Co-living finds its footing as UK rental supply tightens

Co-living is beginning to look less like a niche experiment and more like a structural feature of Britain’s urban rental market.

Research from Savills indicates that around 9,000 co-living units are now operational across the UK, with a further 5,500 under construction. While modest compared with the scale of the wider private rented sector, the trajectory is notable. Delivery is accelerating at a time when traditional rental supply remains constrained.

Rents have risen sharply. Savills reports that rents across London and the so-called Big Six regional cities have increased by 43 per cent over the past three years. At the same time, rental stock is estimated to be around 15 per cent below 2019 levels, reflecting a combination of landlord exits, higher borrowing costs and regulatory change. In London, the private rented sector contracted by 3.5 per cent between 2021 and 2023, marking the first meaningful decline in decades.

Against this backdrop, co-living’s proposition has become clearer. Opening rents in London schemes range between £1,550 and £1,750 per month, based on a sample of 11 operational developments comprising more than 2,700 units. On the surface, that places the model broadly in line with the cost of renting a room in inner London house shares, or a one-bedroom flat in parts of outer London once bills are accounted for. The difference lies in structure. Co-living typically offers self-contained studios, shared amenity space and all-inclusive pricing, which can reduce volatility in monthly outgoings.

Demand is concentrated among those aged 20 to 40, including international residents and early-career professionals. Cities with strong graduate retention rates have emerged as core markets. London retains close to 59 per cent of its graduates and sees roughly 158,000 enter the workforce each year. Manchester and Birmingham display similarly robust retention dynamics. For a cohort accustomed to purpose-built student accommodation, the shift into professionally managed co-living can feel like a continuation rather than a step down.

From an investment perspective, the sector is increasingly viewed as a sub-category within the broader build-to-rent market, which now totals more than 106,000 operational multifamily homes nationwide. Institutional capital has begun to engage more directly, although transaction volumes remain relatively thin given the development-led stage of the market. As schemes mature and operational performance data deepens, pricing benchmarks are likely to become clearer.

Policy remains a determining factor. In London, 23 boroughs have adopted or are developing specific positions on co-living. While some have introduced tighter controls, most remain supportive, recognising the role the model can play in alleviating pressure on overstretched rental supply.

Co-living will not resolve Britain’s housing shortfall. But as conventional rental stock shrinks and younger workers cluster in cities with strong employment growth, it is becoming a pragmatic response to structural imbalance rather than a passing trend.

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