Why we won’t sell student pods
Why we won’t sell student pods
Student pods are all the rage right now, it seems the world and his dog is trying to flog them at the moment. So why have we stayed away from this latest frenzy and stuck to traditional buy to let?
I have 3 main issues with student pods.
1. Capital growth,
2. Resale options
3. Pricing
Capital Growth
On average a UK property will double in value every ten years. Will student pods enjoy the same growth? No chance. The value of a student pod will only rise if the yield significantly increases, because only an investor will buy it from you
Resale options
With a buy to let you can sell to the whole of the market, first time buyers, families, pensioners, students, investors, etc. Your exit options are vast if you’re prepared to price competitively. Unfortunately you are limited if you want to sell a student pod, your only chance of selling would be to another investor. How would you market it, who is going to buy without a mortgage? Finally if you’ve bought one (I’m sorry) try and sell it, you will struggle.
Pricing
Student pods are over-priced, let me explain why. Banks don’t lend on student pods, there are no mortgage products available. If a bank doesn’t think it’s a safe bet then you should stay well clear and the reason they won’t lend is that if they had to repossess a student pod they wouldn’t be able to sell it. Banks lend on buy to lets as they have a strong asset to fall back on if needed.
Also the commission paid to property investment companies is staggering, 10%-20%. If the developer pays out such large margins and still makes a profit then you have to question the investment.
These are the same companies that were selling Caribbean Property last year and Bulgarian before that. You have to ask yourself are these companies experts on these markets or just experts at selling them and who are motivated by commission payments and not your best interests.
Book a time to speak with one of our Asset managers and find out how UK property investment may be right for you.
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