London co-living spaces gaining popularity due to lack of affordable rentals
A lack of affordable housing in London has led to the development of co-living blocks, similar to dormitories, providing young professionals unable to get a foothold on the property ladder an alternative to cramped house shares. London's first co-living space near Willesden Junction contains 550 rooms with open spaces for socialising, a bar, a food-sharing night and yoga classes.

I ssy has just done her washing in a launderette filled with disco balls, and is about to nip downstairs for a spot of yoga in the spa after a stressful day’s work.

On her way down, she’ll pass a busy library, a cinema room slowly filling up, and a “secret garden” where residents will be chatting about the day’s events.

Welcome to a new generation of homes or “co-living” blocks that will be popping up across the capital over the next few years, attracting young professionals fed up with shelling out half their salary on a tiny room in a crummy flat in Zone 4.

Start-ups, seizing on the growing dearth of homes in London and in US cities such as San Francisco and New York, are kick-starting the latest property revolution for Generation Rent.

As I’m given a guided tour of Issy’s digs at Old Oak — London’s first co-living space with close to 550 rooms near Willesden Junction — it becomes clear that this dorm for grown-ups is a place for socialising.

There is a lobby straight out of the Hoxton Hotel with purple and orange sofas; a bar that opens onto an outdoor area overlooking the canal, and a huge space that’s still being developed.

There is a Game of Thrones night on Mondays (it’s the busiest event of the week), and a breakfast speaker series on Wednesdays in the spa followed by yoga in the evening. Special events last week included food-sharing on Thursday evening (bring a dish of anything) and a barbecue on Friday.

“A lot of people are really fed up of living in house shares of three or four people in London,” explains Ed Thomas, one of the community managers at Old Oak. “Many people have had a bad experience and they also pay the same amount and don’t get nearly as much.”

Thomas is one of the staff who will look after Old Oak residents. If a light bulb needs changing or the toilet won’t flush, you just call one of the community managers and it will be sorted in a flash. Residents of co-living communities are paying for the service as much as for the rooms themselves, which are on the small side. Old Oak is the first major co-living project by The Collective, a start-up launched in 2010 by former London School of Economics student Reza Merchant. It is also behind street-food hub Pop Brixton.

‘It’s not like we’re suited, grey-haired 60-year-olds who sit in a head office and build buildings’

It wants to target not just techie types but all young Londoners frustrated with renting in the capital. Thomas insists he doesn’t work for a property company. “We’ve got a young team that passionately cares about the problems we’re solving. It’s not like we’re suited, grey-haired 60-year-olds who sit in a London head office and build buildings. We all live here and are very involved.”

With prices starting from about £1000 a month, it may not seem that cheap. But the cost includes bills and access to all the facilities at Old Oak, and is far cheaper than new residential blocks set up by the likes of Quintain. Its Tipi complex next to Wembley Stadium costs from £1500 a month for a single room — and, Thomas would argue, it doesn’t have the communal aspect Old Oak boasts.

Like many start-up crazes, the co-living concept was born in Silicon Valley and began as an entrepreneur matchmaking idea, designed as a social network for start-up founders. The craze spread to New York and Boston where start-ups Krash, Pure House and more recently Common were all born, and it has now made its way across the Atlantic.

Soon The Collective, which is developing two further schemes in Canary Wharf and Stratford, will face competition. WeWork, the American office space start-up valued at $16 billion (£12.1 billion), raised $430 million in March to fuel its ambitious plans. The funds were primarily set aside to grow its office-sharing concept in Asia (the round was led by Chinese investors Legend Holdings and Hony Capital). But it is also currently trialling its WeLive co-living concept on Wall Street in New York and in Washington, where residents can organise their work and social schedules through an app (something The Collective is also developing).

It is no secret that WeWork, the world’s fifth-biggest start-up by valuation, is eyeing a similar space in London. Co-founder and chief creative officer Miguel McKelvey says it has not found a suitable plot here yet but confirmed a launch would come “soon”. McKelvey (left) thinks start-up phenomena Uber and Airbnb, two of the biggest success stories of the so-called sharing economy on which co-living is based, have “put people in a new mindset”. But he reckons there is still a way to go.

“It’s not that WeLive specifically is a solution but it can be a part of a solution to rethink people’s perception of what they need,” he says. “There’s still a cultural leap to make to say: ‘I need less stuff; I don’t need to own my own furniture’. If we are going to have greater [population] density, there are sacrifices to make.”

McKelvey plays down the importance of WeLive to the WeWork empire but leaked documents last year revealed it hopes the co-living venture will generate $606 million of revenues by 2018 — more than a fifth of the company’s overall turnover.

Common raised $16 million from venture capital backers last month. It has developments in Brooklyn, New York, and plans to branch out to San Francisco and Washington. It is unclear whether the cash just raised is earmarked for international expansion.

There is, however, already a black mark against the co-living sector in the States. Campus, one of the original San Francisco groups aimed at Mark Zuckerberg wannabes, closed its doors last summer, just two years after its inception, leaving more than 150 residents without a home. Founder Tom Currier claimed he was unable to make Campus into “an economically viable business”. Critics accused him of expanding too aggressively.

Sources in the property world say other start-ups are looking to learn from Campus’s failings and open co-living blocks in London. But the potential competition does not concern The Collective’s chief operating officer James Scott.

“I’m actually really excited about someone else doing it,” he says. “It’s only going to demonstrate the support for this as a product and educate the consumer that there’s a better alternative out there.”

That said, Scott and others are preparing to fly out to New York to snoop on WeLive’s operation there. They also plan to launch their own co-working concept within Old Oak to keep money pouring in day and night.

Aside from undercover spy work, they will be meeting potential investors interested in opening a similar space in New York with a vision to create a network of co-living buildings around the world.

“It’s not unrealistic to think we could open a place [in New York] in 12 to 18 months,” Scott says.

With the global co-living race under way, young Londoners will be hoping it translates into a race to the bottom for rent prices — but it may be several years before the fledgling concept helps to heal London’s broken housing market.