Some believe tiny houses could help solve the housing crisis. Photo / 123RF
By Krystal Gibbens of RNZ
Tiny house advocates say legislation, lending and land are prohibiting people from buying tiny homes.
Tiny House Hub founder Sharla May said there was “huge demand” for tiny homes, but complications appeared when people tried to make their dream a reality.
One of the main issues tiny homes owners faced was a lack of standards across councils, said May.
She compared the current system to people requiring different licences in different cities.
“Imagine having a driver’s licence in Auckland, moving to Hamilton ... and having to apply for a new licence in Hamilton. That’s exactly what the industry faces at the moment.”
The majority of people, she said, were facing inconsistency when talking to councils - each time talking to different people and getting different answers.
A few were even having trouble getting people from the council “to put anything in writing confirming if their tiny house [is] legal or not”, she said.
New Zealand Tiny House Association (THA) chairperson and Tiny House Builders Ltd owner Rebecca McLean said the THA would like to see a national standard created for tiny homes, so if people relocated from one location to another, council rules would be the same.
She said they just needed the support of someone in government.
Lending also presented a challenge for tiny home buyers, McLean said, as first-home buyers were unable to use their KiwiSaver.
Dave Tyrer, chief operating officer at Squirrel Mortgages, said that was because tiny homes were typically treated like vehicles, rather than houses, in terms of lending.
As a result, buyers are also unable to get a standard home loan.
Tyrer said there were “literally a handful of lenders who will lend on tiny homes”.
One of the biggest differences, Tyrer said, was tiny home owners often did not own the land. No land meant tiny homes had less security to put against a loan.
Tyrer said an asset such as a house would degrade over time, while “typically land doesn’t degrade”.
He believed the higher risk profile associated with a tiny house was what detracted banks from lending to them. Instead, he said most tiny house loans were treated like personal loans.
But those loans also come at a higher cost. At Squirrel, he said they typically lent at 9.95 per cent per annum - significantly more than the 6.5 per cent banks are charging for a mortgage in the same time period.
Not owning their land also presented tiny house owners with issues beyond lending.
May said it also presented issues around tenancy. Tiny homes on leased land aren’t currently covered by the Residential Tenancies Act, she said.
That raised a myriad of issues from how often the rent can be increased to who is liable for what. She said work needed to be done in that area.
McLean said finding land could also be challenging. But she said it had become easier with websites such as May’s Landshare, which connected those with land and those looking for it.
May hoped to see the issues around tiny homes addressed.
“It’s not for everyone, but there are a lot of people that want to live in tiny homes so … why are we stopping them?”
Tiny homes could assist in solving the housing crisis, said May.
McLean expected interest in tiny houses to continue to increase.
“People want to look at different alternative ways of living.”
But until the Government puts in legislation to make the process simpler and more accessible, barriers would remain for some tiny house buyers.
Reserve Bank says leaving banks to their own devices hasn't worked.