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One Tiny Step Onto the Housing Ladder

Go small. That’s many Kiwis’ answer to the cost of housing in our cities. Amy Hamilton Chadwick investigates, to see if tiny houses are worth it.

8 October 2021

Autumn 21

Could you live in a house that’s below 38 square metres? Plenty of people have decided they can, opting for tiny houses as a cheap solution to a Kiwi housing problem.

They’re eco-friendly, portable and cleverly designed, and that’s why the tiny house movement has been gathering momentum since the global financial crisis of 2008. As housing costs have risen, so too has interest in tiny houses.

If you’ve been wondering whether tiny house life could suit you, Kyron Gosse, chairman of the New Zealand Tiny House Association, says they’re extremely versatile.

“They give you flexibility, freedom, and they have less impact on the environment. Tiny houses suit all sorts, from younger couples living on their parents’ lifestyle block to downsizing grandparents moving to be close to the kids.”

Gosse chose a tiny home because it gave him an affordable lock-up-and-leave base, and it frees up money for travelling and investing.

He also gets to enjoy a high quality of life on the North Shore, one of Auckland’s most expensive areas, at a fraction of the cost most others are paying. He’s parked on a friend’s section and thoroughly enjoying the lifestyle.

A tiny step onto the housing ladder

It’s possible to use a tiny house to get yourself into a traditional home, although you’ll need to run the numbers pretty carefully.

A new-build tiny house will usually cost around NZ$90,000 to NZ$150,000, although a do-it-yourself build can be much cheaper – and the sky’s the limit if you can’t live without gold taps or an inbuilt Italian coffee machine.

If you can pay with cash and find somewhere cost-effective to park, you could save thousands each month.

Island life

When Kate and Willem van den Bergh were struggling to buy a house in a rampant Auckland housing market, they decided to try something different.

They used savings and a family loan to build their 32-square-metre tiny house for NZ$96,700.

Using their KiwiSaver accounts and a loan, they bought a section on Waiheke Island for NZ$387,000.

Their tiny house went across the harbour on the car ferry and they put a concrete and steel foundation around it so it could be hooked up to power and water.

That work, with consents, cost just under NZ$80,000, including a septic system, stormwater and a water tank.

They’ve been living in the house for around three years, with son Leo arriving two years ago. Kate van den Bergh says it’s been easy to live there. “It’s amazing. It’s enabled us to save a lot of money and we’re now building a 95-square-metre house at the top of the section. We didn’t want a big house, because we know we don’t need the space.”

Once the family moves into the new house, they plan to use the tiny house for guests, and it’s still removable if they ever want to move it or sell it.

Borrowing to buy is costlier, because you’re taking out a vehicle loan rather than a home loan.

Rates start from around 8 per cent, and you’ll need to pay it off over five years. That’s what Gosse has done; he thinks it’s about the equivalent of paying rent.

Of course, after the five years is up, he’ll own the tiny house outright and have a big chunk of extra money each week to spend or invest.

Once your tiny house is paid off, you could sell the tiny house and use that money, plus your savings, to buy a piece of land or a regular home.

You can buy second-hand tiny houses for NZ$50,000 to NZ$120,000.

Tiny houses in your garden

A tiny house can be an affordable way to put a granny flat into your garden at home, at the beach house, or at your rental property.

It might be a way to support an adult child to move out of the house, or to provide a space for grandparents, or guests. You can potentially rent out a tiny house, or, more commonly, list it on Airbnb where they tend to be pretty popular.

You can also make money by charging people with tiny houses to park them on your land. You’ll make NZ$100 to NZ$200 a week, depending on where it is, and amenities. Websites like Landshare.nz and Tradeyourspace.co.nz match tiny house and caravan owners with those who have space to rent.

This isn’t a typical landlord situation and you’re not subject to any rental laws – it’s essentially a private contract situation, says Andrew King, NZ Property Investors’ Federation president and owner of cabin hire business Cabin King:

“You may provide electricity or water, or not. There may be a separate water meter. How will waste be handled? It depends on how the tiny home has been constructed and the arrangements between the two parties.”

Clear rules will help tiny houses proliferate

In February 2020, tiny houses were declared vehicles (rather than buildings) by the Christchurch District Court, meaning they don’t need to comply with the Building Code. This is a win for tiny house owners and helps keep the costs down.

Previously, councils around New Zealand had taken different approaches, leading to confusion.

“It does need the Government to get everybody on the same page,” says King.

“We need to avoid problems like the Resource Management Act, where councils interpret things differently and have different rules. They need to make it clear, because in essence tiny houses are a really good idea to increase the density in our big cities.”

Van den Bergh says interest is ramping up from people wanting to visit and asking about tiny house living. She isn’t surprised they’re popular.

“Housing and consents are just too expensive. The cost to build affordable housing is completely out of touch with the huge demand here in New Zealand and tiny homes are one of the answers to the problem.

“There are so many reasons why tiny homes and tiny home villages can be an effective approach. They’re a really good option for a lot of different generations.

“I would recommend this way of living.”

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