Tiny Homes - The Definitive New Zealand Guide

Please be careful before taking significant steps - the dream of living in a tiny home is not without significant financial risks. Our guide explains what you need to know.

Updated 5 September 2023

Summary:

With the soaring cost of property across New Zealand in the last decade and mortgage interest rates now over 7% p.a. it has never been harder for Kiwis to get onto the housing ladder. Even with a 20% deposit for a $500,000 home, we routinely hear of applicants being denied given the high repayment costs.
As those renting effectively end up paying someone else's mortgage, Kiwis are increasingly looking for alternative home ownership options between renting and buying a million-dollar property. This has led to a significant interest in tiny homes.
Embracing the tiny home lifestyle can be an exciting and fulfilling journey. With numerous benefits such as affordability, sustainability, and customisation, it's no wonder that more and more Kiwis are choosing to downsize.
However, Tiny Homes are not without their risks and many construction companies specialising in tiny homes have gone bust in recent years. For this reason, we suggest extensively scruitinising anyone you sign a contract with - the financial risks are significant if something goes wrong. Recent examples include the collapse of NZ Modular Homes, THT (NZ), Thermasol, NZHousing and Affordable Homes Construction, NZ Tiny Homes, Amazing Spaces NZ and Ready Homes all involve significant losses.
Before making a decision, consider the various factors that come into play. This includes finding a job that allows you to work remotely if you're in a rural area, and whether it's better to invest in a traditional home for the potential capital gains. Each option has its pros and cons in terms of risk, reward, and opportunity cost.
Resources beyond our guide include the New Zealand Tiny House Association and the Off Grid Living NZ Facebook group which are both trusted sources of information and support.

To help explain the options and considerations, our guide covers:

Know This First:

Depending on the local council, tiny homes often face zoning restrictions that limit where they can be placed or built. Some councils may only allow tiny homes in specific zones or prohibit them altogether. This can lead to difficulties in finding suitable land or parking spaces for tiny homes and potential legal issues if a tiny home violates zoning regulations. There are several other issues that limit the functionality of tiny homes:

Securing Land: One of the main challenges of tiny home living is securing land. Many subdivisions have restrictive covenants that may prohibit tiny homes. If you're considering a tiny home, it's crucial to prioritise obtaining land that you can legally live on before moving forward with your tiny home plans. The idea of owning a tiny home can be attractive due to the relatively lower costs involved. It is possible to get land and a tiny home for under $200,000 to $300,000.
Location: While you may find affordable land in rural areas, it's important to consider the implications of a longer commute. With rising fuel prices, the cost of commuting can quickly add up.
Cash Flow: If you're concerned about cash flow, it's worth noting that purchasing a regular house allows you to rent out rooms to flatmates, providing immediate cash flow. However, a tiny home might offer better cash flow in the long term due to lower maintenance costs and utility bills.

New Zealanders respond to our research:

Because of the risks, we posted this guide on Reddit in August 2023 - you can read the responses here, which include valuable insights.
One particular comment stood out: "(tiny hones) are great in theory, and the marketing is attractive with buzzwords like minimalism and sustainability thrown around. You're paying a fortune per square metre and don't even get freehold land to put it on. The hassle of dealing with leases, land-rent and councils all comes with it".
As did another - "Could we also start calling tiny homes what they actually are? They're mobile homes/trailers. "Tiny home" is just a 'boujee' and aspirational marketing term that glosses over the fact that they are portable trailers traditionally used by the poor and working class. I've noticed an aversion to using traditional working-class terminology in discussions about personal finance. Nobody wants to admit they work two jobs to get by and live in a trailer. Instead, they have a side hustle and live in a tiny home. I wonder if normalising these traditional terms and using them again could make people view their situations differently and more realistically".
And this comment is worrying - "I'm a member of the Off Grid Living NZ Facebook group, and the number of people that spend a significant amount of money having a tiny home built, i.e. $100,000+, and don't have anywhere to put it is shocking. There must be an assumption that there are very cheap sections or cheap land to lease on which to put it, so they don't start looking until their tiny home is almost completed.

What's an alternative to a Tiny Home? (as a first home purchase)

We argue that the best tiny home is a studio apartment. This is because it's likely to be located somewhere useful and have a saleable value.
One of the advantages often overlooked with studio apartments is that your body corporate costs are proportional to either the value or the square metre area of your apartment. So, a smaller apartment saves you money long-term as well as upfront. It also means your exposure to risk about maintenance and watertightness issues is far less than with larger apartments.
The downside of buying an apartment is that banks can be reluctant to loan money against them. But this also means you're not competing against as many buyers (compared to a house). Investors don't want apartments because they can't leverage them, and most first-home buyers struggle to get the equity for the deposit (which can be more than 20%).
Apartments are low in price relative to houses and allow you to pay it off faster, become 'mortgage free', and work toward a house purchase later on if that's what you want - an apartment gets you on the 'ladder'. However, there's not without risks if they're a leaky building or have a bad manager or leasehold problems.
You can get a fantastic apartment in a great building and avoid the issues with tiny homes. Apartments are also easy to look after and maintain because of their small size.

MoneyHub Founder Christopher Walsh shares his comments on what to do before going any further with a Tiny Home:

"It's critical to remember that connecting any services such as power, supply water, wastewater, stormwater etc. must be consented to, which requires time and money. If you have a kitchen in your tiny home, this will also require consent. Councils have become cautious around tiny homes - they don't want problems later on, and you'll need to be careful as there is online discussion about certain councils trying to catch tiny homeowners out when it comes to consents.

Beyond this, my suggestions are as follows:

Test the Lifestyle: Before committing to a tiny home, it's essential to test if the lifestyle suits you. Try living in a small space, such as your kitchen and bathroom, for several weeks. A tiny home might be right for you if you can handle the limited space.
Appliances: While some tiny homes may come with full-sized appliances, most are designed with space-saving features in mind. If you're considering buying a pre-built tiny home, be prepared to compromise on the size of your appliances.
Water Supply: Collecting rainwater is a viable option for a tiny home, helping you lower water usage costs.
Internet Connection: Consider alternative internet options like Starlink, which could provide high-speed internet access even in rural areas. While 5G might be a solution for internet access, consider the potential data caps and how they might affect your online activities.
Outdoor Space: Maximize the area outside your tiny home by creating an outdoor lounge and entertainment area, such as a deck or pergola, to extend your living space.
Hobbies: Be aware that a tiny home might not have room for hobby-related equipment and supplies. If having space for hobbies is essential to you, a tiny home might not be the best fit.
Try Before You Buy: Visiting and touring a tiny home before committing is highly recommended. This lets you get a feel for the space and decide if it's right for you.
Solo or Shared Living: Consider whether you'd be comfortable living in a tiny home with another person. Some people may find it more suitable for solo living due to the limited space.
Access to Services: In a tiny home, access to water, sewage, and power can be more challenging than in traditional homes. Off-grid living may require a chemical toilet, tanked water, and solar power.
Off-Grid vs. On-Grid: Off-grid tiny homes can be more challenging to manage regarding water and power supplies. On-grid living offers access to services but can be more expensive. Choose the option that best suits your needs and budget".

Christopher Walsh
MoneyHub Founder

What is a Tiny Home? Why Are They Popular? What Are The Different Types of Tiny Homes?

A tiny home is a compact, fully-functional living space that typically ranges from 10 to 40 square metres (the size of a small studio apartment). However, there’s no technical definition of a tiny home based on New Zealand legislation. These homes are designed to maximise limited space, featuring clever storage solutions and multi-purpose furniture (such as a Murphy bed). Tiny homes often utilise eco-friendly materials and sustainable design principles, making them an attractive option for environmentally-conscious Kiwis.

The main reason tiny homes are so attractive is the low entry price needed to get onto the property market. In addition, tiny homes generally cost less to build and maintain than traditional houses, making homeownership more accessible to many Kiwis.

Tiny homes come in various types and styles. The two main options for tiny homes are to have them “moveable” (e.g. on wheels) or immovable (e.g. have the home foundations bolted to land). The most popular types of tiny homes include:

Mobile tiny homes: Typically built on a trailer or a vehicle with wheels, these homes can be moved from place to place, offering flexibility and freedom.
Stationary tiny homes: These are built on a fixed foundation and cannot be easily moved.
Modular tiny homes: Pre-fabricated and assembled on-site, these homes offer customisation and can be easily expanded.
Container homes: Built using shipping containers, these homes are eco-friendly and can be easily transported.

Important: These definitions aren't exhaustive, and other types of tiny homes may exist and continue to be developed.

Where can I find tiny homes?

You can find tiny homes for sale or rent through various channels in New Zealand:

Tiny home builders: Numerous companies in New Zealand specialise in constructing tiny homes. They often have pre-designed models or can create custom homes to suit your preferences.
Important: MoneyHub has not reviewed any of the tiny home providers and therefore provides no assessment or opinion on any of the tiny home providers/builders listed below:

Online marketplaces: Websites like Trade Me Property, RealEstate.co.nz and Homes often have the most property listings, including tiny homes for sale or rent.

Real estate websites or agents: Local agents (such as Ray White, Barfoot and Thompson or Bayleys) may have listings for tiny homes or can help you find suitable land to build one yourself.

Tiny Homes – Pros and Cons Explained

Pros:
There are numerous reasons why someone might choose to live in a tiny home, and why it's favourable to do so:

Affordability
Tiny homes are generally more affordable than traditional houses in terms of construction and ongoing costs. This is because they require less land, materials, and building time. Additionally, utility bills, maintenance, and property taxes tend to be lower, making them an attractive option for those looking to save money or live within a tight budget.
Sustainability
Tiny homes have a smaller environmental footprint, requiring fewer resources to build and maintain. In addition, they often incorporate sustainable materials, energy-efficient appliances, and renewable energy sources like solar panels. This makes them a more eco-friendly housing option.
Less maintenance
Living in a tiny home can simplify one's life by reducing clutter and encouraging a more minimalist lifestyle. The limited space forces residents to be more intentional with their belongings and maximise the available space. This can lead to a more organised, stress-free living environment.
Flexibility
Moving or expanding your tiny home offers flexibility not found in traditional housing. However, you're generally restricted from expanding beyond a certain level and space if you own a house with specific local council rules and regulations (such as the Auckland Unitary Plan).

Cons:
Despite their appeal, tiny homes also have potential drawbacks:

Limited space
The small size of tiny homes can be challenging for some Kiwis, particularly regarding storage and personal space or those with large families.
Zoning and building regulations
Navigating the legal requirements for tiny homes can be complex and time-consuming.
Accessibility
Some tiny homes may not be suitable for Kiwis with mobility issues or disabilities that require certain accessibility modifications.
Financing difficulties
Obtaining a mortgage or loan for a tiny home can be more challenging than traditional properties due to their limited resale value and lack of comparable property sales data (which banks need to assess relative value when issuing a mortgage).
Capital growth and resale value
The niche market for tiny homes could make selling your property more difficult given the pool of eligible or interested Kiwi buyers is likely smaller.

What are the Main Steps I Need to Follow to Build My Own Tiny Home?

1. Planning
Before buying a tiny home, consider the following factors:

Budget: Determine how much you can afford to spend on your tiny home, including land, materials, labour, and additional costs such as permits and utility connections.
Location: Identify suitable land or property to place your tiny home, ensuring it meets zoning regulations and community requirements - finding land is arguably the most difficult part of developing a tiny home. If you’re building a mobile tiny home, this likely won’t apply (but you’ll still need a location to assemble it).
Size: Determine the ideal size for your tiny house, considering the number of people living in the home, lifestyle, and storage requirements.
Design: Choose a design that reflects your taste, maximises functionality, and adheres to local building codes and safety standards.
Budget: Create a realistic budget for your tiny home project, considering costs associated with land, construction, permits, and other expenses.
Legalities: Familiarise yourself with local regulations and building codes to ensure your tiny home meets legal requirements (note that we've included a specific section below as it's incredibly important to ensure you've met all obligations BEFORE building your tiny home and AFTER you've finished construction/building).

2. Building
Once you have a solid plan, you can begin the building process. This will likely involve:

Sourcing materials: Select high-quality, sustainable materials that withstand time and provide insulation, durability, and energy efficiency.

Hiring professionals (tradies): While some build their tiny homes, hiring experienced professionals can ensure a smoother building process and a well-constructed home. If you’re based in Auckland, check out the definitive guide to trade services in Auckland.
Customisation: During the building process, consider any unique features or customisation options you want to incorporate into your tiny home.
Construction: Hire a reputable builder or consider a DIY approach if you have the necessary skills and resources.
Utilities: Plan for essential services such as water, electricity, and waste disposal.
Finishing touches: Customise your tiny home with furniture, appliances, and decor that maximise space and functionality.

3. Regulations and compliance
Tiny homes are legal in New Zealand. However, while tiny homes offer an attractive alternative to traditional housing in terms of affordability and sustainability, they also come with their fair share of risks related to council regulations. Navigating these regulations can be challenging for tiny house enthusiasts, as the rules often vary between regions and can lead to complications.

The two main rules and regulations that tiny homes must adhere to are the New Zealand Building Code and local zoning regulations. Some of the risks associated with tiny homes and council regulations include:

Inconsistent regulations: One of the primary risks for tiny house owners is the inconsistency of regulations between different councils and regions. As there are no uniform nationwide rules governing tiny homes, it can be difficult for owners to ensure their tiny home complies with all local requirements. This lack of consistency can result in legal issues and potential fines if a tiny home is found to be non-compliant.
Zoning restrictions: Depending on the local council, tiny homes may face zoning restrictions that limit where they can be placed or built. Some councils may only allow tiny homes in specific zones or prohibit them altogether. This can lead to difficulties in finding suitable land or parking spaces for tiny homes and potential legal issues if a tiny home violates zoning regulations.
Building code compliance: Another risk associated with tiny homes is the need to comply with local building codes. While some councils may classify tiny homes as caravans and exempt them from building code requirements, others may classify them as buildings requiring compliance with the Building Code. Ensuring a tiny home is built to code can be challenging and costly, particularly if modifications are required after construction.
Utility connections: Tiny homes may also face challenges related to utility connections, such as electricity, water, and sewage. Local councils often have specific requirements for connecting tiny homes to utilities, and non-compliance can lead to legal issues and potential fines. Additionally, connecting a tiny home to utilities can be a complex and costly process, which can further impact the affordability of the tiny home lifestyle.
Permit requirements: In some regions, permits may be required for various aspects of tiny home construction and placement, such as building permits, resource consents, or special permits for transporting oversized loads. Obtaining these permits can be time-consuming and costly, and failing to secure the necessary permits can result in legal issues and fines.

Tiny Homes NZ Must Know Facts and Considerations

Tiny Homes - Must-Know Facts and Considerations

1. Tiny homes aren’t for everyone
Tiny homes are incredibly efficient and cheap relative to living in a larger home. Still, it's important to know that not all Kiwis can live in tiny homes (especially families). Consider your lifestyle, needs, and long-term goals before deciding if tiny living is right for you. Additionally, renting out a tiny home for you and your family for a few weeks can be a great way to see if the "tiny home lifestyle" is right for you.

2. Know where you can and can’t place your tiny home
You can't just drop a tiny home anywhere. Additionally, you still need to follow all rules and regulations regarding whether your tiny home is a fixture or a chattel (which may influence what you can do to the tiny home and where you can move it).

Research council regulations and requirements before building or placing your tiny home to avoid potential legal issues from residents or the New Zealand government. Most regulation relating to tiny homes originates from the Buildings Act 2004.

In addition, building Performance (which is overseen by the Ministry of Business, Innovation and Entrepreneurship, or MBIE) has published detailed guidance on how tiny homes are regulated.

3. When space is small, good design and customisation make all the difference
Because tiny homes lack space, make sure the layout and objects you keep in your tiny home are customised to fit your preferences as best as possible. Try to design your tiny home to meet your unique needs and preferences, maximising functionality and comfort. A few areas to start you off include:

Transforming furniture: Innovative furniture can serve multiple purposes, allowing you to maximise the functionality of your space. Examples include wall beds (such as the Murphy bed), fold-out desks and modular seating arrangements to accommodate multiple guests.
Smart home technology: Integrating smart home technology into your tiny home can enhance your living experience and improve energy efficiency. Devices such as smart thermostats, lighting controls, and security systems can help you manage your tiny home more effectively.
Off-grid solutions: Developments in off-grid technology, including solar panels, composting toilets, and rainwater harvesting systems, make it easier to live self-sufficiently in a tiny home.

4. Try to declutter and downsize BEFORE you move into a tiny home
It's important to try and prepare yourself to live with less space (and, as a result, fewer "things"). Assuming you live in a standard house before moving into a tiny home, take the time to declutter your belongings and only keep essential, functional, or sentimental items. Embracing minimalism can help you adapt easily to tiny living and create a comfortable, organised space.

5. Incorporate outdoor living spaces to “save space” inside your tiny home
One way to enhance your tiny home experience is to extend your living space outdoors. By incorporating outdoor living spaces into your tiny home design, you'll be able to get the maximum benefit from the materials and resources in your tiny home without feeling like you're "compromising" on things:

Decks and patios: Adding a deck or patio to your tiny home can create a comfortable dining, relaxing, or entertaining space.
Fold-down outdoor tables: Install a fold-down table on your tiny home's exterior to create an instant outdoor workspace or dining area.
Container gardens: Cultivate a container garden to add greenery and fresh produce to your tiny home environment.
Outdoor kitchens: An outdoor kitchen can provide additional cooking and food preparation space, making entertaining and enjoying the outdoors easier.

Know This: While tiny homes are efficient, some maintenance is still required
Don't underestimate the time and cost required to maintain a tiny home. While tiny homes require far less maintenance than traditional homes, this doesn't mean that there's zero maintenance that you need to do. Generally, a tiny home may come with bespoke water, utilities and cleaning to run that local government council may or may not assist with (something that would usually get covered as part of paying "council rates". Whether you pay council rates (and get the associated services that come with paying council rates) will depend on where you place your tiny home.

Frequently Asked Questions

Do I need a special licence to tow a tiny home on wheels?

No, you can generally tow a tiny home on wheels using a standard driver's licence, provided the vehicle's and trailer's combined weight does not exceed the specified limit.

Should I build or buy a tiny home?

It depends. If you're looking for a no-frills option, don't want to "get your hands dirty", or don't have the time, an easy option is just to purchase a tiny home that's already been made from some of the vendors listed above. You can then customise the tiny home as you like after you've bought a base model. If you'd rather build your tiny home from scratch, consider the time and cost of building your own. We've provided a framework above for those that wish to build their own tiny home.

Is a tiny home big enough to bring up and support a family?

You can raise a family in a tiny home, but it requires careful planning and organisation. Some families opt for larger tiny homes or modular designs that can be expanded. Prioritising space-saving features and multi-purpose furniture can also help accommodate the needs of a growing family.

Whether you can bring up a family in a tiny home depends on your living style and the number of people in your family. For some Kiwis, bringing up a family (such as a couple with a single young infant) will be possible. However, if you've got a relatively large number of children/dependents and you're the type of family to enjoy lots of space, a tiny home may not be as suitable for you.

How do I connect utilities to my tiny home?

Connecting utilities to your tiny home will depend on its location and type. For tiny homes that are fixed, you can connect to existing utility lines or use alternative sources such as solar panels, rainwater collection systems, and composting toilets. Mobile tiny homes can use RV-style connections or portable options like solar panels and propane tanks.

Related Guides:

Buying Land to Build a House

Other resources (external guides):