Aegon Scottish Equitable has added GuestInvest, a UK buy-to-let hotel company, to its self invested personal pension investments as part of its expansion plan.
The addition represents the first phase of the group’s expansion plan for its self invested personal pension (SIPP) property portfolio, aimed at widening the investment options to cater for the variable needs of investors.
Aegon Scottish Equitable is the first major provider to offer direct hotel room purchase through a pension fund. The decision follows the company’s belief that it will give investors exposure to the commercial property market with a view to offering greater liquidity and less hassle.
The GuestInvest addition will offer investors the chance to purchase a room in a hotel on a 999-year lease, receiving a return on their investment by renting it out, plus any capital appreciation on re-sale. GuestInvest will manage the hotel and maximize room occupancy sharing room revenue 50:50 with the investor. A minimum 6% return is guaranteed in the first year of the hotel’s operation.
Purchasing a room via a SIPP provides the investor with tax relief at their marginal rate. Under normal SIPP borrowing regulations, investors are able to borrow a maximum of 50% of the value of their SIPP fund to buy the hotel room. Aegon Scottish Equitable also permits rooms to be bought on a pooled basis, opening the opportunity up to more people.