Co-living planning classification — C4, sui generis, and Article 4 Directions
Small-scale co-living houses (3-6 occupiers from 2+ households): C4 HMO use class. Change from C3 (dwellinghouse) to C4 is permitted development UNLESS the area is covered by an Article 4 Direction — most UK urban areas with significant rental markets have Article 4 Directions requiring planning permission for C3 to C4 change of use. Large-scale co-living (7+ occupiers): sui generis — planning permission always required. London Plan Policy H16 applies to purpose-built schemes of 50+ units: minimum 18 sqm per studio room; communal amenity space; no dedicated car parking; minimum one-year occupation.
- Article 4 Directions: cover most UK urban rental markets; planning permission required for C3 to C4 conversion in designated areas
- 7+ occupiers: always sui generis; always requires planning permission regardless of Article 4
- Purpose-built co-living investment blocks: check planning consent conditions (maximum occupation period; operator restrictions; HMO licence structure)
- New-build estate restrictive covenants: many explicitly prohibit HMO use or conversion — check title covenants before purchasing
HMO licensing, all-inclusive rent tax, and RRA 2025 compliance
Any co-living property with 3+ occupiers from 2+ households sharing facilities is an HMO. Mandatory HMO licensing: 5+ occupiers in 3+ storey property. Additional HMO licensing: many LPA areas require licences from 3+ occupiers. All-inclusive rent: the entire rent including utilities, broadband, cleaning, and social events is rental income — the costs of providing those services are deductible as business expenses. Street v Mountford [1985]: if a resident has exclusive possession of a private room, the agreement is a tenancy regardless of how it is labelled.
- HMO mandatory licence: 5+ occupiers; 3+ storeys in England — unlimited fine for unlicensed HMO; Rent Repayment Order risk
- Additional HMO licensing: check with LPA — many require licences from 3+ occupiers in designated areas
- All-inclusive rent: no distinction between accommodation and service elements for income tax — entire rent is rental income; services costs deductible
- RRA 2025 (England from 1 May 2026): co-living tenancies (exclusive possession of private room) are assured periodic tenancies; Section 8 grounds only; PRS Ombudsman and Property Portal registration required