A notable change within the draft Plan is the removal of a dedicated co-living policy, currently London Plan Policy H16. Instead, the requirements relating to co-living are now dispersed across new Policies HN3, HN5 and HN9. While these requirements have been simplified compared with the existing Policy H16, they remain broadly consistent with the Greater London Authority's (GLA) LSPBSL guidance, despite not being referenced, with two subtle amendments.

The first relates to accessible accommodation. The draft Plan prioritises wheelchair-accessible units at ground-floor level, allowing provision on upper floors only where buildings contain two or more lifts. These units must meet Part M Volume 2 standards and have access to wheelchair-accessible kitchen facilities on the same floor. This differs from the current guidance, which promotes distributing accessible units throughout developments in the most convenient locations, and in close proximity to communal kitchens and shared amenity spaces.

The second amendment concerns cycle parking. The draft Plan proposes a reduction in long-stay cycle parking standards, broadly aligning requirements with the GLA's Support for Housebuilding London Plan Guidance. Revised standards would require between 0.5 and 0.7 cycle parking spaces per bedspace across Bands 1 to 4.

More broadly, the Draft London Plan acknowledges the significant challenges facing housing delivery and introduces a welcome change by allowing co-living schemes to access the same affordable housing threshold route available to conventional residential developments. This represents an improvement on the GLA's emergency measures, under which co-living developments were excluded.

A missed opportunity?

The Plan introduces bespoke affordable housing approaches and options for conventional residential development, Build-to-Rent (BtR) schemes and purpose-built student accommodation (PBSA). However, there is no equivalent flexibility provided for co-living developments, except for the different boroughs’ thresholds. Instead, the Plan continues to require co-living schemes to provide either on-site conventional affordable housing or a payment in lieu.

In the same way that Policy HN3 provides alternative affordable housing pathways for PBSA developments, why not allow co-living schemes to deliver affordable housing through a more flexible range of options? These could include on-site conventional affordable housing, discounted market rent (DMR) co-living accommodation, or a hybrid approach combining DMR provision with a payment in lieu. There are successful examples of operational DMR co-living already in London at Folk Sunday Mills and the Apiary in Ealing, both consented prior to London Plan Policy H16 and the latest GLA LSPBSL guidance. DMR co-living could add further housing choice for Londoners and, in particular, for key workers. 

Market evidence backs the case for greater flexibility

The case for greater flexibility is strengthened by current market evidence. Research by Savills shows that co-living development starts frequently exceeded BtR starts between 2021 and 2024.

Since 2025, however, both sectors have experienced a significant slowdown, highlighting the viability pressures affecting all types of residential development across London.

While the BtR sector has shown signs of recovery, with rolling annual starts increasing by more than 100% from their low point in Q4 2023, co-living development has experienced a much sharper downturn. Rolling annual starts have fallen by approximately 85% from their Q4 2023 peak, based on Savills latest data. This trend indicates that, although there is a growing pipeline of approved co-living schemes across London, many are not progressing to construction. Savills data indicates that there are just over 16,000 co-living units consented which have not yet started on site, as of July 2026.

The principal barrier is viability. As with other forms of residential development, co-living schemes face rising delivery and construction costs, funding constraints and broader market uncertainty. Significant payment-in-lieu requirements can further undermine deliverability and restrict investment in new schemes. If a site cannot feasibly accommodate on-site conventional affordable housing, there is no other option, as exists for BtR or PBSA, where DMR or a hybrid approach can be adopted.

The need for a policy framework that supports delivery

Co-living faces many of the same commercial challenges as other residential sectors.

The Plan already encourages boroughs to adopt a supportive approach towards the BtR sector, recognising its ability to diversify housing supply and the fact that it is less exposed to market absorption rates. Likewise, it acknowledges the importance of PBSA in meeting London's student housing needs through clearly defined targets. Arguably a similarly positive and proactive approach should be applied to co-living, recognising its contribution to housing choice, housing delivery and diversity of tenure across the capital.

The current London Plan counts communal and shared living accommodation towards housing targets on the basis of a 1.8:1 ratio, with 1.8 bedrooms or units equating to one home. The government's Housing Delivery Test guidance also confirms that shared accommodation can contribute towards housing delivery metrics.

Given this established position, the Draft London Plan should provide clearer and more explicit recognition of the role co-living can play in helping London meet its housing targets. Particularly given the data on fast lease-up rates, and even in some cases waiting lists, for operational schemes in London shows there is a significant demand in the market for this type of housing.

At a time when housing delivery remains under significant pressure, supporting viable and deliverable forms of housing that the market is in need of should be a key priority. Co-living is one such housing model and should be afforded the policy support necessary to realise its full potential in contributing to London's housing supply.

Further information

Contact Mark Thomson or Fergus Wong