The trend towards co-living is sweeping the nation’s capital, with many young professionals choosing to live in an environment reminiscent of university years. An en-suite bedroom with access to communal kitchen, gym and games room sounds like a dream for many and can reduce the sky-high rental costs young workers otherwise face. Private living space tends to be tight. For many, it’s the social aspect that draws them in. In this university-style environment, it’s easy to meet new people but is co-living a long-term housing solution, or a quick fix for bright-eyed ex-students?

In providing guidance to London councils the Greater London Authority has recently acknowledged co-living as a form of housing, and since 2016 developers have submitted plans for over 1,000 new co-living units across London. Nevertheless, doubts over the practicalities of co-living spaces have been voiced by councils and the government. The lack of private space in existing developments is a significant concern, with many worried that London’s young people are simply being forced by economic necessity to live in very small flats, rather than choosing a new way of living as a result of social and emotional motivations. Regardless of these concerns, the popularity and prevalence of these developments looks set to increase. 

Investors and housing developers are understandably keen to capitalise on this trend. We recently published an article highlighting key tax issues that need to be considered during the planning process to avoid increased tax costs. In particular, what constitutes a dwelling for SDLT purposes and structuring the development to maximise recovery of input VAT. The key to avoiding nasty tax surprises is planning at an early stage, so developers considering co-living developments should take advice as early as possible. Get in touch if you want to know more!