Manchester is set to become the co-living capital of the North. With several large developments recently approved the city’s council has gone all-in on the new breed of private renting that tears up rules on personal space and affordable housing.
Victory for the co-living developers was hard won. Two of the most controversial developments, a multi-tower 2,224 bed co-living development on First Street near Hulme was delayed by a month and initially rejected by the council’s planning committee, while another 390 apartment co-living tower, dubbed T1, in Deansgate was rejected twice, both were then approved in late September.
So what really is co-living? Is it a new form of renting that builds community, as developers trumpet, or a just new product fitting into an increasingly broken housing market? The Meteor has a look into this new type of tower set to join the city’s skyline.
There is no standard definition of co-living accommodation. While not sharing bathrooms, it involves the same sharing of communal space; kitchens and living rooms with smaller bedrooms and expensive rents, similar to student housing. In short, co-living can be described as purpose-built and managed developments that include a combination of personal and shared amenity space.
Bedrooms can be clustered together inside flats or be multiple private studios. The real “innovation” of the model is that co-living projects cut personal space.
A quick internet search on co-living returns bundles of reports and articles by developers and real estate consultancy firms representing a gold rush like moment of profit-fuelled excitement. One report titled Coliving’s Moment describes co-living as a product “where location, convenience, community, and affordability are all maximized for the tenant, while revenue is maximized for the owner and operator.”
Co-living rents vary depending on amenities and levels of privacy, but in general, co-living spaces tend to cost at or near market rates. Because more areas are shared, property owners are making more money per square foot than they do from traditional housing.
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For some co-living is already being trumpeted as a solution to Britain’s endemic housing crisis. A report by the Social Market Foundation (SMF), funded by Barclays Bank and many other high profile blue chip companies, proposes co-living as a solution to decreasing opportunities for homeownership, especially among the young.
Since 2000, the average house price in the UK has more than doubled, rising from £102,000 in 2000 to £235,000 in 2020. Meanwhile, wage rises have stagnated and rarely kept pace with inflation. As a result, the ratio of house prices to an average worker’s salary (a key measure of housing affordability) has increased dramatically, rising from 6.3 to 10.5 over the same period.
Manchester has seen the highest spike in house prices of any UK city with housing prices currently inflating at more than 3 times the rate of London. Between 2014 and 2019 average rents have risen by 37.8% across the city. In Manchester housing is a rising market in which property developers and landlords are benefitting the most.
Despite this thinks tanks like SMF are still pushing for the next product which might both satisfy developers and plaster over a widening gap in incomes and affordable supply. However, a survey of existing co-living operators’ rents today suggests the product is not a solution for truly affordable housing but instead is offering a discounted premium product targeted at a specific subset of renters.
Co-living in Manchester
Property developer IQ Living, have a co-living plot already under construction on Echo Street near Manchester Piccadilly station. Consisting of three towers at 14 storeys, 20 storeys, and 25 storeys it will hold 242 student rooms and 642 co-living rooms. IQ plans to price rooms so that ‘almost half of the available rooms at Echo Street would be affordable to those earning up to £29,000 with over 80pc of the rooms affordable to those earning up to £39,000 pa. Not truly affordable housing then but a premium product aimed at graduates with well-paying jobs.
Manchester has one of the largest student and graduate populations in the UK and co-living developers aim to capitalise by providing a new product that sits between overpriced student digs and the possibility of future home ownership.
One reason for the rapid spread of co-living developments is that they occupy a poorly regulated gap in planning law. “Sui Generis” or “unique” developments don’t conform to standard housing classifications so get leeway when it comes to minimum living space.
Several Councillors have expressed disquiet about the rapid spread of co-living. Marcus Johns, a councilor for Deansgate Ward in which six co-living towers were approved, spoke strongly against them. Despite them being passed Johns said he had not come to a firm conclusion on co-living:
“It is an interesting debate – not least because a lot of ‘co-living’ happens in city-centre apartments and in family housing stock already – so I can see an argument similar to the purpose-built student accommodation policies around freeing up general housing stock for general use but I can also see arguments against, including how it fits in with host communities and its genesis in the American model of urban development. I think the Council’s policy documents are right to be cautious and to demand space standards are met.”
Dr Jonathan Silver of the University of Sheffield, who has carried out research on the lack of affordable housing being built by private developers in the city centre, took to twitter to criticise the approval of the T1 development in Deansgate and the First St development in Hulme:
While council policies have called for these minimum space standards to be met every co-living development passed so far has hundreds of rooms which break them.
One proposal by the Vita Group for two 32 and 36 storey co-living blocks, which The Meteor covered in July, and was initially rejected because up to 48% of the rooms were smaller than the National Described space standards (NDSS), meant to outline legal minimums of living space in housing. A single bed studio in either tower has only 18 sq metres of living space. It’s significantly less than national space standards which require 37 sq metres for a studio. For comparison, the average hotel room in the UK is 32 sq metres.
The most controversial project in Manchester was situated near First Street. It consisted of four towers ranging from 10 to 45 storeys holding 1,349 apartments, of which 870 were co-living micro-studios. Those marketed as “compact” squeeze down to a cosy 18 sq metres, while at least 35% of its rooms would be illegally small if NDSS guidelines applied.
One work around the NDSS standards which developers argued for was that studios would not be “permanent residences” and only rented for less than 6 months. Council planners went along with this caveat but what remains unanswered is whether these contracts could simply be renewed indefinitely.
In effect co-living offers student housing for adults replete with the same characteristics; high rents and smaller living spaces than any other tenure. Future Mancunians might have got off lucky, another co-living development in London dubbed “The Collective” rents studios with only 12 square metres of space.
So who are these companies pushing co-living? Co-living certainly bears resemblance to student housing in its size and marketing. Every developer currently bringing forward co-living in Manchester is also a student housing operator. All three companies set to build co-living developments in Manchester, Downing Living, VITA Group, and IQ Living (which started construction in May 2019) are also Student housing operators and own large Purpose Built Student accommodation (PSBA) portfolios.
For instance, the VITA Group also owns a multi-city spread of student housing under VITA Student. Their properties including a series of shiny towers at Circle Square near the All-Saints campus of Manchester Metropolitan University in which baseline duplex rooms go for at least £330 p/w and its 10th-floor “Ultimate Vita” apartments advertise for £482 p/w.
Downing Living also runs Downing Student which owns a national portfolio of student housing in most major UK cities while IQ Living, owned by the investment firm Blackstone also runs IQ Student which owns 66 student halls with 28,000 bedrooms. The UK is the largest market for student accommodation outside of North America valued at £50 billion. The rapid growth of PSBAs over the last decade can perhaps explain the fervor behind co-living. No-one wants to be the last player to reach the next “big thing”.
Co-living feels like a natural progression in an unbalanced market creaking under a lack of affordability. The property developer’s pitches to planning officers probably go “city rents too high? Then compromise on living space and then we will talk.” Untested in the UK we can already see the effects elsewhere. In Ireland co-living is similarly under-regulated, with Dublin having minute rooms no bigger than parking spaces with rents at €1,200 per month. Sinn Fein deputies have publicly pushed a bill that would ban co-living while developments have faced sustained opposition from local communities who fear being priced out of their homes.
Stephen Hill is a former-director of UK Cohousing Network, an organisation that connects Cohousing communities and publicises research on community housing, and has his doubts about the co-living model:
“Will the scale and pace of funds now being raised for co-living projects have positive or negative effects? There are clearly wide-ranging potential risks to the economy and governance of cities. It is designed to extract economic rent from weak market players. It transfers wealth from low and middle-income households to the already wealthy, even more efficiently than standard ‘build-to-rent’.”
Manchester is historically a city of firsts. Now it appears we are playing catch-up on a housing model that many are critical of due to its poor size standards and the high level of profit made at the expense of its tenants.
This article is part of the ‘Raising the Roof on Housing‘ series. The housing investigation theme for this series was voted as the winner of a shortlist by Meteor Community Members. To find out more about becoming a member – click here
To read other Meteor articles on property development issues in Manchester – click here
Feature image: composite image showing Echo St development on the left and First St development on the right.