Government has bought the dormant Harmony Club hotel in Paget in a deal worth $6.25 million to house overseas Police recruits.

The hotel, formerly owned by Bermuda Resort Hotels Ltd., ceased operating two years ago. After shareholders failed to raise investment to revive it, the Ministry of Housing, through the Bermuda Housing Corporation, made them an offer.

After short-listing areas within Government most in need of housing its professionals, the Bermuda Police Service was identified as the most in need.

The property consists of three buildings with 40 large hotel-syle rooms, a swimming pool, and will soon be refurbished to make way for the new recruits.

Minister of Housing Senator David Burch said of the hotel's history: "The owners of the property have flirted with tourism redevelopment, an outright sale, a branded partnership style tourism development and other means of realising the potential of the site.

"Those efforts did not succeed primarily as a result of the current difficult credit market environment in the United States.

"They have therefore determined that this sale provides a great opportunity to proceed with plans of redeveloping their other properties, particularly the Surf Side Beach Hotel.

"When looking for suitable housing options the Ministry approached the principals of Harmony in late 2007 about the possible sale of the property and preliminary discussions were held."

Before choosing the Police Service, it was determined that single professionals who prefer a studio or a one bedroom would benefit from the scheme the most.

The Minister added: "Market conditions dictate that left in direct competition with Bermudians in this critical sector of the rental market, these professionals' ability to guarantee payment make them preferable to landlords.

"The effect of this unchecked and inequitable competition is to drive the cost of single person rental units further out of the affordable range of the average Bermudian — as such an alternative solution needed to be found."

Housing has a budget of $65 million and the money for the property will come out of that allotment, Sen. Burch revealed.

"Earlier this morning the final signatures were secured, the deposit was paid and so we essentially have possession.

"There are 30 days in the normal course of events for closing but we don't anticipate any problems and we have a licence in addition to the sales and purchasing agreement allowing us to move onto the properly immediately and begin the renovations we wished to carry out."

A Police spokesman said: "The Bermuda Police Service is pleased with this announcement as it will assist us in recruiting overseas officers."

Naval Mehra, CEO of Bermuda Resort Hotels Ltd. detailed how talks to revive the former landmark hotel failed after proving to be costly. He explained: "We had contacted Hilton and a few other interested parties but nobody had come up with the funding and the proposal that we needed to continue and this is becoming a financial drag on the company.

"Once we negotiated with the Ministry I think it moved very well and it suits our needs right now at this moment because we need to upgrade the properties we have right now."