A SECOND BUY-TO-LET hotel is to be opened by GuestInvest entrepreneur Johnny Sanderson.

The new hotel, Nest, will be by Paddington Station in London, and Sanderson says it will offer property investors who buy one or more of the 170 bedrooms good returns on money while others sleep.

Investors will receive 50% of the room’s income and also be able to stay free for up to 52 nights a year.

Rooms at GuestInvest’s debut hotel, Guesthouse West in Notting Hill, London, which launched in April 2004, sold out within weeks.

Investors there are already seeing returns in excess of 6.5% in the first 18 months of ownership, and those who have since sold their rooms are seeing capital growth of 10%. With occupancy rates at around 80%, similar returns are anticipated for Nest.

Those disappointed by the Chancellor’s SIPP U-turn on pensions being used to buy residential development will be interested to know that GuestInvest also qualifies for SIPPs, being classed as commercial property.

Rooms are on sale off-plan to investors priced from £175,000 for a 999- year lease and with complimentary membership of trendy London club Home House. Nest opens in early 2007.

A prototype Nest hotel room is now on display in a window at Harrods.

GuestInvest is currently expanding beyond the UK and plans to have hotels across Asia.

Sandelson said: “We are effectively creating a brand new asset class.”

Suddenly, city living apartments seem awfully last year …