17 Oct Co-Living – A New Twist in Property Development
There is a huge variety of investment opportunity in property. It may be simply investing in your own home or you’re an investor in build to let or buy-to-let. There are opportunities to develop old properties or develop new builds and even these are diverse.
Some are residential, others are commercial, and yet others are industrial. Seasoned developers are always on the lookout for a new context in which to develop property at a profit. Co-living is the new kid on the block.
Property prices are increasingly on the rise and the younger generation are now taking longer to save up a deposit for a home. In fact, for many this has become a pipe dream without the help of mum and dad.
As long as people need homes, there will be properties to buy or rent. The dilemma that developers face is how can they provide quality, affordable accommodation for sale or to let at a profit.
Changing Accommodation Needs
Calculating the return is not the difficult part. As the needs of the general population change so does their approach to accommodation. Developers that have observed the habits of young newly graduated professionals have noticed a new trend. Co-living.
Co-living provides smaller private spaces where individuals have a room of their own, sometimes with a private bathroom and a small kitchen unit. These form part of a greater living space that is shared. Living and dining areas, as well as kitchens, are often shared. It doesn’t stop there though, intentionally developed co-living spaces include recreation space and quiet spaces too.
Although this may seem to be a new area of investment, co-living is not new. Most people that have been through university or student accommodation will know that it has been around for a long time. Currently, many young professionals choose co-living in HMOs. Landlords find that it provides a better return on investment and tenants have more flexible terms with renting.
Co-Living as a New Model for Investment
On the back of traditional co-living, a new breed of co-living has emerged. Apart from students, there are also those in their mid-thirties experiencing a major life change. They now form a substantial part of this group.
Many are either newly divorced or moving from one city to another. They need somewhere temporary to live that will meet all their needs. There are older nearly retired individuals who have sought out a change of lifestyle. They may want a downsizing option and don’t want to be lonely. And then there are active retired persons with extra time on their hands who want to share their lives while they are still able to enjoy them.
Investing in and developing co-living spaces has become popular in the US and Japan, much in the way that investing in student accommodation has in the UK. While student accommodation will eventually reach saturation, developers are now looking at the examples from abroad to expand on this concept.
With the gap widening between those that can afford to own homes and those that have to rent, co-living comfortably fills the space created by that gap. There are possibilities for landlords to invest entirely or for individuals to buy a share in the co-living structure.
Complexities of Legal Provision
This is very new to the UK and HMOs are good examples of co-living. However, the evolution of the concept will mean that ASTs may no longer be applicable. For buy or build to let landlords, this means a whole new tenancy minefield. A whole new property sector is likely to spring up from the demand that these changes are likely to generate.
Pod style living is well known in Japan and some parts of the US. Co-living with individual units but shared living spaces are seen elsewhere in Europe. This is a rapidly emerging development area that is new and intriguing. Some developers may adopt a wait and see approach. Others may well want to get ahead of the rest and delve into it as opportunities avail themselves.
There is still a minefield of legal issues surrounding the development and planning of this type of housing, but those that become the accommodation pioneers of today may well be seen as the rescuers of the housing crisis of tomorrow.