Somerset House in talks with hotel firm

A section of the Grade I-listed Somerset House could be converted into a hotel.

A long lease on the Pennethorne Wing, which faces Waterloo Bridge, has been up for sale since last year.

Now it has emerged that GuestInvest, the firm which has just bought Kensington's Blakes Hotel, is in advanced negotiations with the Somerset House Trust and the Department for Culture, Media and Sport.

GuestInvest, founded in 2004, specialises in "buy-to-let" hotels. It sells rooms to investors who can use them for up to 52 nights a year and receive a rental income the rest of the time.

Leasing the wing would bring valuable funding to the trust, which receives no grant for maintaining and operating Somerset House.

A trust spokeswoman confirmed the lease was for sale, saying: "In line with its mission to open up Somerset House to the public and complete the restoration of the 18th century buildings around the courtyard, Somerset House Trust has invited bids from developers to consider options to achieve this."

She added: "This is a confidential process. The trustees will make their recommendations to the DCMS."

Last year, it was reported that the Alrov Group, run by Israeli tycoon Alfred Akirov, had bid more than £50million for the wing but the deal collapsed. Instead, it bought Café Royal in Regent Street.

The news that GuestInvest may take over the Pennethorne Wing, reported in Property Week, will reignite a row over the use of Somerset House.

By law, it is supposed to be used for the promotion of culture and the arts, or as an office. It is unlawful to allow "any person to sleep on the premises, unless it is associated with caretaking/security purposes". However, the terms of the lease can be changed by ministers without legislation.

In November, rumours of the sale to Akirov sparked a row with the neighbouring King's College, which has tried in vain to move into Somerset House for nearly 180 years. Led by Sir Lawrence and Baroness Rawlings, who recently stepped down as chair of the college's ruling council, a campaign was mounted to secure use of the wing.

But the college's argument that selling to the highest bidder would demean one of England's grandest buildings failed to win over the cash-starved trust. Currently leased as office space by HM Revenue and Customs, the wing was designed by John Pennethorne, a disciple of John Nash, and built in 1856.

GuestInvest declined to comment.