Fund offers holiday deals

Wealthy homebuyers are being targeted by a new property investment fund that offers investors shared ownership and rent-free use of luxury holiday homes around the world.

Safe Haven Property Investment Company plans to invest half of its portfolio in holiday homes – including £1m-plus villas, chalets and city centre apartments in Europe, the Caribbean and the US – and the remainder in UK buy-to-let properties. The company intends to use the income from the UK rental properties to cover the costs of maintaining the overseas properties.

Nigel Gourlay of Safe Haven says the fund is different from destination clubs and fractional ownership schemes, which are popular in the US, but offer predominantly lifestyle products. This fund aims to combine both lifestyle and investment features.

Safe Haven’s target is an annual return of 12 per cent – made up of capital gains of between 6-8 per cent and what it claims is a 4 per cent “yield” from the tax-free benefit of the holidays.

The fund has an initial 5 per cent charge and a 1.5 per cent annual management fee. The minimum investment is £55,000 and shareholders will receive travel points depending on the number of shares bought. For example, a £55,000 investment would equate to 500 shares and 450 travel points each year. An investor would need between 400 and 1,000 travel points to stay in a large villa for a week, depending on the value of the property and the time of year.

The fund also has a “last- minute getaway” scheme. Any property not reserved 35 days before departure date can be used by any shareholder without using travel points – an attractive feature for those with flexible schedules.

But investors should be aware that Safe Haven requires a minimum investment term of three years and, while the fund says it will match buyers to sellers, there is a risk there won’t be any new investors.

Anna Sofat of Addidi Wealth, an independent financial adviser, says it is important to look at additional costs, such as how expensive is it to fly to these locations. “You need to decide what the objective of this fund is,” she says. “Is it lifestyle or investment? It’s a lot of money for a lifestyle product.”

The Safe Haven fund may not be suitable for investors who want access to a large range of international properties. Gourlay says it will buy approximately nine properties once it has raised £6.5m, of which just three will be leisure properties.

The fund has only raised £1m so far but Gourlay expects to start buying properties this year. He says the fund will raise money indefinitely, with the hope of reaching £70m in six years.

“It is a market that is growing considerably and not just because the economy is tough and people can’t afford to buy property on their own. Investors don’t want to do the work of managing the properties and this also gives them a bigger and more varied portfolio,” says Gourlay.

Other holiday property schemes include Rocksure, the Hideaways Club and Holiday Property Bond.