Will co-living stand the test of time?

11 Oct 19

Co-living is increasingly being recognised by developers, operators and investors as an attractive and alternative form of housing which can promote affordability, increase housing choice and is something that can ease pressures on local housing markets. But being in relative infancy there are still some areas that raise questions among decision makers.

The co-living sector, we would argue, is currently the most exciting and innovative residential sector; the landscape is moving quickly and evolving constantly. As a consequence, what works today may not work in 6 months’ time. Co-living is an imminent wave being fuelled by housing need. This need is informing the market in its locality. The market thinking is years ahead of planning policy.

We have sensed that part of the market is looking for a one size fits all, cut and paste approach to the model, which misses the point and is unlikely to work; however, there are a few key trends and themes which have appeared consistently across our co-living schemes and we thought it would be helpful to highlight these trends in this constantly evolving sphere:

There is still a substantial PR piece to do on what co-living is and what it offers, even in its broadest sense. The strategic messages about housing choice, affordability, quality, community and sustainability have still not been fully made and heard. There is a key opportunity for a leading co-living developer or operator to own this space and lead the charge on behalf of the sector.

As a consequence of the above, most councils have yet to make their minds up about what they think about co-living. There are some councils who support co-living. There are others who are against it publicly. There are others who are against it privately. There are councils who used to like it and are now changing their mind. There are councils who don’t know what it is. There are councils still on the fence.

The market is constantly changing and evolving. What gets planning permission today might not work again in 6 months’ time. This means that co-living requires a deeper understanding of the target market and the places providers are seeking to develop in. Track record, reputation, quality, commitment to deliver and robust mechanisms for management and maintenance can be as important as any planning policy rules.

The quality of the accommodation overall is the most important factor in the planning assessment of any co-living scheme as a place to live. This involves a balanced planning judgement of many different factors and does not just boil down to an identification of a minimum or maximum unit size. The number of units and density, the residential mix (co-living schemes are increasingly attractive to retired people and couples as well as younger people), the type and balance of amenity space, the quality of external spaces, internal floor to ceiling heights, aspect, amount and quality of light within are all factors. Demonstrating overall quality is critical and essential in providing re-assurance to planning officers, committee members and the community that co-living is not just the next evolution of cram them in, stack them high, poor quality housing, which has scared many councils in recent years.

Co-living schemes do, and should vary in size, subject to the considerations above. You are likely to find units between 15sqm and 30sqm in an area with floor to ceiling heights between 2.4 and 3 metres in height. Then add good levels of natural light, excellent energy efficiency, security, build quality and cycle parking before considering high levels of quality communal internal facilities.

If you are interested in delivering co-living at scale then your site needs to be able to accommodate 150 units or more and be in a town centre location or near to a train station.

There are some questions with regard to how co-living schemes are valued and challenges associated with capitalising rental income, defining yield and understanding management costs in the absence of comparables, given the limited amount of completed, built and rented co-living product on the ground and the wide range of co-living business models.

Iceni are experts in co-living and we hope the above is of some help in guiding your scheme. Please do not hesitate to contact me, the Iceni Central London Planning team, or your usual Iceni contact should you wish to discuss any aspect of this further.

Mairéad Flower Senior Planner,Planning