Across all areas, people are seeking to accomplish more with less, more than ever before. Sustainable and affordable have become synonymous with wanting to achieve a de-cluttered, light-footed lifestyle, where the strain of incoming utility bills and high mortgage repayments is also muted.
It’s a somewhat utopic scenario for current households that have fallen into red. According to the Reserve Bank’s interpretation of data gathered by the Australian Bureau of Statistics (ABS), in December 2018, household debt was at 189.6% of disposable income, and housing debt also at a record-breaking 140.2%.
In rolls the tiny movement; a compact and mobile home on wheels that doesn’t require a substantial loan with the bank.
In 2018 there were about 200 of these scattered around the country, according to the Australian Tiny House Association. Whilst some are owner-occupied, others are generating a stream of income for landlords, and for the land owners who sign-up to host them.
“The cost of living in a tiny house is definitely much lower than that of a normal house. Our tiny houses cost about USD $60k each, and comes fully furnished and equipped with a kitchen, restroom with hot shower facilities, and all the necessary electrical appliances,” says Adam from Tiny Real Estate.
“As time went by, the tiny house movement eventually evolved from an alternative housing option to become a minimalist way of living.”
When one resides in a house that can measure anywhere less than 15 square metres, there is more reluctance to dip into a consumer mindset because of the limited amount of space available.
Katherine Leong, director of tiny home advocacy organisation Tiny Non-Profit, says less materials to build, less energy and less storage means “the financial benefits are huge”.
“This is especially relevant to people who often struggle to enter the property market, such as first home buyers who can save or even build their own home as their first entry point,” she says.
The movement has also become the next step to thoughtful, responsible living, especially relevant to younger demographics, who are now increasingly making decisions with the environment in mind.
“Couple [producing less waste] with the use of solar panels to harness the power from the sun, the use of composting toilets and rainwater collection and filtration system, and this becomes an even more eco-friendly housing alternative,” Adam says.
How much does a tiny home cost?
When compared to the major-city dwelling, the price of a tiny home speaks for itself. As long as one is ready to manoeuvre around a few pokey spaces, in the great outdoors, disposable income may be better tapped into.
“I believe with the addition of wheels to the tiny houses makes it a very mobile housing solution as well. Imagine living near to the beach in one year and then in the middle of the forest the next and immersing yourself in different sights and sounds in different parts of the country,” Adam says.
“The maintenance and upkeep of a tiny house is much lower as well due to its relatively smaller size and also because of the way we have designed and built up the tiny houses.”
An advanced panelling system means a tiny home differs greatly to the costs and work needed to replace an entire wall of a standard-sized home. Rather, if there is any wear and tear, the house is thoughtfully designed for each panel to be individually replaced without having to tend to the whole exterior cladding.
And with more advanced technologies in the pipeline, Adam says tiny houses will only become more sustainable and comfortable for occupants, whether that means a faster production rate or the installation of smart home technologies.
“The prices of tiny houses might also become more affordable in the future due to the economies of scale in production,” he says.
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Is a tiny home a good investment?
A tiny home may not appeal to everyone as a permanent abode, although many families have built comfortable and adventurous lives within their walls. But their financial potentials are not to be boxed-in, being just as rewarding from a distance.
“For landowners or investors, they can potentially build a sustainable source of secondary income from listing their tiny houses out on major booking platforms and renting them out to locals or tourists,” Adam reveals.
Big Tiny, the brainchild of likeminded Singaporean entrepreneurs, has expanded such a concept.
From having first opened its doors in 2017, there are now a handful of tiny home owners and land owners signed to their books – and all earn an income from the tiny market, whilst addressing issues of a bigger scale.
Co-founder Jeff Yeo explains how it all started: “A desire to offer the city dweller a chance to experience the perfect escape from a hectic, digitally-laden lifestyle, and enable anyone to have a part in this new way of living.”
“We also wanted to give back to the Australian community, by providing the farmers, who are otherwise very dependent on the weather for their revenue, with a sustainable source of secondary income by hosting our tiny houses and entering into a profit share arrangement with our company,” he says.
In this way, tiny homes go far beyond existing as an alternate lifestyle option. They’re a dark horse, filling in the gaps in both rural and urban spaces, in their own unique way.
“The movement is being motivated by the economic climate, but it is also being pushed by environmental factors and a shift in values,” says Leong from Tiny Non-Profit.
People are becoming less interested in materialistic possessions and more enthused with spending their time and money on experiences, she adds.
“In addition to being more affordable, tiny houses are one of several ways we can address the growing demand for housing in our Australian cities. Local councils keen on increasing density are starting to explore how they can enable more tiny houses on private properties that may be available for rent to contribute to this objective.”
How can a landlord or land owner generate a profit from a tiny home?
For city dwellers interested in venturing down a tiny pathway, eco-tourism lease platform Tiny Away, a partner company of Big Tiny, offers two strategies.
“In our sale and leaseback scheme, members of the public can choose to buy the tiny houses from us and thereafter lease it back to us, for us to deploy on our land partners’ lands. Tiny Away will then manage their tiny houses for them and in exchange, pay them a fixed lease rate per annum, that is disbursed on a monthly basis,” co-founder Yeo explains.
On the other end of the spectrum, for land owners interested in hosting a tiny home through Tiny Away, a profit-share arrangement will eventuate, whereby the landowner receives a cut of the rental yields. In return, landowners will welcome guests, introduce them to the greater property and clean the tiny house once guests check out.
A landowner signed with Tiny Away says hosting a tiny home has been a rewarding venture.
“We have loved every minute of land hosting with Tiny Away. It’s a great concept. It’s easy to manage and gives us a little more income to be able to do more things around our property to keep improving it,” they say.
“We are now at the point where our property is working better for us.”
Any costs associated with tapping into a land partner’s power and water grid are calculated into the rental rates, Yeo explains. But how can you qualify as a host?
“As a general guideline, the things that we look out for include the scenery onsite, the activities that they can offer to our guests on site and around the region, and also how hospitable the host is,” he says.
Interested buyers can also purchase a humble abode through Tiny Real Estate; the one-stop shop for everything related to tiny homes, including floorplans, trailer bases, and the raw materials required to build one.
“They can browse through the tiny houses that are available on our website and our customer service team will get in touch with them to further understand their requirements, or if they want to do certain customisations to their tiny houses,” Adam says.
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What are the laws surrounding tiny homes? And what needs to be done next?
One of the most unique features of owning a tiny home is in the flexibility they provide. However, despite their cost-saving benefits and potential to remedy national trends, the regulatory framework surrounding them is albeit slow to catch-on.
“Tiny houses are still considered to be caravans and regulated as caravans in most shires. We have seen better support for the tiny house community in recent years as there are more and more people embarking on the journey, and also more and more people who are becoming more eco-conscious,” Adam says.
Whilst their investment worth rests in their ability to generate rental income and increase the value of a residential property – especially if the tiny home is stationed in a generous backyard space in a suburban area – it can be, however, more of a logistical nightmare if the council instructs it to vacate.
“For [Tiny Away], we are always looking at long term partnerships whenever possible, but the unique point about our tiny houses is that they are all on wheels, hence should there be a situation whereby we have to move our tiny houses, it can be easily facilitated,” Yeo says of the holiday rentals.
“As a rule of thumb, we do advise our land partners to seek approval from the local councils before we deploy our tiny houses on their lands.”
But with councils taking more of an interest in how best to tackle urban density, and with people’s values shifting, such as in how they prefer to live and work, regulatory change is a card that could soon be drawn.
Leong says poor management can lead the council and local residents to complain about a tiny home on a residential plot, which can then ultimately send it packing.
To refrain this from happening, the Tiny Non-Profit director offers a few tips to prospective owners: “Do your research; start the conversation early with your local council; get neighbours on-board with a tiny home being on the property; ensure the build is a quality build, and is not unsightly or dangerous; and ensure all systems are appropriate for the area.”
Sanitary and water management also needs to be well thought-out and communicated in advance, she adds.
“There are no consistent standards for tiny houses yet, and this would certainly help councils and regulators if there was a national standard.”