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Tiny Homes Vs Small Homes

tiny home vs small home

Are tiny homes a good investment? It’s hard to see the appeal when comparing them to small homes. Tiny homes cost as much per square metre, yet they are more likely to depreciate if they’re the type that is classified as vehicles.

Tiny homes are everywhere from the UK, to USA, Australia and New Zealand.  In the USA they are often called trailer homes.  Different rules apply to homes that are mobile – i.e. can be easily transported.

Tiny homes have become a popular housing option for those seeking a simpler and more minimalist lifestyle. But what exactly is a tiny home, and how does it differ from a standard home? In this guide, we will explore the unique features and benefits of tiny homes, and why they have captured the attention of so many people looking for a different way of living.

So before you rush in, let’s look at tiny homes in more detail.

What Is A Tiny Home?

Unlike standard homes, which can be large and often come with excess space and amenities, tiny homes prioritise functionality and practicality. They are often built on trailers or foundations and can be customised to fit the specific needs and preferences of the homeowner.

The main goal of a tiny home is to provide a comfortable and sustainable living space while reducing the environmental impact and financial burden associated with larger homes.

Be aware the there are different names and conditions for the tiny home product. Some say it’s a home on wheels or a home that is easily moveable.

What is widely accepted is the maximum size of a tiny home is 37 square metres – with the width being no more than 3.2 sqm.

Different rules apply to tiny homes for example in New Zealand a tiny home means different things in different regions. i.e., is it a building or a vehicle? That depends on the regional local authority. Avoid getting caught out should you choose to relocate a tiny home from one region to another in your country.

Does A Tiny Home Need Building Consent?

The short answer is yes if it is connected to services for the kitchen and bathroom. However, it’s not black and white; the tiny home could be classified as a vehicle.

Classified As A Vehicle

A tiny home may be classified as a vehicle in one of three ways:

  • As a transportable load on a truck or trailer
  • Or a car with a motor similar to a motorhome
  • Or towable like a caravan

However, some councils may still class your tiny home as a building even when it falls into one of three categories, as stated by NZTA. For example, in the Tasman District, the council noted a trailer-tiny home was deemed a building even though it was movable.


How tiny homes are classified seems to depend on intent. If the home is stationary, connected to services, and permanently occupied, it’s a building and needs to comply with the Building Act. However, classifying tiny houses is not as straightforward as it should be, so confusion remains exacerbated with the new building consent exemptions.


Consent exemptions

New building consent exemptions that came in August 2020 haven’t done anything to clear up the grey areas of what can be built without resource consent. If your 30sqm building needs a bathroom, kitchen, and service connection, it will require a building permit.

Are Tiny Homes Worth It?

While there is confusion over the status of tiny homes, make sure you have factored in ongoing costs, including rates, service fees, etc.

A 30 sqm tiny home will set you back at least $150,000 or $5000 per square metre. If you were buying a new build and spending $5000 per square meter, you would get a top-quality build.

However, you can get a new tiny home of, say, 80 – 100 square metres at around $3000 per square metre, i.e. the total price of $240,000 to $300,000. There is the section to buy too, but it could be as little as $100,000 or as much as $1 million.

Today $500,000 will be enough to buy a small house and land package in a small town,

However, if Auckland or a central city is your desired location, you must add another $300,000 or more to your budget.

The cost of a tiny home is comparable to what you’d pay per square metre for a house and land package outside the main centres.

Resale Value

The investment in a small home becomes a better bet than a tiny one when it comes to selling it, i.e. your small home will value up in time, whereas tiny houses are more likely to devalue.

In the year to June 2021, property prices have risen nearly 30%.

Whereas tiny homes are expected to – wait for it – depreciate, not appreciate over time. So while a home may go up in value by tens of thousands of dollars most years on average, the tiny house, if it’s classed as a vehicle, will likely lose weight – i.e. value up for less than you paid for it.

Plus, when you list your tiny home for sale, you know there will be a good market. Tiny homes appeal to:

  • first home buyers
  • downsizers
  • single families
  • couples

Tiny homes have a much smaller appeal, and as most of them are highly customised for their owner, they don’t appeal in the same way to new buyers as a small home can.

Another consideration is the wear and tear of living in tiny spaces. Living in a tiny home full-time for 12 months is equivalent to five or seven years in a small house. Little home sellers will either need to renovate before selling or realise their tired and worn-down interior will attract buyers looking for a knocked-down bargain price.


If you can afford a mortgage and invest in a small home, this would be a better investment than a tiny home.

Get Excited About Tiny Homes

There are many reasons to get excited about tiny homes. Their small footprint makes them more affordable, so they are ideal as first homes for first home buyers.

Another important aspect of tiny homes is their environmental impact and sustainability. Due to their smaller size, tiny homes require fewer resources to build and maintain. They use less heating, cooling, and lighting energy, resulting in lower utility bills and a reduced carbon footprint.


Additionally, many tiny homes are built using eco-friendly materials and incorporate sustainable design features such as solar panels, rainwater collection systems, and composting toilets. Living in a tiny home allows individuals to live a more environmentally conscious lifestyle and contribute to preserving natural resources.