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TRENDS: Rental sector you've never heard of is growing the fastest

co-lilving development

The co-living sector grew by 65% in 2023 - nearly 2,500 new beds - and looks set to treble to more than 20,000 beds by 2027.

This relatively new sub-sector of the private rented markets, which are usually fully-furnished upscale HMOs, boast a strong sense of community and premium amenities that allow landlords to charge higher rents. They also enjoy strong occupancy rates and resilience during economic fluctuations as well as high tenant satisfaction rates, according to Knight Frank’s Co-Living Report

The agency says co-living offers a more affordable option for private renters; in London, co-living rents are targeted at a 7% discount compared with all-in costs of living in other private rented sector accommodation, and a 14% discount relative to multi-family or 'build to rent' homes.

Knight Frank says the sector’s growth trajectory is impressive, with a fivefold increase in complete homes since 2019, and nearly £1 billion spent on acquiring or funding co-living developments since 2020. Although increasingly attracting investors, current delivery accounts for just 0.4% of the potential target market.


Oliver Heywood (pictured), partner in the residential investments team, says the surge in institutional interest in co-living is a clear indicator of the sector’s potential.

“As more investors recognise the value proposition of co-living, we expect to see continued growth and innovation in this space, particularly in urban centres where housing demand remains high,” he adds.

The report reveals that co-living appeals to a diverse demographic, with 72% of current residents aged between 26 and 40, many of whom are young professionals.

While London dominates with 74% of complete co-living development, Manchester, Liverpool, Sheffield, and Birmingham are leading the way in regional cities, thanks to their large and growing populations of young professionals, strong graduate retention rates, and expanding employment markets.

EXPLAINER: Difference between traditional and 'build to rent'

Traditional PRS: Traditional pirvate rented sector stock includes homesand is the largest part of the rented housing market and consists of both small-scale landlords with fewer properties and larger private landlords with extensive portfolios of non-purpose-built stock.

Build to Rent (BTR): Institutionally owned private rental homes that are professionally managed and typically purpose-built. There are three sub-sectors of BTR: MFH, Co-living and Single Family Housing (SFH).

Multifamily (MFH): MFH schemes are apartment-led and typically target young professionals in urban locations.

Co-living: Co-living provides studio apartments with extensive shared amenity spaces and a strong focus on community. Co-living typically targets single occupant tenants who may otherwise be living as sharers (e.g. sharing a home with friends or living in House of Multiple Occupation (HMO)-style accommodation).

Single Family Housing (SFH): SFH is for young families and those aged 35+ in 'hot', suburban locations close to employment opportunities, amenities and schooling.

Read more about the rise of co-living


Knight frank