Somewhere for the weekend

A new scheme selling hotel rooms in London is promising solid rental yield - and a bed for the night when you need one

What do you do if you need to come to London several times a year? Spend a fortune on hotel bills or maybe, if you come often enough, buy a small pièd-a-terre, which is then left empty for months on end.

What do you do if you need to come to London several times a year? Spend a fortune on hotel bills or maybe, if you come often enough, buy a small pièd-a-terre, which is then left empty for months on end.

To tap this market, Johnny Sandelson, who has been in the property business for several years as a developer in central London, has just launched a new investment vehicle - GuestInvest, where investors buy their own hotel room where they can stay for up to 52 nights a year and also get between 5 and 7 per cent (net) rental on the room during the remainder of the year.

"At the moment, the first hotel in Westbourne Grove, W11, is a 'little' idea, but what we hope is that it will become a prototype of a very big idea," says Sandelson. "It's a variation of the traditional buy-to-let market, but better because you will get income all the year round and because you get all the tax breaks - tapering tax relief if you keep it for more than two years, the chance to use roll-over relief and some people will be able to put it into their pension scheme, but if that is the case they are not allowed to use it. I am advising everyone to take advice from their own accountants."

James Lord, who lives close by in Notting Hill and has several buy-to-let properties in the area, has just signed on the dotted line for one of the hotel rooms. "Because prices in Notting Hill have gone up so much, it is difficult to achieve the right rental yield, but with this you have a guaranteed 7 per cent cash flow and the company is going all-out to ensure the hotel will be solidly booked," he says. "Obviously it is a risk, as with any investment, but if this is successful, I would definitely look at their future schemes."

The small boutique hotel is the first of many that Sandelson hopes to open in London and he has plans to extend the scheme into other UK cities and into Europe. Investors buy a 99-year lease for their room and sign an agreement allowing GuestInvest to let out the room when they are not there. When the owner uses the room, he or she will pay a nominal charge - around £10 a night - to cover laundry and cleaning, but breakfast will be extra.

The double rooms have wi-fi communications and plasma screen TVs and there are few larger rooms, with balconies, on the ground floor. Owners who are staying the night will be texted (if they wish) in the morning to ask if they want the "dish of the day" prepared by Alastair Little, who has a delicatessen close by, which will then be delivered to their room in the evening.

"Of course, owners will get the benefit of the all the hotel facilities - concierge, lighting and heating, laundry, soaps, etc. and they won't have to worry about the management or marketing of their investment," says Sandelson.

The income from letting the room is divided 50/50 between the hotel and the room owner and as well as gaining an income, they will hopefully see some capital appreciation too. The only maintenance costs they will incur will be a £500 per annum sinking fund.

Since the hotel, which has 20 rooms, was launched 10 days ago, half the rooms are already under offer and it is already fully booked over the next few weeks, with 75 per cent of the rooms booked for the next couple of months.

But what about selling on your investment? "With such demand for the product and with room prices and occupancy rates in London set to rise, I can see no problem with this. Owners can sell through an agent or come back to us," Sandelson says.

Rooms are for sale from £235,000. Further details from GuestHouse West, 0800 028 0268, or www.guestinvest.com