Rapid growth in the number of co-living properties is due to a desire for affordability and companionship, according to market analysts.
The surge in the popularity of co-living rental housing began during the Covid-19 pandemic in 2020. What was once a fairly niche market gathered pace as the economic crisis began to bite.
© Formatoriginal / Shutterstock
Now, research by UK property experts Savills reveals 51% of European investors are planning to buy this type of rental space during the next three years.
An estimated £2.2 billion is expected to be invested in the sector – so just what is it about co-living that is causing the boom? Research suggests priorities have changed in post-Covid Britain.
In the five years up to March 2020, an additional 10,950 co-living apartments were added to the relatively small market. In the three years since, a further 12,150 flats have either become operational, or are planned.
The study concludes lenders, investors and developers have a greater appetite for the sector now that more tenants are expressing an interest.
What’s behind the growth?
Since early 2020, more tenants have expressed an interest in co-living accommodation, which comprises furnished individual flats in a building where there’s a large percentage of shared and communal space.
The flats are often small studio apartments, while the community areas can include general places for tenants to socialise, a gym, a coworking area and even a cinema.
Experts say this type of property has become more popular post-pandemic because people who have experienced isolation now rank a sense of community more highly.
In addition, affordability has become a key aspect of renting. The cost-of-living crisis means tenants are trying to save money. While the individual flats tend to be compact, the rental package includes many shared amenities to improve the deal.
With co-living spaces offering facilities such as shared kitchens, dining areas and lounges, tenants are always grateful for more features that can help reduce costs.
Co-living apartments frequently come with the bills included, so the residents find it easier to organise their finances.
With an average age of around 35, 70% of co-living tenants are single. This kind of living arrangement works for people who often travel for work, or someone who has flexible hours for part of the year.
Another reason for the market growth is convenience, as co-living spaces are commonly located in urban areas. They are an ideal option for people who want to live close to work, retail areas and entertainment. The tenancy can also offer benefits such as housekeeping and maintenance, making life much more convenient for tenants.
Co-living promotes a sense of community. Residents often interact and socialise with one another, which can lead to a greater sense of belonging and connection.
From the point of view of landlords, renting out co-living apartments can make life simpler, as they are all housed under one roof, rather than dotted about across a neighbourhood.
You can take advantage of furniture packages for landlords to save money and reduce the hassle of having to furnish your properties at different locations using various suppliers. HMO furniture packs from one supplier will make the process a lot simpler.
Which areas of the UK have seen the biggest growth?
The trend began in London, but it has now started to spread across the rest of the UK, with more investors, developers and landlords becoming involved. However, the capital still accounts for around four-fifths of the market.
A survey of tenants in co-living accommodation in Wembley revealed 82% believed the scheme had improved their life.
Growth levels in Birmingham, Sheffield, Manchester, Bristol, Glasgow and Leeds are now increasing. This is because the infrastructure, transport links and amenities of these cities are continually improving.
Smaller regional hubs such as Brighton, Reading and Guildford are also experiencing an increase. This suggests the appeal of co-living is growing across a range of areas.
As a result of the rapid growth, there has also been an increase in banks and other lenders agreeing to finance new developments through loans. This suggests the sector’s growth represents a potentially permanent shift in demand for rental properties with social interaction spaces.