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Brokers warn against student pods

Investors should mistrust the apparently high yields on offer in the burgeoning 'student pod' market
Brokers warn against student pods

Influential property brokers are warning investors to steer clear of so-called student pods, which are widely marketed as low-risk property investments with 'assured' yields of up to 10 per cent. Stuart Law, chief executive of Assetz, the country's largest buy-to-let agency, claims that asking prices and rental returns are inflated, while agents routinely fail to disclose the development and letting risks.

Robert Bence of RMP Property, another buy-to-let broker, believes student pods are only sold because the agent commissions can be as high as 20 per cent. "The margins are so huge that there is a very strong motivation to establish a market," he explains.

The term 'student pod' usually refers to a single bedroom within a purpose-built flat with a shared kitchen. This arrangement has been typical of student accommodation developments for some years, but individual rooms have only recently been sold off plan to small-scale investors - following a model common with hotel developments before the 2008 crash.

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