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Investment warning over student podsA student-sector investment specialist is warning landlords to avoid being taken in by the alleged income and capital potential of so-called student pods.

Mish Liyanage, chief executive of the Mistoria Group property investment firm, admits that the sales pitch for a student pod is initially highly seductive. For a relatively modest cash price, you get a stake in the property market in a top university town and a guaranteed income - all without the hassle of having to manage a buy-to-let he says.

Liyanage claims the vast majority of student pods have been sold at a premium with staggered purchase payments and guaranteed yields for anything up to 10 years.

But as student pods are not considered to be individual properties and therefore cannot be bought using a mortgage, investors will not be able to take advantage of the traditional buy to let mortgage products.

In addition, with most pods being bought off-plan there is no information for the prospective investor about the quality of management of the pod after completion, nor the size and conditions of service charges.

As traditional letting agents are rarely used to manage purpose-built student accommodation, this presents investors with a leap of faith.

Another concern is the rental guarantee' offered by developers. This can often be an overstatement. The guaranteed rents are attractive to investors, but often they fail to materialise. I believe that investors are actually subsidising the guaranteed rent by paying an inflated price for the unit they secure says Liyanage.

He also claims that whereas with a normal' buy to let investment an investor can sell the property at any time on the open market - often with capital appreciation - student pods present more difficulties.

Pods are typically leasehold so are a diminishing asset; they are highly-priced compared to almost any other type of residential unit on a price-per-square-foot basis; and they have no established resale market - capital appreciation, even in a rising market, is not guaranteed.

Comments

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    Regardless of the true intentions of the writer the facts remain the same. There are a huge risk and one does not have to go far to find many a factual story of financial loss, great stress and court cases. Economies are fragile and students whimsical. Today's great and popular uni could we'll be tomorrows dead uni. Pods might just die out completely and then how would you sell......

    I own a few apartments and a house (non hmo) that are rented by the room and by the property right in the heart of manchester and I have never had any probs renting and I make a great yield whilst supplying a great set of homes. The students have frequently told me that they pods have many probs inc fights, assaults, drug problems and that is why they left for the safety of an independent property.

    • 13 March 2015 19:48 PM
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    I wouldn't personally invest in student pods, they seem like a cheap gimic to me really. Thanks for confirming my suspicions!

    Andy - [url="http://www.union-lets.co.uk/"]student accommodation york, UK[/url]

    • 12 September 2014 10:29 AM
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    Has anyone actually sold one usefully Time share

    • 06 August 2014 13:44 PM
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    A student-sector investment specialist trying to put landlords off student lettings I think I'll take what they say with a pinch of salt.

    • 05 August 2014 16:18 PM
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    Yes very good job of putting off investors in student property, by a company that specialises in selling student HMO's! Nothing like publishing an 'impartial' article to rubbish the competition. Admittedly I was sceptical on student 'pods' when i first heard about them but there is a massive demand for high quality student housing (especially from overseas students) rather than the traditional damp Victorian terrace in a run down area. Hence why a lot of City Councils with high student populations are introduction selective licensing fro HMO's to try and bring the numbers down and return the accommodation into traditional housing.

    • 05 August 2014 09:47 AM
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    Well, this article is doing a successful job of putting me off student pods. To be fair, I have heard mixed reviews about their effectiveness and it seems the sales pitch is better than the actual capital return, so I'll certainly be giving them a swerve.

    • 05 August 2014 08:53 AM
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    I've always been wary of student pods, and this confirms my suspicions. More trouble than they're worth.

    • 05 August 2014 08:40 AM
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