Could tiny houses solve regional Australia's housing crisis?

Kylie Miller's tiny house being installed at her East Gippsland hobby farm. Photo: Kylie Miller
Kylie Miller's tiny house being installed at her East Gippsland hobby farm. Photo: Kylie Miller

Could tiny houses be part of the solution to regional Australia's big housing affordability problem?

In the second instalment of our Regional Housing Solutions series, the Australian Community Media property team explores the possible role of this housing type in improving affordability and asks what needs to change at a regulatory level for that to happen.

Missed any of the series? Catch-up below.

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What is a tiny house?

There's no strict definition of what constitutes a tiny house, but the form often touted by advocates as best-placed to tackle affordability concerns, and personifying the 'tiny house' ethos, is a house on wheels.

This type of tiny house is constructed on a trailer designed to road legal dimensions, according to the Australian Tiny House Association (ATHA).

ATHA president and design and planning expert Janine Strachan explained that they focus on representing moveable tiny houses on wheels and skids as this type of structure currently falls under a regulatory grey area in Australia.

"What we focus on [at the Australian Tiny House Association] is moveable houses. Not just those on wheels, but also skids [temporary foundations]. The reason being is because tiny houses come in all shapes and sizes, be it granny flats, prefab, accessory dwelling, but they are allowed currently to be lived in [under various planning schemes]," she explained.

The Australian Tiny House Association defines a tiny house as under 50 square metres in size. Photo: Kylie Miller

The Australian Tiny House Association defines a tiny house as under 50 square metres in size. Photo: Kylie Miller

Moveable tiny houses, by contrast, are classified as caravans by many authorities, posing a significant hurdle to their use as a permanent dwelling.

Fixing or anchoring a tiny house on wheels to the land can result in it being classified as a permanent structure, Ms Strachan explained, but that then opened up problems regarding building compliance.

"They've also then got to comply with the national building code, which is designed for [much larger] residential dwellings and because of the tiny houses are unable to accommodate the same requirements for stairwells, for example. The stairwell to get up to a loft in a tiny house is very different to the requirements for a stairwell in a regular house, for example," she said.

For this reason, the Association is currently campaigning for a national definition of what a tiny house is.

"There is no regulatory definition statewide or nationwide for what a moveable tiny house is and that is one of the key barriers [to wider adoption]," Ms Strachan explained.

How can they help affordability?

Moveable tiny houses remove the biggest barrier to affordability - needing to secure land on a permanent basis.

Do I think there is a role for tiny houses in solving housing affordability? Absolutely. We've got a housing crisis from east to west from, residential to farming areas.

Janine Strachan, President, Australian Tiny House Association

"The major barrier of housing affordability is land - often people cannot afford the land and then naturally housing is in addition to that," Ms Strachan explained.

"[Theoretically] the benefit of moveable tiny houses is that the owner can enter into a lease agreement or a license agreement for a period of time where the landholder provides them with access to the site, maybe provides them with water and waste collection and also therefore entering in to a time commitment."

Kylie Miller's tiny house incorporates a loft bedroom. Photo: Kylie Miller

Kylie Miller's tiny house incorporates a loft bedroom. Photo: Kylie Miller

Tiny houses also represent a substantially reduced construction cost when compared to full-sized residences.

Though they are not cost-efficient on a per square metre basis, their reduced size means they cost far less than than it does to construct the average new dwelling, which the Australian Bureau of Statistics pegs at around $320,000.

"On a price per square metre basis I would never say they are cheap but they provide people an opportunity to get into housing between $70,000 to upwards of $150,000," Ms Strachan said.

$70,000 might seem like a significant amount of money, but it's currently equivalent to around two-and-a-half years of renting in the Richmond-Tweed region of NSW.

This smaller outlay meant that tiny houses could be a realistic option for workers seeking an alternative to the traditional mortgage, according to Shannon Schultz.

Ms Schultz works at Fred's Tiny Houses, a company that sells trailers to tiny house builders and offers instruction courses for those looking to conduct a DIY construction.

Most of the time it's way more affordable than saving a deposit.

Shannon Schultz, Fred's Tiny Houses

She said that tiny houses represented a viable way of "getting off the rental treadmill".

Tiny house owners weren't subject to the whims of the housing market, interest rates or being forced to remain in the one location, Ms Schultz said.

"[People can say] we've got everything we need, if we need to go we haven't lost our investment," she said.

Tiny houses also represent an efficient way to keep members of the extended family in the community, be they younger members who would otherwise be priced out or older members looking to downsize.

"Your whole community is there so it would be really nice to stay in place and have an independent living option. [Tiny houses] allow for increasing density without needing to build and subdivide," she said.

Dr Heather Shearer, a research fellow at Griffith University's Cities Research Institute has researched tiny houses extensively.

She agreed that the housing type was an excellent way for regional councils to rapidly densify the middle ring suburbs of major population hubs.

"It's a really quick way of densifying without adding additional infrastructure," she said.

But Dr Shearer said that the lack of regulation surrounding tiny house constructions also represented issues over financing and achieving affordability at scale.

"I think if it were more regulated in terms of building council or councils, maybe that would make the banks more likely to tailor products for them," Dr Shearer said.

"The lack of building regulation is also holding back more people from investing in them. [More investment] means more demand and the more demand for something the cheaper it generally is," she said.

Ms Strachan said while tiny house owners were unable to apply for a traditional loan, tiny houses could potentially be asset financed, although this would likely attract higher interest rates than a mortgage and require a shorter repayment term.

Dr Shearer also said that for those already facing housing stress, stumping up $70,000 or qualifying for finance was an unrealistic prospect.

"One issue with tiny houses on wheels, is you think of the gorgeous things you see on Instagram which are quite expensive and you don't mention the fact that a lot of people who have issues with rental affordability can't afford them anyway, so they tend to live in converted buses or similar," she said.

Regulatory issues a major barrier to more tiny houses

Perhaps the biggest problem arising from the lack of regulation for those who can afford to construct a tiny home, or manage to secure financing for one, is finding a place where stability of tenure is guaranteed.

"In many areas across the country tiny houses could provide an opportunity for a secondary dwelling for anywhere where there is secondary land use but the issue is that there is no recognition of tiny houses in any of the planning frameworks in any of the states," Ms Strachan said.

A lack of planning clarity has meant many tiny houses are situated on rural blocks. Photo: Kylie Miller

A lack of planning clarity has meant many tiny houses are situated on rural blocks. Photo: Kylie Miller

The classification of tiny houses as caravans meant that in some jurisdictions residents would only be permitted to occupy their house for a certain number of days, if at all, with restrictions varying wildly between states and local government areas.

"For example, in NSW the local law allows people who are members of a household to occupy one caravan on a residential property. That definition of household is very unclear and they are only able to live in a caravan which is on the site if it's a residential area and not in rural properties," Ms Strachan said.

Even then, there could be no exchange of money between the tiny house occupant and the landholder.

"That's really short sighted because most people want the exchange of money and the housing crisis is not only in urban areas'," Ms Strachan said.

Restrictions in Victoria vary significantly.

For example, in the Yarra Ranges Council, caravan dwellers don't require a permit at all, although it is an offence to live in a caravan "in a manner which causes a nuisance".

In Mount Alexander Shire Council, tiny house occupants can remain in one location without a permit for six weeks, before needing to apply for a permit for six months. This permit can then be renewed in six month increments for up to two years.

Such variability in permitted tenure meant that tiny houses were an unsuitable living arrangement among those who need it most, Dr Shearer said.

The people who are at more of a risk of housing issues are older people, older single people, and single parents. They don't want to invest $50,000 on something they don't know they'll be able to stay in long term.

Dr Heather Shearer, Research Fellow, Griffith University

This murky regulatory situation had led to many tiny house owners living "under the radar" according to Ms Strachan.

"Nobody has a clue how many people are living in a tiny house because there are so many people living under the radar," she said.

This out of sight, out of mind mentality had perverse outcomes for the environment and mobility, according to Dr Shearer.

The problem with tiny houses [under current planning schemes] is they have to live in rural areas, because that's where they get away with living in them permanently," she said. .

This compounded issues of economic inequality, as it pushed tiny house dwellers further away from urban centres and the jobs and public transport connections that come with them.

What's it like to live in a tiny house?

Kylie Miller and husband Brett live part-time in a tiny house situated on a ten acre hobby farm in East Gippsland.

They had been deciding what to build on the block when the Black Summer bushfire hit the region.

"We didn't have a house so we didn't lose a house but we lost all of our infrastructure," Ms Miller explained.

The couple saw the trailer, which had been built and lived in by somebody who was assisting in the bushfire recovery, for sale on a trip to the block.

They purchased it for around $60,000.

"In the end we decided that was a really good short term solution while we figured out what the long term solution is... In the end we love it so much that it may be our long term solution," she said.

"It's not huge, it's on the smaller end [but] it's beautifully appointed inside - there's pine looking oak everywhere. It's got a bathroom, it's got a full working kitchen and its got an oven.

Ms Miller's tiny home was purchased for around $60,000. Photo: Kylie Miller

Ms Miller's tiny home was purchased for around $60,000. Photo: Kylie Miller

"It's got a loft bed so you go upstairs to the loft. It's not as basic as some of the basic ones," she said.

The couple are planning to invest in an off grid battery system and are considering a composting toilet, although the camp toilet system they currently use is sufficient for now.

Ms Miller said the tiny house was ideal for the pair, who use it as a weekender, but cautioned that tiny home living requires sacrifices.

"It wouldn't be for everyone because it is a little bit crowded. You are on top of each other, especially if it's raining.

"For us we'd struggle [living there fulltime] because we both have stuff and we both like stuff and I work for home... If we were going to do the tiny house thing full time we would need to be in a different stage of our lives, we'd get a bigger tiny house, somewhere where visitors might be able to sleep."

This story Could tiny houses solve regional Australia's housing crisis? first appeared on Newcastle Herald.