AEGON Scottish Equitable has become the first major pension provider to offer a direct hotel room purchase through a pension fund. The Edinburgh-based unit of the Dutch insurance giant AEGON has added GuestInvest, the UK buy-to-let hotel company, to its Self Invested Personal Pension (SIPP) investments, in what is said to be only the first step of a phased expansion of its SIPP property portfolio.

AEGON Scottish Equitable has become the first major pension provider to offer a direct hotel room purchase through a pension fund. The Edinburgh-based unit of the Dutch insurance giant AEGON has added GuestInvest, the UK buy-to-let hotel company, to its Self Invested Personal Pension (SIPP) investments, in what is said to be only the first step of a phased expansion of its SIPP property portfolio.

This move will allow investors for the first time to buy hotel rooms via their fund, and at the same time give them both greater liquidity and fewer complications than more traditional property purchases.

Through GuestInvest investors can buy a hotel room on a 999-year lease and receive a return on their investment by letting it out, plus any capital appreciation on re-sale, Insurance Business said. The company manages the hotel by maximizing room occupancy and shares revenue 50/50 with the investor. During the first year the investment guarantees a minimum 6% return, and purchasing through a SIPP also gives the investor tax relief at their marginal rate.

'Property is still a very popular asset class with advisers and their clients and can play an important part in building a balanced SIPP portfolio,' said Douglas Jones, head of individual marketing. 'Growth projections for the London hotel sector are strong over the next three to five years and the GuestInvest concept is unique in offering investors exposure to this market. As well as the tax advantages, the borrowing and pooling facilities of purchasing through a SIPP could put this asset class within the reach of many more people,' he added.