How to Underwrite a Coliving Deal

Is the intended use permitted at this address? In England, three to six sharers is use class C4 and the change from a family dwelling is permitted development — unless an Article 4 direction applies. Two of the four UK cities in our cost index have removed that right citywide. Seven or more sharers is sui generis and always needs permission. In the US, the equivalent question is the unrelated-occupancy limit in the municipal zoning code.

Mandatory, additional and selective schemes are separate designations with separate fees and separate boundaries, and they change on their own timetable. Check the council's own live scheme rather than an aggregator, and note when the designation expires — a licence issued late in a scheme may not run the term you assume.

Measure every intended sleeping room against the statutory minimums — 6.51 m² for one adult in England — and against the amenity ratios that apply locally. In Toronto that is one bathroom per four dwelling rooms, which caps rooms at compliant bathrooms multiplied by four regardless of what the floor plan shows. This number, not the plan, is what you model.

Licence fee plus planning application fee where one is required. Across the UK cities we have indexed this runs from about £755 in Birmingham to roughly £2,486 in Bristol. It is small against acquisition and large against first-year cash, and it lands before any rent arrives.

Comparable private rooms within a genuine commute of the same employers or campus. Regional averages are context: the ONS puts West Midlands average private rent at £971 a month, which tells you very little about a specific street. Model the achieved rate rather than the asking rate.

UK coliving demand thins from late May to mid-August. A building averaging 90% across a year is often running low eighties in July, and if your debt service is level and your covenant is tested quarterly, the trough is what matters. Two to three points of annual occupancy movement is normal — the largest UK student operator went from 97.5% to 95.2% in one year with two decades of leasing history behind it.

A first building in a market where you have no brand does not fill on the timeline a spreadsheet assumes. Our planning assumption is 45–70% average occupancy across the first six months, and that the revenue lost in ramp-up should sit in project cost rather than being treated as a delay.

Take the lawful bed count, the achieved rate, the trough month and a five-point occupancy fall, and see whether the deal still services its obligations. If it only works at the base case, it does not work — you have found a building that requires everything to go right, which is not an investment thesis.