This study explores the role that co-living could play in increasing homeownership for first-time-buyers in the United Kingdom – particularly among those in younger age groups living in urban areas.
Co-living refers to housing models where individuals have a private housing space, but also have access to a range of communal facilities such as shared living areas, dining spaces, gyms, gardens and cinema rooms. The private housing space would be a self-contained flat or house, or, as has recently been the case in co-living developments, a micro-studio flat or room. The types of communal facilities on offer could also vary drastically, catering for a range of budgets. For example, lower-priced co-living developments may not contain relatively luxury facilities such as cinema rooms.
Recent years have seen the emergence of small rooms/studios in co-living spaces that can be rented in London and other global cities, such as New York, San Francisco and Beijing, through organisations such as The Collective, Roam and WeLive. Other co-living developments, for example Munksoegaard in Denmark, offer larger private housing space but relatively minimal or basic communal facilities.
“To buy” co-living spaces could bring with them a number of benefits:
- Significantly lower purchase costs. By compromising on space, individuals would be able to acquire property in a relatively expensive urban area such as London, at a significantly lower purchase cost than a conventional home. Communal spaces, such as lounge areas and shared laundry facilities, will reduce individuals’ private space requirements.
- Enabling individuals to get on the property ladder (and build up equity) at a lower age and for longer. By offering a lower entry price onto the housing ladder, co-living could increase homeownership rates among younger age groups. Individuals would thus spend less income on rental payments over the course of their lives. If co-living units appreciate in value over time, they can also help individuals to build up additional housing equity.
- Financial savings for households through the “sharing economy”. A co-living space may be conducive to the development of a broader “sharing economy”, where individuals rent/borrow rather than buy items such as cars, power tools, bicycles, cooking equipment and crockery. This could translate into significant financial savings for individuals.
- Easing pressures elsewhere in the housing market. Co-living could lead to a more efficient use of the UK’s housing stock. For example, co-living developments could potentially curb demand for social housing. Co-living can also provide a compelling housing solution for individuals without children and free up larger, family-sized homes for those with children who require more space.
- Fostering communities and tackling loneliness. Recent research by the Office for National Statistics suggests younger individuals feel more lonely than those in older age groups[1], contrary to common perception that loneliness is predominantly a problem for the elderly. With co-living, interactions in communal spaces – such as in shared dining facilities, resident events, gym classes and/or lounge areas – can foster friendships, conversations, entertainment and ultimately community spirit.
We believe that several benefits of co-living – tackling loneliness, offering high quality communal services and encouraging sharing – make this a unique proposition among other affordable housing models such as shared ownership and “pocket living”, therefore making co-living a compelling alternative.
An Opinium survey of under 40s living in urban areas, commissioned as part of this research, suggests demand for “to buy” co-living spaces exists:
- Across the UK, 53% of survey respondents were willing to consider buying a co-living product, with 42% not willing to consider it (among those that do not currently own a home).
- The proportion of under 40s in urban areas willing to consider a consider a “to buy” co-living product was particularly high in London, with over 60% willing to consider such a product – likely to be a reflection of the difficulties associated with purchasing a “conventional” property in the capital.
- In terms of the communal facilities that individuals would be most interested in, in a co-living space, survey respondents under the age of 40 expressed the most interest in free private car parking (34% interested), followed by a gym for residents (30%), a swimming pool (26%), a kitchen/dining area (24%) and communal gardens (20%).
- In terms of the perceived advantages of co-living, the most commonly cited advantage among under-40s was lower housing costs (47%), followed by getting a first foot on the housing ladder (27%) and the ability to meet new people (21%).
- On average, to purchase a micro-studio flat om a co-living space, individuals would be willing to pay up to 60% of the price of a one bedroom flat in an area.
[1] https://www.ons.gov.uk/peoplepopulationandcommunity/wellbeing/articles/lonelinesswhatcharacteristicsandcircumstancesareassociatedwithfeelinglonely/2018-04-10
