What is coliving, a new real estate trend?
When talking about coliving, it's mostly about housing, combining luxury and comfort, where tenants have both their own private spaces and a common area to share with others.
This trend, a real niche in rental investment, ultimately allows everyone to save on rent.
What is coliving?
Co-living consists of sharing a property—commonly a house and lot or multi-bedroom apartment—amongst different residents (tenants). The rental is composed of private rooms for each resident and common spaces that encourage a sense of community between them.
This concept originated in the United States around the early 2000s, initially as a way to provide university students with adequate and proper housing when they couldn't afford to live in their university dormitories. Over time, young working adults also adopted this concept to help save money on rent.
Eventually, the aim of co-living is to create flexible living spaces with modern amenities, prioritizing comfort whilst highlighting innovation. Some co-living spaces even establish themes according to the specific interests and backgrounds of co-livers (people living in coliving).
In general, the average duration of the occupation of a co-living in France is 10 months. Therefore, it is not considered a short-term rental lease or tourist accommodations, but rather a standard long-term lease for furnished rentals as defined by the Law of March 24, 2014, more commonly known as the ALUR Law.
Who is coliving for?
Generally speaking, co-livers are those who are in need of a temporary home. There are no age requirements but they tend to lean on the younger side most of the time.
For example, a business traveler on a short-term stay in France. An expatriate who just moved to the country and doesn't have the means to acquire a principal residence yet. And of course, students who are studying at a university in France.
Moreover, it's also common for people who are having work done on their principal residences to stay in a co-living rental in the meantime.
If any of these situations apply to you, such as temporary accommodations or short-term housing, then you might want to check out what France's mobility lease is all about.
Spaces and services in coliving
- Private Rooms/Spaces
- Every tenant (unless they're a married couple) has the right to their own private room in a co-living property. If said co-living property is a lot, this can include a studio unit or small apartment with a private bathroom and kitchen. But for co-living houses and apartments, a private room has an average size of 17 square meters.
- Common Areas
- These are parts of a co-living home that anyone and everyone can use and have access to. They commonly are kitchens, living rooms, terraces, libraries, coworking spaces, entertainment rooms, gardens, terraces, etc.
- Services
- Professional-run co-living properties often include a wide range of services. They include high-speed internet, cleaning, supplies such as linen, streaming platform subscriptions, monitored parking, provision of bicycles or scooters, home insurance, maintenance, water, heating, etc.
What are the advantages of coliving?
For Tenants:
- Tenants can enjoy affordable housing, especially in big and expensive cities like Paris.
- Tenants also get to save on utilities bills such as electricity, water, heating, etc.
- They offer lots of flexibility, especially when it comes to the type of lease.
- The opportunity to meet and live with people who share the same interests.
- Enjoy the various amenities that co-living properties often have (i.e. gyms, libraries, entertainment rooms, etc.).
For Investors/Property Owners
- They can welcome multiple tenants at a time (which also means multiple incomes).
- The rental business will never go out as there's always someone in need of temporary and affordable housing.
- It's also a way to network and meet different types of people.
What legal framework and lease for coliving?
In residential homes, for example, a one-month resident's contract is only with the occupant. This short period is renewable upon the end of the lease.
Meanwhile, Law No. 89-462 of July 6, 1989, on public order applies to serviced residences to the extent of its own limited scope.
Two types of furnished leases can be concluded with the occupants:
- The Furnished Lease of Title I bis of the 1989 Law.
- The Mobility Lease in Title I ter of the 1989 Act (only applies to certain categories of tenants).
Outside the scope of the 1989 Law, a civil lease could be concluded alternately with a tenant who would make the premises available to their employees, only with the agreement of the owner/landlord.
What rent will be charged in a co-living?
In the context of leases under the 1989 ALUR Law, the rent is subject to capping and supervision depending on the location of the property, particularly when it's located in a tens area (i.e. big cities like Paris).
However, furnished rentals subject to Value-Added Tax (VAT) are excluded under certain conditions, namely under rent control (applicable in Paris).
The operation in serviced residences will make it possible to freely invoice non-individualizable services (personalized reception, service/technical staff, security personel, and common areas) in the same way as the rent.
On the rent receipt, owners/landlords are required to distinguish the amounts associated with rent, charges, and non-individualizable services. Billing for individualizable services may also be added.
Moreover, it is possible for co-living properties to apply for housing assistance just like any other accommodation.
If the building is coloving, is it subject to the regulation of establishments open to the public?
Co-living properties are not public spaces. They remain the private property of the owner and the principal residence of the tenants. With that said, there are certain conditions that can make co-living rentals subject to PRT. These include:
- If they are open to third parties, the owner/landlord will be required to operate and comply with strict safety standards.
- With regard to the category of persons accommodated, the accommodation of senior citizens would favor, for example, classifies as ERP.
- Co-living is a new real estate concept that's becoming popular in France.
- It's a combination of a shared apartment and a short stay in a hotel.
- In co-living rentals, tenants have the right to their own private spaces.
- The average duration of the tenancy in a co-living rental is 10 months.
- Co-living also offers various services such as concierge, internet subscription, access to amenities, and more.
- Coliving is aimed at people in need of a temporary home.
- Coliving offers several advantages such as flexibility, saving on rent, etc.
- Co-living properties are subject to the regulations of establishments open to the public to a certain extent.
- It is possible for owners/landlords of co-living rentals to apply for housing benefits
- The rent is subject to capping and supervision depending on the location of the property.
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Posted on 27/10/2022 by
Andy LECUYER
