4 June 2019

The fast-growing tiny house industry is a step closer to becoming an official downsizing option, with an Australian-first move underway to recognise the dwellings under State regulations.

Tiny houses are defined by the Australian Tiny House Association (ATHA) as being moveable dwellings which are capable of being used for permanent accommodation and less than 50 square metres in size.

In effect, they are miniature and towable versions of typical suburban homes.

According to the ATHA’s vice-president Janine Strachan, the tiny house movement began in the United States following the global financial crisis of the late 2000s, when they became an affordable housing option for people who had lost their homes in the market crash. She estimated that tiny houses have been in Australia for up to eight years.

Downsizing.com.au can exclusively reveal the Victorian Government has now released a consultation paper which canvasses the idea of specifically defining and including tiny houses in the State’s regulation covering caravans and moveable dwellings. Feedback is being sought until 23 June.

“Tiny houses have been growing in popularity as people seek more affordable or sustainable housing options,” the consultation paper says.

“There may be scope to regulate some design aspects of tiny houses within the regulations if it were determined that the use of tiny houses as primary residences involves risks that are not addressed by the national standards for trailers and caravans.

“The regulation of tiny house communities – which are essentially similar to residential villages – could also be addressed in the regulations.”

According to Ms Strachan, the potential regulations are an opportunity to legitimise and grow the industry, particularly in relation to getting government support for new tiny house villages and allowing these houses to be located on vacant land.

The ATHA believes the Victorian Government to be the first State or Territory in Australia which is looking to define tiny houses separately to caravans under regulations relating to moveable dwellings.

About the tiny house movement

Ms Strachan, who is the owner of Tiny House Solutions, says the tiny house philosophy is grounded in both affordability and sustainability.

“People are doing this because it is a response to the unaffordability of the housing market  - they want something more than living hand to mouth through the mortgage - and they are also doing it because they want a smaller footprint on the earth,” she said.

Some tiny houses are linked to local power and water utility infrastructure, while others work entirely ‘off the grid’ (say with composting toilets and solar panels). Tiny house prices range from around $45,000 to $140,000.

Internal of Tiny House with bright colours (photo Tiny House Solutions)


Ms Strachan said tiny houses are different to caravans because they integrate far more easily into the urban environment, such as being used as granny flats for family members in the backyard. By the same token, the houses can also be towed to vacant land or into residential parks for a change in scenery or circumstances.

“Unlike caravans, tiny houses are built with accepted housing principles - they generally have laminated windows, higher insulation levels and cooking systems that don't always use gas,” she said.

However, Ms Strachan acknowledges that caravans are a better option than tiny houses for long or frequent ‘grey nomad’ style holiday trips.

Ms Strachan says the potential uses for tiny houses are endless. “They can be used for permanent accommodation, or an Airbnb income stream, or for grown up children saving up for their first home, or for grandparents, or as a studio,” she said.

External structurally insulated panel tiny house (photo Tiny House Solutions)


Regulatory challenges for tiny houses

While the Victorian Government potential regulation change is a good start, the tiny house movement continues to face many other policy challenges.

Local council planning regulations can be highly variable, and at times seek to discourage the permanent or even semi-permanent occupation of these houses. Ms Strachan said that, at times, it is not clear why these restrictions have been put in place.

Furthermore, like granny flats, taking rental income from a tiny house located on the family home could remove the home’s capital gains tax exemption. The Australian Government has however asked the Board of Taxation to look at taxation issues with granny flats.

As Ms Strachan and the team at the ATHA are working through these issues, they are still seeing high interest and ongoing growth in the industry. Ms Strachan cited that, only in March 2019, some 10,000 people came to a tiny house festival in Bendigo, Victoria.

“This movement is not going away and will probably increase further,” Ms Strachan said.

External timber tiny house (photo courtesy Tiny House 2 Go)

By Mark Skelsey, News Editor at Downsizing.com.au. Email Mark at news@downsizing.com.au