managing director of the Skelwith Group commented, “Our hotel will be for both local people to use and enjoy but we also expect to fly in the rich and famous from around the globe. It will attract high profile people whose time is very precious. Because of this having the best transport providers on board is key to ensuring these people stay at the Flaxby.”

Early investors include England cricket captain Michael Vaughan. Describing The Flaxby as “a showcase for the best the county has to offer,” he said, “This is a one-off opportunity to invest in one of Yorkshire’s best developments.”

Now Property Ltd www.now-property.com
Flaxby Park Golf Club www.flaxbyparkgolf.com

       

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