Co-Living

Co-Living

A new way to live

The growth of a new sector
There is no doubt that London is facing an intensifying housing crisis. The delivery of enough homes to meet the capital’s growing population while remedying a backlog of unmet need is becoming ever more challenging. Alongside the housing crisis, the way people live and work continues to rapidly evolve.
 
There are many factors at play underpinning the burgeoning housing crisis and informing the changes to Londoners living and working arrangements. These include the ability to build enough homes to meet demand, increased remote working opportunities, changing household dynamics, rising levels of loneliness and the cost of living crisis. All of these factors are changing the ways people live in one of the most expensive cities in the world.
 
In this context, the co-living sector has emerged as an increasingly popular option. There has been a significant increase in the demand for co-living units amongst occupiers and, in turn, a growing appetite for c o-living development from developers, operators and investors.
There remains though, considerable undersupply of good quality co-living accommodation in London. The BPF [1] report on co-living identified that, as of September 2023, there was a 48% shortfall in the number of co-living units to rent compared with demand. There is also a growing pipeline of c.12,000 co-living units in London at the planning stage[2]; suggesting a planning system which is becoming more aware of the role co-living can play in meeting acute housing need while accommodating lifestyle and household changes.
 
Lichfields view is that the co-living sector in London presents a significant opportunity for growth in an otherwise flatlining housing market.
 
 
Planning for co-living in London
Planning, of course, has a critical role to play in supporting the delivery of new co-living developments in London. The purpose of this Insight Focus is to explore the opportunities presented by co-living in London; assess the patterns of co-living development in the capital; and, identify the common planning challenges faced by these developments as well as potential planning solutions.[3]
 
This Insight Focus comprises the following sections:
 
  1. What is the Use Class?
      
  2. An overview of planning policy for co-living in London
      
  3. Co-living myths
     
  4. Which LPA’s are supportive and which are more resistant?
     
  5. Patterns of development - the types of co-living applications which are coming forward in terms of location, scale and form of development
     
  6. Typical Issues - A summary of the typical issues encountered in applications for co-living development and how these can be overcome
     
Throughout the planning sector, and in particular in planning policy, reference is often made to large-scale shared living or large-scale purpose built shared living (sometimes called ‘PBSL’). These terms refer to a similar form of use and for the purpose of this report, ‘co-living’ is used to encapsulate these different terms.
 
   

Co-Living: What is the Use Class?


   

 
 
 

The GLA Perspective: Strategic Policy and Guidance on Co-living

Strategic Policy – London Plan
At the national level, there is no existing planning policy that relates to co-living development, including within the latest iteration of the NPPF (Dec 2023).
 
At the strategic level, the London Plan has a bespoke policy for co-living developments which was adopted in the 2021 version of the plan. Policy H16 ‘Purpose Built Shared Living’ sets out ten qualifying criteria that schemes must meet and broadly establishes the principles against which co-living schemes will be assessed.

 

Policy H16

Notably, the policy requires a cash in lieu contribution towards conventional C3 affordable housing either through the provision of an upfront cash in lieu payment or an in perpetuity annual payment. However, the GLA’s Draft Affordable Housing LPG (May 2023), and the recently published Large-Scale Purpose-Built Shared Accommodation LPG, confirm that co-living schemes can progress via the GLA fast track affordable housing route when onsite affordable housing is provided. Further information will be provided in the revised affordable housing LPG (due to be published in Summer 2024) and so this is likely to continue to evolve.
  
Overall, the London Plan is clear that co-living has an important role to play in meeting London’s housing need.
 
Large-scale shared living developments may provide a housing option for single person households who cannot or choose not to live in self-contained homes or HMOs. This policy is required to ensure that new purpose-built shared living developments are of acceptable quality, well-managed and integrated into their surroundings.

London Plan Policy H16 supporting text

 

London Plan Guidance
Following the publication of the draft in January 2022, the GLA published the final Large-Scale Purpose-Built Shared Living London Plan Guidance on 29 February 2024. Following consultation with many of the major co-living operators, the LPG has been significantly updated to provide a more flexible, yet still robust framework supporting the delivery of co-living schemes in London.
 
Lichfields covered the changes between the draft and final versions of the LPG in the blog ‘A Leap Forward for Co-living’ in which was published in March 2024.[4] We summarise some of the key points as follows:
  

  


   

London authorities’ approach

In the light of the strategic London Plan support and the recent growth in planning applications for co-living, how are London boroughs reflecting co-living within their Local Plans?
  
To answer this question, we have looked at co-living policy across all 32 London boroughs, the City of London and London’s two development corporations (London Legacy Development Corporation (LLDC) and Old Oak Common and Park Royal Development Corporation (OPDC)).
  
As demonstrated above, the policy position is very mixed and there is little consistency in the approach taken by the London authorities. The acceptability of co-living schemes and the prospects of securing planning permission is heavily dependent on the location and authority.
 
We expect this picture to change as Local Plans are reviewed and co-living continues to grow in popularity across London. The success of a planning application for co-living is dependent on many factors, but from a purely planning policy perspective, we consider that those authorities with the most supportive policy position include the City, Southwark, Waltham Forest and Brent. However, as the co-living policies within each authority are very different, it is important to review the precise local policy requirements.
  
The results of this research are summarised in the interactive map below.
  
The research shows the following:
 

 

 

Co-Living Myths


   

Patterns of development

 

Number of Applications
Lichfields has reviewed all planning applications for co-living submitted in the last six years (January 2018 to June 2024). This research focuses on bespoke sui generis co-living schemes. We are aware that there are a number of co-living schemes which operate under a C1 Use Class. However, for the purpose of this research we have focused on those that align with London Plan Policy H16 and the LPG. These are applications which have been submitted following publication of the draft version of the latest London Plan.
 
This research identifies 29 applications, of which 19 have been approved, 3 refused and 7 are still to be determined. Many of these schemes included other uses, particularly at the ground floor. Other uses typically  comprise commercial space including offices, retail of food and beverage which compliments the co-living use.
 
The chart below summarises these recent co-living applications, breaking them down into GLA referable applications (those exceeding floorspace and/or height thresholds for Mayoral referral) and non referable applications, determined locally.

Of the applications which have been refused, the impact on existing housing or the ability to deliver conventional C3 housing on the site was cited as a reason for refusal for two of the applications. This was either because there was an extant permission on the site or the site was in existing residential use.
 
 
Geographical Spread
London authorities adopt different approaches to co-living in planning policy. In Lichfields’ experience, developers and investors focus on those boroughs which have a positive policy position and are politically supportive of co-living.
 
The map below shows the distribution of the 29 co-living schemes Lichfields’ has reviewed.
 

 
Our research shows that:

 

 

Development Quantum
Our research has found that there is a broad range of scheme sizes, with the quantum of units ranging from under 50 to over 800 co-living units. The average quantum of these schemes is 295 units.
 

 

Scheme Details
We have undertaken a detailed review of the schemes that have been approved and reviewed each development in terms of affordable housing, unit size, communal facilities, car and cycle parking and tenancy agreements. The following section provides a summary of these findings.
  
 

Housing Need and Affordable Housing

Our research shows that co-living developments are being brought forward on a range of sites including former office buildings, commercial units, storage and distribution yards, car parks, pubs and vacant sites.
 
A common requirement for these co-living applications is the need for a housing needs assessment to evidence the local demand for co-living and the role co-living accommodation will play in the local community and an area’s housing stock. Whilst out research identified that many did not provide housing needs assessments, this is partly due to the applications being submitted prior to the adoption of the LPG.
 
The provision of affordable housing in co-living schemes is varied and dependent on a range of factors including location, authority and scale.
 
Our research shows that:
 
  1. Less than 50% of schemes are supported by a Housing Needs Assessment.
     
  2. 54% provided on-site affordable housing provision (discount market rent or conventional affordable housing).
     
  3. 75% of referable schemes followed the GLA’s fast track affordable housing route.
     
  4. Those schemes which provided on-site affordable housing, typically achieved 35% affordable housing.
  
 

Unit Sizes

Within the co-living developments analysed, unit sizes vary from 16 to 24sqm and the average unit size is 20sqm (excluding accessible units).
There is little correlation between the size of the co-living scheme and unit sizes. A scheme’s unit sizes are instead typically determined by the developer, the location and character of the site and the market the units are targeted towards.
 
 

Communal Facilities and Amenity Space

The quantum and type of communal facilities provided within the co-living schemes analysed varied considerably. The most common communal facilities are summarised below:
 
 
The analysis shows that the average area of a co-living development’s internal communal facilities is 5.5sqm per unit.
 
There is a broad range in the areas given over to communal facilities in the individual developments analysed; varying between an average of 2.6sqm and 8.1sqm per unit.
 
Similarly, the average area of communal external amenity space provided is just over 2sqm per unit. The range of amenity space across the developments again varies considerably, with a range between 0.6sqm and 4.2sqm per unit.
 
 

Cycle and Car Parking

Cycle parking provision varies considerably across the schemes (0.2 to 1.9 spaces per unit) with an average of 0.9 spaces per unit.
 
Interestingly, two of the referable schemes in the research provide a cycle hire scheme for residents to use free of charge. In both instances, the developments provided cycle parking levels below London Plan standards, but cycle hire provision was considered by the determining authorities to be a more appropriate offer for future residents.
 
All of the schemes reviewed were car-free with the exception of accessible car parking spaces.
 
 

Tenancy and Management

Our research shows that, in accordance with the London Plan, all of the planning permissions (100%) have a minimum tenancy of three months and two schemes committing to longer minimum tenancies of six months.
 
All approved schemes were required to provide a management plan as part of the application or post-planning via a condition or S106 obligation.
 
 

   

Co-living: Common Planning Challenges

This section provides an overview of the key planning challenges experienced by co-living schemes and sets out how these issues can be addressed based on Lichfields’ project experience.
 

 

Land Use and Housing Need

 

Affordable Housing

 

Unit sizes

 

Communal Facilities

 

Cycle Parking

 

Tenancy and Management


   

Summary and Conclusion

Co-living is a dynamic and burgeoning new entrant to London’s otherwise embattled housing market. In the face of an intensifying housing crisis and amidst stagnating housing deliveries, co-living remains singularly buoyant. It fulfils a housing need, responds to lifestyle changes and contributes meaningfully to the capital’s communities.
 
The opportunities for well-designed co-living schemes in the right locations across London are significant. The appetite for co-living amongst prospective tenants, developers and investors is growing. The number of planning applications for co-living is following suit.
 
Yet, despite this growth and its mounting role in the housing market, co-living is a still-nascent sector imbued with myths and misgivings. There is much to do to educate stakeholders and decision takers on the benefits of co-living, its role within London’s communities and its contribution to the capital’s acute housing need.
 
With this in mind, this Insight Focus discusses the varied approach of each London borough to co-living, it explores patterns of co-living development across London, and it sheds light on the myths and common planning challenges facing this growing sector.
 
 
The Approach of London Boroughs to Co-living
Firstly, we have looked at co-living policy across all 32 London boroughs, the City and London’s two development corporations.
 
While the GLA has in place bespoke and constructive co-living policy, the position at borough level is inherently mixed. Only 25% of London boroughs have supportive (adopted or emerging) co-living policy in place. Others are still mostly silent on co-living.
 
Those boroughs endorsing co-living frequently also set additional requirements beyond the criteria in the London Plan. This can include prescriptive locational requirements, alternative affordable housing targets and onerous expectations on evidencing housing need.
 
A co-living development’s planning prospects are, of course, heavily dependent on the borough in question and it is critical to understand these local policy nuances. Lichfields’ interactive policy map at Section 3 is a useful starting point.
 
 
Patterns of Co-living Development in London
We have then analysed all planning applications for co-living development submitted in London during recent years. Our research shows that half of London boroughs have received co-living applications with the most applications submitted in Brent, Ealing and Wandsworth [check]. Around one third of these co-living applications were referable to the Mayor.
 
The approved co-living schemes assessed include an average of 295 units and just over half provide on-site affordable housing. Their units are typically 20sqm in area; with an average 5.5sqm of internal residents’ facilities and 2.2sqm of outdoor amenity space per unit.
 
While there is of course variation in these parameters, it does appear that policy and the market are driving co-living schemes towards an optimal development quantum, unit size and approach to amenities. Given the embryonic nature of the sector, there is much to learn from these previous co-living applications.
 
 
Planning Challenges Encountered by Co-living Developments
Finally, drawing on Lichfields co-living experience, the Insight Focus explores the common planning challenges encountered by these developments.
 
A fundamental starting point for many co-living developments is establishing support for the land use. We outline how co-living applications can encounter resistance where they are considered to prejudice conventional housing delivery and we discuss approaches to housing needs assessments for co-living.
 
While the London Plan encourages payments in lieu towards affordable housing, more recent GLA guidance supports on site C3 affordable housing alongside co-living. We consider the affordable housing options open to co-living schemes, tenure considerations and viability matters.
 
The Insight Focus then discusses the approach to co-living unit sizes and the quantum and type of communal facilities being delivered in co-living schemes, as well as approaches to cycle parking and tenancy and management considerations.
  
In conclusion, it is clear to Lichfields that the opportunities presented by co-living in London are significant. Our research shows a marked increase in planning applications for co-living during recent years. Co-living schemes continue to improve as lessons are learnt, as the sector matures and as the profile of co-living grows. Co-living is now establishing itself as an important component of London’s housing market. We fully expect the sector to continue to evolve, expand and flourish in the years ahead.
 

   

 

Footnotes

[1] The New Kid on the Block BPF Co-Living Report October 2023
[2] Savills Spotlight: UK Co-living – May 2023

[3] Throughout the planning sector, and in particular in planning policy, reference is often made to large-scale shared living or large-scale purpose built shared living (sometimes called ‘PBSL’). These terms refer to a similar form of use and for the purpose of this report, ‘co-living’ is used to encapsulate these different terms.


[4] https://lichfields.uk/blog/2024/march/01/a-leap-forward-for-co-living

[5] Co-living Report The Final Living Frontier: Explained, Harris Associates and VervLife

[6] Rental Series: Co-living Getting under the skin of renter psyche, Conductor

[7] Harris Associates and VervLife Co-living Report 2023