Analysis published by the British Property Federation (BPF) has highlighted an increasing momentum for co-living amid calls for the government to formally recognise the importance of the sector in the forthcoming revised NPPF.
The research aims to improve understanding of co-living and as such, consolidate the offer as an important, emerging asset class and a vital piece in the puzzle to solve the UK housing crisis. This is made even more timely by the renewed focus on housing ahead of the next general election.
The demand for rental property in the UK now far exceeds supply. SpareRoom data shows that, as of September 2023, there is a shortfall of 11,716 rooms to rent in London alone. Trends suggest this is only going to increase, and requires not only a step change in the delivery of new homes, but an increasingly diverse supply.
Originally co-living featured most strongly in London and other core cities but there is now a growing pipeline of developments across the UK. JLL data from June 2023 shows that the UK has just over 31,000 co-living beds in operation and development. Developers, operators, and investors are looking to diversify their rental residential offer to meet tenant demand, and co-living’s USP and appeal to renters means that it is a growing part of this offering.
The report also highlights the benefits of co-living. With growing affordability constraints and an increasing desire for many to live in an urban location, co-living has the potential to offer a more affordable, professionally managed housing choice to renters which has previously been unavailable.
To ensure that co-living continues to grow and mature, the BPF is calling for:
The NPPF (National Planning Policy Framework) to provide active support for co-living schemes and require local authorities to include an allocation for co-living schemes in their local plans.
Local authorities to include policies supporting co-living in their local plans.
Policies to not be too prescriptive and in turn allow for market broad parameters within which to bring forward co-living developments.
Affordable housing policies to recognise that co-living, in the same way as BtR, meets a different housing need than traditional C3 housing need and a reduced affordable housing offer should be required subject to a covenant that requires units to remain as co-living for a specified period failing which a clawback payment would be made.
Mark Corea, policy officer at the British Property Federation, said: “Much like Build-to-Rent, co-living can help make a significant contribution to the UK’s housing need and alleviate the current housing crisis. By catering to parts of the population which would otherwise struggle to find appropriate accommodation, co-living is an accessible and affordable option for many, and should be recognised as such in policy going forward. Only through the continued diversification of the Living Sector is a critical tool in battling the housing crisis.”
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