Tiny house living has become an increasingly popular trend in Australia in recent years, with many people opting for a minimalist lifestyle and more affordable homes. This trend is not surprising, considering that price increases have set records in the last few years. Even with interest rate increases and the recent dip in property values, Australian national property prices are still more than 18% above the levels seen before the pandemic. In fact, many think that the tiny house movement could solve the housing crisis.

Tiny houses have the added benefit of being mobile.  The lure of flexibility means that you could live by Bondi beach and then the next day move the house to a remote town in the outback or the forest.  Another advantage is that it fits with the minimalist living philosophy which is becoming increasingly popular.

Loans

Tiny houses are so affordable, to the point where the cost is equivalent to a typical deposit amount for a standard house. Even so, a loan may be required, and obtaining a standard home mortgage is more difficult for a tiny house. This is because it is not classified as a standard house. In Australia, if it is on wheels, it is classified as a caravan, so a caravan or motorhome loan is an option. There is also the option of a personal loan, although the interest rate is much higher.  

Tiny home builders have recently begun offering loans, so this should be part of your comparison research. Always obtain quotes from different providers, as their offerings can vary and this knowledge will allow you to negotiate the best deal.

The Builder

With the increased demand for tiny houses, so has the number of tiny house builders. As with any building company, you need to work through your criteria checklist to make the best decision. It is important to consider how experienced they are, by reviewing their online portfolio and inspecting their work in person. In person, you will be able to inspect their craftsmanship and the quality of their materials. Check whether they can cater to your customization requests, as some offer predesigned homes only and others will be able to offer various levels of customization. 

Find out their costs and how their setup works, if they will deliver it and set it up at the destination. Ask if they offer a warranty and if they have guarantees and how long these last. You will also want to ensure they are Australian certified and that they comply with the Australian building codes. Consulting with many builders will give you a good idea of which one suits your requirements. 

Financial Return

The major downside is that tiny houses do not appreciate in value. Just the land would appreciate. However, there are some advantages. The most beneficial aspect of this type of investment is the fact that they are much more affordable. Additionally, they cost less to run and rents are higher when calculated on a per-night basis. Keeping in mind the restriction of how many days per year it can be occupied, this would need to be taken into account when calculating rental income.

You may want to consider consulting with an expert to help calculate the numbers to ensure you are in profit. Assistance would help to ensure that you have taken into account all factors in your calculations. They can also help you compare a tiny house investment to other types of property investments, in case you would like some advice and reassurance on your property investment strategy.

Regulations

As mentioned above, tiny houses on wheels are classified as a caravan and thus are not subject to DA approval or any special permit to drive on the roads. The regulations vary across councils, so you would need to check the regulations for your area.  

There are some regulations that are Australia-wide. The house can’t be located in too close proximity to the neighbor or restrict the views of a neighbor. Depending on the state, there is a limited number of days per year that it can be occupied – for most local councils it is between 30 and 60 days per year. Many are surprised to discover that this restriction is in place, as their intention would be to purchase a tiny house for permanent living. From an investment point of view, it means that rental would be restricted to short-term periods. There are signs this regulation is beginning to change, with the Shire of Esperance in Western Australia recently approving a tiny house planning policy for a permanent living – the first local council to do so in Australia.

It is very important that the house owner seeks council approval to deploy the house on the land. Liaising with the local council can be quite an involved and challenging process. Being educated and doing your research will prepare you for this. You will want to know the regulations extremely well before proceeding with your investment opportunity.

Resources

One of the best resources is the Australian Tiny House Association. They have different membership levels, including a free membership option. They offer industry news, members-only offers, and access to the member's directory, which can all be extremely valuable in your tiny house journey.

It is also worthwhile joining Facebook groups that are dedicated to tiny houses in Australia. In Facebook, search “tiny house australia” and you will discover many groups you can join. One of these groups has over 71,000 members. This confirms the strong and active tiny house community across Australia.

In Summary

It is essential to do your due diligence when it comes to evaluating if a tiny house investment in Australia is the best investment for you. You will need to understand the regulations in your area and find the most suitable builder. The research process will require considerable effort, however, there is support available and an accessible active community.

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