Is co-living really the answer to the UK’s housing crisis?

With a shortage of available properties and growing costs, renting in inner-city areas can be a minefield for those involved and many people are now having to live in shared accommodation well into adulthood. It’s for this reason that more and more people are turning to co-living schemes, which is a new phenomenon in the private rented sector - predominantly targeting Millennials and Gen Z -where tenants live in a communal development with strangers. Tenants have their own room and share communal facilities like the kitchen and living area. To put it simply, they can be described as ‘dormitories for adults’.

The idea was first introduced in North America, where the first co-living schemes were introduced in New York and San Francisco. The purpose was to provide affordable and social-focused living for young professionals. The benefits of co-living include affordable city centre living (where tenants will often have their bills included in their rent) and communal facilities including cafes, gyms, workspaces and entertainment spaces. Tenants will also get to enjoy resident only social events that can range from arts and crafts workshops to yoga classes.

The UK market has followed the footsteps of its US counterparts and co-living schemes are now starting to appear in major cities like London and Manchester. According to the most recent European Co-living index by JLL, there are currently around 750 co-living beds in the UK with a further 4000 in the pipeline. The arrival of co-living has come at a crucial time for the UK property market - the country is currently going through a chronic housing shortage that is making private renting less affordable. Not to mention that it taps into a growing market of single young people in the UK that are looking for flexible and sociable living arrangements. The sector has also become increasingly popular with investors and it’s easy to see why - co-living units have low entry prices and although it still cultivates a small section of the market, the speed in which it has grown indicates that it will become a prominent part of the property market before too long. According to JLL, 60% of schemes across Europe have become operational since 2017.

However, beneath the shiny surfaces of co-living developments, there are some concerns of whether they can provide the high standard of living that they promise. The biggest of which is how much space they offer to their residents. Under UK planning rules, co-living schemes are classed as ‘Sui Generis’ which means that they are not required to conform to minimum space standards, and it seems that some developers are taking advantage of this. As reported by the Manchester Evening News, a developer has put forward plans for a scheme in Manchester city centre that offers bed spaces of just 19 square metres, which is almost half as small as the national standard for regular studio apartments. Alarmingly, this looks favourable compared to co-living schemes in London that offer apartments that are as little as 12 square feet. In addition to this, tenants living in these schemes have often complained about the living standards, saying that they have very little in the way of personal space and that living in co-living spaces often felt more like a hotel than the ‘inner city community’ that was initially sold to them.

There is a cynical view that developers are simply looking to cash in on a generation that are cash poor and living in an age where loneliness is common, and when you consider the above factors, it’s easy to see why. It seems that developers have identified a gap in the market and are trying to capitalise on them, and the lack of regulation is making it easier to do this. There’s no mistake that models like co-living schemes are needed in the current market, but developers and investors need to make sure that they are not taking advantage of tenants in less than ideal circumstances. Should co-living schemes become more prevalent - which is looking likely - then more needs to be done to ensure that developers provide satisfactory accommodation. After all, these are places that people will end up calling home.