Whilst still a nascent marketplace, the number of planning applications for Co-living developments continues to gather pace across the country’s urban areas as first-generation schemes begin to mature and a second generation of developments come forward. by the British Property Federation last year
[1] highlighted Co-living’s broad tenant appeal and growing role in meeting housing need. Whilst the current supply and pipeline of bedspaces is largely focused in London where this sector is more developed, developments are starting to emerge in other regions such as the North West which is the second largest Co-living market outside of London.
Although from the outside Co-living developments may look like any other urban residential building, their internal design reflects a social living philosophy centred on shared spaces and facilities, including kitchens, living rooms, gyms, co-working spaces, cinemas, and roof gardens. Among Co-living’s broad potential market are often graduates and young professionals who, given unfavourable market conditions for ownership coupled with flexibility-focused lifestyle choices, are driving a growing cohort of ‘generation rent.’ In the context of the UK private rented sector having doubled in size since the early 2000s and one-person households now making up around a third of all households
[2], Co-living represents an easily accessible and social form of living which is an attractive option for many renters. Although supply remains considerably lower compared to other rental products, such as the ever-expanding Build to Rent (BtR) sector, Co-living could play an important role in meeting rental needs and increasing choice across the country, particularly in University towns and cities who want to retain their graduates, and other urban areas who are facing a 35% ‘urban uplift’ to their standard method housing need figure, with mandatory targets expected to be reintroduced should a Labour government come to power post-July 4th.
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recent Lichfields blog covered the emergence of new ‘large-scale purpose-built shared living’ regulation in London, where bedspaces are expected to more than double by 2027. Recent guidance from the Greater London Authority (GLA) was informed by the market and provides advice on matters such as location, need, space standards, affordable housing, cycle parking and inclusive design. By providing a greater degree of guidance on the planning requirements for Co-living developments, in a sector with few operational examples, the planning risk and uncertainty for developers, investors and operators is greatly reduced.
Regionally, we are finding that the model is gaining traction, with Co-living developments emerging in northern cities like Leeds, Sheffield, and Manchester, as well as further south in Brighton and Southampton. Some of these cities have large student populations where graduate retention is high,
particularly in Manchester, and therefore the potential market for Co-living is considerable, either as a stepping-stone from student accommodation, or for those who have made a purposeful choice to seek a shared living arrangement irrespective of their age. However, scepticism from local councillors, officers and the community sometimes exist about the role Co-living has in meeting housing needs and the quality of accommodation it provides. For example, in Manchester the Council published non-statutory guidance which set an initial 5,000 bedspace cap (that is now fast approaching based on our research). At the other end of the M62 in Liverpool, planning guidance requires compliance with Nationally Described Space Standards (NDSS), which is at odds with the more flexible approach adopted in London by the GLA and often challenges the viability of developments.
Using the methodology developed for our previous
analysis of BtR policy, we have analysed the policy position for Co-living across England (excluding London) to see whether any patterns emerge.
The Regional Policy Position
Three key trends emerge from our spatial research (as shown on the interactive map above):
- Outside London there are no adopted policies supporting Co-living.
This is perhaps unsurprising considering the nascence of the sector vs. the lengthy timescales typically required for Local Plan preparation, often exacerbated by recent planning reforms and political statements, which has seen many Councils pause or delay preparation altogether.
- However, there are no anti Co-living policies either.
None of the areas we studied had adopted or intend to adopt an explicitly negative position. Many are approaching the tenure with caution due to the untested nature of the Co-living model in the UK. Manchester’s 5,000 bedspace cap is a clear example of this.
- Looking ahead, importantly, there is plenty of emerging support.
Birmingham, Bristol, Coventry, Leeds, Reading, Sheffield and Southampton all explicitly and positively reference Co-living within emerging policy. For Reading, Sheffield and Southampton this was included within the policy text itself, making the position very clear for prospective applicants. If you compare this with the results of our BtR analysis these supportive locations are broadly similar, while those areas which are silent on BtR are also generally silent on Co-living. The correlation suggests that if authorities are pro-BtR they are (or will be) pro-Co-living, given they are both forms of rented accommodation which can meet housing needs at scale, and often over quicker timescales than traditional residential development which sometimes relies on forward sales or in the involvement of an affordable housing provider. As one might expect, there is less adopted policy support for Co-living when compared to BtR overall, but this is likely due to the nascence of the sector and is expected to catch-up over time.
What is the Planning Inspectorate saying?
While planning appeals on Co-living developments are relatively few and far between, we have uncovered the following lessons from a couple of recent Planning Inspectorate decisions:
- Space standards are a key battleground, but flexibility should be applied.
An appeal was recently allowed in Leeds for a design that did not comply with NDSS. The Inspector stated that Co-living should not be subject to a strict application of NDSS given the provision of other communal space and facilities. The appellant used aggregated space calculations to show that total amenity space per person exceeded NDSS minimums when factoring in communal space. A similar view was taken on a recent allowed appeal in Brighton. In Liverpool, an appeal was refused for reasons including failure to provide adequate private and communal space. As noted above, whilst Liverpool’s Co-Living Planning Policy Advice Note expressly requires NDSS compliance, the Inspector stated it is “reasonable to take a broader view in this case, and take account of the communal areas when considering compliance with space standards”. The problem in Liverpool was that some of the proposed communal spaces were publicly accessible and some required advance booking and payment, so were not considered as ‘freely available living space.’ After all, Co-living is widely accepted as Sui Generis rather than Class C3, so one would expect some flexibility on policies and guidance written specifically for residential development, rather than a new form of urban living which has its own unique design requirements.
- Interim guidance carries little weight. In the Liverpool appeal, the Inspector stated the Council’s advice note “does not form supplementary planning guidance, rather it takes the form of an advice note which sets out the Council’s understanding of the co-living concept, and identifies the policies it considers to be relevant.” Similarly, in the Brighton appeal the Inspector stated that as the Council’s Interim Planning Guidance Note on Co-Living Accommodation “does not form policy, is not supplementary to any particular policy, and has not been consulted upon, I attribute very limited weight to any conflict the scheme has with this document.” Finally, in Leeds the Inspector stated that while the Co-Living Technical Guidance Note “is a useful guidance document it does not carry weight in the decision-making process”. Therefore, while such guidance should be considered when drawing up new proposals, it carries little weight which suggests Council’s should consider using their Local Plan (or next Review) to update their position.
- Co-living does address specific housing needs.
In Sheffield, an appeal was allowed to remove affordable housing provision from an approved Co-living/private rented development. The Inspector referenced paragraph 60 of the National Planning Policy Framework (NPPF) which requires the needs of groups with specific housing requirements to be addressed, and highlighted students and young professionals seeking Co-living opportunities as one such group. Even without affordable housing, the scheme was believed to provide a mix of accommodation through a new product which adds variety to the housing market.
- Co-living has specific public benefits.
Back to the Leeds appeal – the Inspector gave ‘moderate weight’ to the scheme’s public benefits. Some were relatively typical benefits – green space contributions, economic benefits associated with construction and operation, increased local spending – but others were more specific to Co-living. This included the “provision of accommodation and communal space for workers and the associated benefits of social interaction” and “the relief of pressure on use of family sized homes as HMOs.” Similarly in Liverpool, it was highlighted as a benefit that this type of accommodation is “aimed particularly at younger people, with the potential for social interaction and making new friends.” Finally, in Sheffield, Co-living was considered to offer a more affordable alternative to private rented accommodation.
Levelling the Playing Field
The lack of a national policy position on Co-living is leading to real variance in Councils’ approaches across the country, which in turn has put the onus on Planning Inspectors to mediate between applicants and Local Planning Authorities. While this has generally resulted in favourable outcomes for applicants, it creates an uncertain environment for developers, with added cost and time needed to navigate the appeal process. With such planning risks remaining until Local Plans catch-up, proposals will need to be carefully considered under the guidance of an experienced planning consultant. We note that the ‘safer’ investment market of BtR went through a similar ‘trial and test’ journey and period of education and engagement with LPA officers, politicians and communities before becoming the established and understood market it is now in the UK. It seems that Co-living is on that same journey.
Whilst London has been quickest to respond in policy terms via the London Plan and subsequent Guidance, some of the regional cities are beginning to contemplate Co-living in their emerging local plans, but many may not have these policies adopted for years to come. In the meantime, applicants will have to work hard to explain the concept and need for Co-living, as well as evidence its benefits, to stand a chance of local approval. A flexible and proactive approach also needs to be taken by LPA officers and Councillors to ensure applicants aren’t dissuaded from bringing forward Co-living developments which would otherwise deliver much needed homes in our biggest urban centres.
The opportunity is that, as draft Local Plans emerge, there is scope for representations and input to help refine policy, and as these drafts advance, they benefit from greater weight in planning decisions. The emerging policy position across the country, coupled with the appeals outlined above, show that Co-living is starting to be viewed more favourably as a new rental tenure which can provide more choice and variety to the market, meeting the specific needs of certain groups, and providing several benefits.
However, as was the case for BtR, clear policy support is needed at both a national and local level if Co-living’s potential to contribute towards addressing the housing crisis is to be realised. Updates to the NPPF and inclusion in the forthcoming National Development Management Policies should both be considered to provide clear guidance across the country which in turn will level the playing field and provide certainty for investors and developers.
Getting the Right Advice
Co-living applications should be well-informed and carefully prepared. Lichfields has experience advising clients on Co-living developments and has local knowledge of policy, guidance and appeal decisions across the country from our network of nine offices. Please get in touch if you are interested in knowing more.
[1] https://bpf.org.uk/media/6754/coliving-report-2023-final-final.pdf
[2] https://www.gov.uk/government/statistics/english-housing-survey-2021-to-2022-headline-report/english-housing-survey-2021-to-2022-headline-report#section-1-households
