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.