Co-living, although not a completely new concept, has seen massive growth in the property industry over the past few years and I can’t really see that changing.
The concept behind co-living was born out of an increasing disparity between average property prices and average annual salary. Growth in property prices has been outstripping wage growth year after year for a long time now, this is the reason that most first time buyers are now 30 before they have saved enough to afford a deposit on their first property.
So we find ourselves in a position where, particularly in the capital, more people have to rent in order to be able to afford to live in an easily commutable location to the city. However, with increased pressures on the BTL investor market and the UK missing it’s annual house building targets every year, private rented stock is thin on the ground. This increased level of demand against a restricted level of supply has led to rental growth over the past few years which has put the dream of, even renting on your own, out of reach! Enter, Co-living
Co-living is the idea of private rented stock developed with the millennial in mind. They can be anything from 4 bed self-contained flats up to thousands of beds in one block. The idea is that tenants come for a hassle free, living experience in a communal environment, with all of their bills included. Tenants will rent a room and share with others they do not necessarily know. This obviously works out a lot cheaper than renting their own place and often provides more flexibility for the tenant, with shorter tenancy agreements available in some of the larger blocks.
Communal living on average would turn out to be around 60% of the price of renting your own one bed flat and paying all of the monthly costs that come along with that. In a market that is increasingly pricing your average worker out, it’s a breath of fresh air!
One of the bigger schemes which has garnered a lot of interest in the past year is “The Old Oak” a development held by a company called “the Collective” who have made a name for themselves in this industry. Tenants come for a sleek, stylish and affordable living experience. With 550 beds in total, the community is expansive and well served with 1,115 sq metres of restaurants, bars, gym, office space, cinema room and more, all on site.
The developer is able to achieve a higher price per sqft on his rental figures by charging per bed space and it’s cheaper and more sociable for this new tenant profile!
The “Old Oak” has recently been put up for sale for around £100m, but is yet to find a buyer. I believe the market is still trying to find where the risk profile sits on these types of investment. However, in the meantime, you can bet “The Collective” are sitting on a very healthy annual yield! Speak to Fresh Invest about ways we can make your investments work to their full potential.Back to news