Co-Living and Use Class Complexities

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‘Co-living’ has become a buzzword in recent years as the residential market adapts and diversifies in response to the continuing shortage of supply, rising prices and the desire for young adults (in particular) to have an opportunity to afford a home of their own.

Pre-pandemic, the concept of small studio/one bed apartments sharing facilities including kitchens, lounges and gyms had begun to be explored by pioneers such as The Collective bringing forward their development on Old Oak Common to provide affordable, flexible and sociable accommodation with shared facilites. The objective was to establish a community which would be so much more than a block of rented apartments, the intention being to foster wellness, social cohesion and affordability for the target market of recent graduates and young professionals.

Post pandemic, interest in Co-living products has increased significantly.  Savills states that more than 2,000 Co-Living beds were completed in 2022 and more than 25,000 Co-living beds are now operational or in the pipeline. They estimate that 51% of European investors plan to invest in Co-living schemes over the next 3 years, ploughing in some 2.6 billion euros of capital.

So, what is Co-living?  It means many things to many people, but fundamentally it comprises purpose built rented small units (typically 15-30 sq. m. in areas), which are not self-contained and share a range of facilities including kitchens, dining rooms, co-working spaces, gyms, cinema rooms and outside spaces. Some also run activities such as yoga and movie marathons. They are usually for single occupancy and are managed by a single management company.

As an innovative new form or residential accommodation, fitting the use within the confines of our lumbering planning system may be confusing.  Questions are asked as to whether the new use is always a sui generis use (in a class of it’s own) or can it fit within a C1 (hotels) use class or even with a C3 (dwellinghouses) use class?  The answer to the question is that it depends on what end use is required and how it is intended to operate.

For example, Re:shape’s Wembley Ark Co-living development in Wembley operates within the C1 (hotels) use class following a conversion from the former hotel. Also at Wembley, Dandi/Dukelease converted a former office block under permitted development prior approval allowing the conversion to C3 residential use.  Despite the fact that the units are self-contained (within C3) they still share a range of facilities and are marketed as a Co-living development.

In London, Policy H16 of the London Plan is very clear that the GLA considers Co-living, or Large-scale Purpose-Built Shared Living of 50 units or more to be a sui generis use.  Consequently, London’s large new build Co-living schemes fall squarely into a class of their own.  They also benefit under the policy from being able to make a financial contribution towards affordable housing instead of providing it on-site.

While London leads the way on Co-living schemes due to affordability issues, schemes in other cities such as Manchester, Birmingham and Bristol are also now well established.  Downing’s First Steet (sui generis) scheme in Manchester will be a “Co-living neighbourhood” comprising more than 2,000 bedrooms in four blocks, one of which is a 45 storey tower.

Until such time as the supply of more affordable market accommodation for sale or rent becomes available, the Co-living model seems destined to continue to appeal to the target young adult market, providing flexible, affordable accommodation in a way that provides social inclusion and a sense of community.  New build developments will be regarded as sui generis uses, but the planning system is flexible enough to accommodate the Co-living model within other residential use classes depending on the existing use and proposed end operation.

This article is for general purpose and guidance only and does not constitute legal advice. Specific legal advice should be taken before acting on any of the topics covered. No part of this article may be used, reproduced, stored or transmitted in any form, or by any means without the prior permission of Brecher LLP.