Coliving vs HMO: What Actually Changes When You Call It Coliving

Under Part 2 of the Housing Act 2004 and the Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018, a property in England needs a mandatory HMO licence when it is occupied by five or more people forming two or more households who share a kitchen, bathroom or toilet. Nothing in that test refers to how the property is marketed. A five-bed coliving house is a licensable HMO on exactly the same terms as a five-bed house share.

Mandatory licensing is the floor, not the ceiling. Councils can and do operate additional licensing schemes that catch smaller HMOs, and selective licensing schemes that catch ordinary single lets in designated areas. Both are local, both change on their own timetable, and both carry their own fee. The only reliable way to know what applies to a specific address is to check that council's current scheme before you commit.

The Management of Houses in Multiple Occupation (England) Regulations 2006 sit on top of the licence and apply whether or not the property is licensable. They cover the manager's duties on fire safety, water and drainage, gas and electrical supply, common parts and waste. Operators who think of coliving as a hospitality product sometimes read these as a landlord concern rather than theirs. They are the manager's legal duties, and the manager is you.

Planning is the one place where scale creates a real distinction. In England, a dwelling shared by three to six unrelated people is use class C4, and the change from a family dwelling (C3) to C4 is permitted development — unless the council has made an Article 4 direction removing that right, which many high-demand boroughs have. At seven or more sharers the property becomes sui generis and always needs planning permission.

Above that sits a category that is unambiguously coliving rather than HMO: large-scale purpose-built shared living. In London, Policy H16 of the London Plan and its February 2024 guidance treat schemes of 50 or more private rooms with shared facilities as sui generis, route them through a viability-tested process, and expect an affordable housing contribution equivalent to 35% of units — 50% on public or eligible industrial land.

So the honest version is this: at house scale, coliving and HMO are the same thing in planning terms and the label changes nothing. At building scale, purpose-built coliving is its own planning animal with its own policy, and the HMO comparison stops being useful entirely.

The operating decision is about what you take on. A conventional HMO landlord lets rooms, keeps the property compliant, and leaves the day-to-day to the housemates. A coliving operator prices bills, wifi, cleaning, furniture and often events into one number and takes on the operational load that comes with them.

The premium is real, and so is the cost. In our own modelling across the buildings and brands we have run, the bundled inclusions — utilities, communal cleaning, wifi, consumables, furniture amortisation — routinely consume the majority of the rate premium before management time is counted at all. The margin does not come from charging more. It comes from occupancy and from turnover discipline: the same room let for eleven months rather than nine is worth more than any pricing change you can make.

There is a second, less visible difference. A coliving operator carries every empty night on their own P&L. An HMO let on a joint tenancy pushes that risk onto the group, who remain liable for the whole rent when one of them leaves. That is a meaningful transfer of risk and it is a genuine argument for the plainer model, particularly for a landlord with one or two properties and no appetite for leasing operations.

The Renters' Rights Act 2025 abolished section 21 no-fault eviction and assured shorthold tenancies from 1 May 2026, converting most private tenancies to assured tenancies with grounds-based possession only. Both models feel this, and the shared-house models feel it harder than single lets, because a shared house depends on the ability to remove an occupant whose behaviour is making the house unliveable for everyone else.

Practically, it moves weight onto the front of the process. Screening, written house rules that form part of the agreement, and documented handling of complaints stop being good practice and start being the mechanism you rely on. An operator who cannot evidence a complaint history has fewer options than one who can, and that is now true regardless of which model you run.