Co-living is where three or more tenants, not from the same family or household, share living accommodation. This scenario is common in cities such as London where the cost of living is high.
Other advantages of co-living are reduced utility costs as this is shared among the tenants or included in the rent and the accommodation is usually fully furnished and liveable.
The social side of living with others could be seen as advantageous or not, depending on how well you get on with your housemates but lockdown has shown us that when we are deprived of that social contact, most yearn for it.
Co-living is seen as the norm for students, who often need the support of others when they live away from home for the first time, the graph shown below shows that in the under 40’s there is definitely appetite for this model of living.
Of the under 40’s surveyed the amenities (exclusively for use by residents in the shared accommodation) that would encourage them to take up a co-living space were (in order of popularity):
- Free private car parking
- Gym
- Swimming pool
- Kitchen/dining area
- gardens
- entertaining space
- Laundrette
- Lounge areas/bars
- Study/work space
- Green energy
The following graph shows the same cohort asked what they see as the potential advantages of co-living:
What about co-living as a buying option? For this to succeed it would need to be financially compelling to the stakeholders and with a robust legal framework. The same cohort were asked what the maximum price they would be willing to pay for a studio flat in a co-living development, in relation to a conventional one bedroom flat and the average maximum price coming out at 60%. If it were possible to buy a studio flat in a co-living development at 60% of the cost of a conventional one bed flat, we can see that the mortgage should be easier to raise but we must not forget to consider service charges, which are likely to be higher for co-living accommodation.
In conclusion, co-living is an option to help ease the housing crisis and to make homes more affordable. With shared facilities, you should be able to fit more accommodation units into a space, and it may enable more to get that first foothold on the housing ladder. For developers, it is certainly an option worth considering, especially in more built up areas, and as long as you plan carefully and keep a good track with a robust financial model, you could be joining a profitable trend.
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