Co-Living Investment Finance

In the UK’s competitive property sector, investors must maximise rental yields wherever possible whilst dealing with an undersupplied housing market. Historically, student housing and HMOs have helped investors maximise tenant yield within available spaces, but a new trend is beginning to emerge that presents opportunities both for investors and for people who want to live in a dynamic new way. 

Co-living is a new concept being introduced to the UK’s housing mix, offering an evolution of HMOs and similar shared spaces. Whilst the sector is still deliberating over an exact definition, a co-living property is one that usually combines private living quarters with large shared amenity spaces. 

As an investor, the concept of co-living is an attractive one – especially considering the total size of the sector has doubled since the COVID-19 pandemic. If planned correctly, you can finance and run a co-living property that maximises rental yield and ensures your tenants enjoy a higher standard of living – provided you can meet size requirements. 

The first recognised co-living space, The Collective Old Oak, offered rooms starting from 13sqm – but already appetite has changed the market and tenants now expect that standard co-living assets offer at least 18sqm or larger. We’d encourage investors to think even bigger, since local planning officials are current advising at least 35sqm as a minimum. 

Co-living is about far more than private bedrooms, however – it’s about offering a convenient living package for busy people who want to enjoy a sense of community and have easy access to vital amenities. Gyms, cinema rooms, saunas, terraces, large kitchens and more are all potential inclusions to consider. 

Obviously, developing this type of property incurs considerable costs. From development to equipment, you’ll need plenty of capital if you intend to enter this promising market. Rangewell can help investors get started by arranging finance with specialist lenders who are willing to embrace the new trend, which eliminates many of the barriers you might face when approaching lenders alone. 

If you’re interested in investing in a co-living property, speak to Rangewell today to see how we can get the finance you need to buy, build or convert a co-living investment property. 

What is co-living? 

Co-living is a new concept gaining traction in the UK, especially in busy cities where space is at a premium and workers look to combine convenient access to their workplaces with opportunities to socialise and build communities in their living arrangements. Ordinarily, a co-living home offers private quarters, shared amenities and all-inclusive living costs that include Wi-Fi, utilities and more. 

In London, co-living is gaining traction as both a short and long-term living solution. According to Savills, 37% of co-living tenants intend to stay for at least 12 months and 35% intend to stay for more than 12 months.

Between 2000 and 2022, the number of private renters in the UK has more than doubled – though there is still not enough housing to go around, even in the rental sector. As young people move into city centres to seek work opportunities, they are not able to purchase their own homes and therefore seek rental accommodation – but they do so with a new appetite that co-living supports. 

Unlike traditional rental units, co-living helps combat loneliness and fosters community. Co-living spaces that are well planned will help promote sustainable living and simplicity for tenant social lives – ensuring all of the bills and costs are rolled into a single payment and allowing tenants to have everything they need at hand. 

As an investor, you can get ahead of this rising trend early by planning your own co-living property. By providing adequate private living space to each tenant and investing in desirable amenities such as a home cinema or gym, you’ll be able to launch a popular new concept that will attract young, ambitious tenants. 

However, if you need finance to help achieve this vision, you may find the traditional lender’s market is hesitant due to a lack of understanding about this nascent idea. Fortunately, Rangewell are here to help.  

Investing in co-living property

To invest in co-living properties, you’ll either need to find an existing space for sale or convert another property. In both cases, you might need finance – though the approach will vary if you’re purchasing an existing property versus having to fund development. 

Either way, Rangewell can help you identify lenders that understand the sector and can support your plans. You’ll need to demonstrate a strong business plan and project idea to de-risk the investment for lenders, which means making sure you’ve got a well-researched idea and a clear concept in mind for the finished property. 

When considering a co-living property, you’ll need to assess the following:

• What area are you going to invest in? Co-living is popular in student and graduate areas, where there’s already a compressed housing market and major employers nearby. 
• How do you intend to develop the property? If you’re building from scratch you’ll need development finance, but if you’re buying an existing property you may need a commercial mortgage. Speak to Rangewell and we’ll help you understand the options. 
• How will you run the co-living business? Unlike more passive forms of property investment, co-living spaces tend to include a management team that can deliver events and entertainment programming as well as taking care of tenant requirements. Some landlords are instead exploring technology-led alternatives such as resident apps that allow tenants to report repairs and book services etc. 
• What pricing structure will you offer? Most co-living ventures provide all-inclusive pricing thatincludes rent, utility bills, Wi-Fi and more. 
• Will you be able to acquire planning permission for a co-living project? How will you communicate the value of the concept to your local planning office? 

The most important consideration, however, is that of cost. How will you finance your co-living property? Mainstream lenders such as Barclays, HSBC and Lloyds might be reluctant to invest in this new sector, so you might have to find independent providers or specialist teams. 

Talk to Rangewell and we’ll guide you through all of the potential options, as well as identifying which lenders will be most amenable to co-living property investment. We’ll discuss your application in detail and find the best approach for you, then negotiate a deal on your behalf to suit your requirements. 

Get ahead of this new development early by raising a co-living finance loan and developing your new space today.