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Is Building A Smaller Home More Affordable?

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Building a smaller dwelling or even a ‘tiny home‘ can be an effective way to construct a new property on a low budget. However, just like with all new construction, the size of the property is irrelevant when it comes to cost to build.

A smaller home doesn’t guarantee you can get it built within your budget.

Plus there are various regulations you’ll need to adhere to, and many states and indeed countries have introduced a building code specifically for tiny homes so be aware of all the rules relating to this type of home.

Building tiny or small is not always more affordable. For example, architects and builders need to ensure that any minor dwelling or micro-dwelling design meets the relevant specifications for the location.

Building small should be more affordable, but the rules can be more challenging and cost more for the consents.

Building Code

Complying with the building code is a prerequisite for all new properties; therefore, going the extra step for a smaller build is not a ‘big ask’.

The main challenge is in the design of the home, and that building consent is approved, and this task is that of the Architect. There is likely to be more pre-build cost associated with the custom design however when you consider the lower build cost for the smaller footprint the overall budget required to get into a new home will be more affordable.

Budget Vs Actual Build Cost

Budget blowout is the right of passage for building a property no matter who is the owner is, as even the most qualified, i.e. builders, architects, engineers get the costs wrong when designing and building their own home. Therefore all new home build owners should allow for a 20% overspend and have the contingency fund approved as part of the overall budget.

Be aware of the potential of a massive blowout on actual build cost. Make sure your budget includes ‘everything’ including the kitchen tap! It’s the smaller items that push many new homes build well over budget.

Grand Designs

The Reality TV show Grand Designs UK, and Australia and New Zealand are well worth viewing as it presents owners consistent mismatch of budget vs actual build cost. It’s disheartening to see many naive owners failing to complete their homes due to lack of funds. Here are some links to Grand Designs budget blowouts.

Grand Designs UKviewers slam couple for the budget blowout on a ‘shed’ design house.

In New Zealand here is a grand design gone wrong with the original budget of NZD$900,000 blown out to NZD$1,300,000 and the property is nowhere near complete. If you want to go to the other extreme and build a tiny home you’re not alone; there is the tiny home movement.


Tiny Homes

When do regulations apply?

Although the tiny home movement has been gaining momentum for some time, it’s only recently that new regulations have been brought in. As a result, councils and planning officials are cracking down on the construction of micro-dwellings.

With dedicated regulations, it’s safe to assume that the building code for tiny homes will be routinely enforced. Indeed, anyone who wants to live in a micro-flat or tiny home legally should ensure the building meets the relevant regulatory requirements.

What about compliance costs?

One of the major benefits of tiny homes is relatively low construction and maintenance costs. With increased regulation, however, comes additional compliance costs. These will, inevitably, add to the cost of planning and building tiny homes.

Furthermore, now that regulation is in, tiny homes will also be subject to certifications and approvals, which may incur even more fees.

While these extra costs are undesirable, the regulation of tiny homes brings them a step closer to being a mainstream solution to housing crises. Plus tiny homes are now of interest to commercial investors and businesses, as well as homeowners.

Despite the increased compliance costs, regulation of tiny homes could ensure that they become a viable and popular housing option.

Tips To Get Your Home Built Within Budget

  • Preparation is key to any new home build
  • Avoid rushing the pre-build process
  • Focus a lot of time and research on upskilling your knowledge of all facets of design, costs, timeline and regulations
  • The size of the property is no indication of how long you should spend in preparation for the actual construction

You can avoid significant budget blowouts when you prepare well. For example, on a recent new home build of 130 square metres, the preparation time was two years and the construction time ten months, more cost was spent in the pre-build stage, but it lowered the cost of the actual build, and it was achieved on-budget! Plan to succeed and get your next new home built on time and within budget.


In Australia buying a section and building two homes on it often known as a duplex is offering up a home and income solution to cash strapped homeowners. The second home is usually smaller i.e. a minor dwelling or granny flat and the dual occupancy homes are cleverly designed to offer privacy and security. As the world’s population continues to grow intensification will become the norm even in newer countries like USA, Australia and New Zealand. The two homes on one block of land will become commonplace.

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