Ahead of our UK Living Conference in September we sat down with Simon Scott, Lead Director Living Capital Markets at JLL, to get his insights on the current state of the UK living sectors—from investment trends to sectoral growth and the challenges shaping the market.
What’s happening in the UK living sectors right now?
The most active area at the moment is probably single-family housing. You can’t talk about the living sector without mentioning viability—particularly cost inflation, outward yield movement, and the impact of the Building Safety Act. These have made dense, apartment-led schemes more difficult to deliver, which is why single-family housing is gaining traction.
This shift is largely due to the fact that single-family housing avoids many of the regulatory and structural hurdles that come with multifamily developments. While cost inflation still affects all sectors, the absence of high-density compliance issues makes single-family homes more attractive to developers and investors alike. It’s a space where we’re seeing a lot of momentum and innovation.
Where is investment money currently focused?
Due to viability challenges, investors are turning to existing first- and second-generation housing stock—mainly multifamily, with some early interest in single-family and retrofit . Student housing remains active due to its running return, and later living and healthcare have bounced back post-COVID. Co-living is still emerging but offers density benefits that can help with development viability.
Investors have become increasingly cautious, and the ability to underwrite deals with more predictable outcomes is key. Co-living and student housing, in particular, offer higher density and operational efficiencies, which can help offset some of the broader market challenges.
What are the biggest issues facing the living sectors, and have they stalled activity?
Demand isn’t the issue—occupancy levels are high. The real challenge is the relative cost of funds. If you can earn 4% in the bank, you need a higher level of return to justify the risk. There’s also a disconnect between government expectations and the private sector’s risk-reward balance. Education around what drives investment is crucial. Developer and contractor insolvencies have added to the risk profile, making existing opportunities more appealing than new developments. But that doesn’t help solve the housing crisis—we need mechanisms to attract institutional capital into the sector.
There’s also a need for better communication between the public and private sectors. Initiatives like the Build to Rent Alliance (formerly the Build to Rent Task Force) aim to bridge this gap, but more work is needed. Without a clear understanding of the risks and returns involved, it’s difficult to create policies that genuinely support development. The sector needs a more collaborative approach to unlock its full potential.
Which sectors are set to grow in the short, medium, and long term?
Short to Medium Term:
- Single-family housing: Still lots of room to grow at scale.
- Co-living: Evolving and increasingly relevant as a small, affordable housing asset class, though local authorities are still catching up.
Medium to Long Term:
- Later living and healthcare: Driven by demographic trends—an ageing population and lack of bespoke housing products make this a strong bet.
- Student accommodation: Ironically, the youngest demographic is the most mature investment class. It remains a strong, institutionally backed asset.
These trends reflect broader shifts in how people live and what they need from housing. Co-living, for example, is adapting to changing lifestyles and affordability pressures, while later living and healthcare are responding to demographic inevitabilities. Investors are increasingly looking for thematic opportunities, and these sectors align well with long-term societal changes.