Are Tiny homes, Caravans and Granny Flats the answer to our Housing- Rental Crisis
To answer the questions, we need to find out the reasons behind the Housing and rental unaffordability crisis..
It was very hard to find rentals during the covid period, this was a period when our borders were closed, and many people actually left Australia...
So why was it difficult...
Our population dropped, which would make you assume there would be more vacancies.
The use of the houses has changed, short-term lets have increased dramatically and in some cases, there are more short-term lets than long term lets.
The fact that nobody could travel overseas in covid then made us a captive audience.
An investor wants the most money they can get from a property...and here is an example..
A friend bought a property in Berridale, about an hour from the ski fields in NSW, this property has been in the long term rental market for the last 30 years, it was getting around $500 a week in long term rental. He now rents the same property in the 4 months of the ski season for $750 a night, around $90,000 for 4 months as opposed to $26000 as a long term rental and he gets to use the property for 8 months of the year..
Taking this property out of the long term rental market in turn pushes the price of the other properties up as long terms rentals, it’s a perfect storm.
The Central Coast NSW is a good example of what has happened and its an example for most beach towns around Australia...
A few years back you could rent a house anywhere starting around $400, many of the people who live and work on the Central Coast work in age care and the salary is low, around $25 per hour so $1000 is an average wage and $400 is 40% of their income...
Now with short term lets you can rent a beachside property for up to $10,000 a week or more in the school holidays, this has elevated the price of a simple rental starting around $700 which is 70% of their income leaving not very much for food and other bills...
Other factors have contributed including housing companies going bust and going forward huge immigration figures....
So are Are Tiny homes and Granny Flats the answer to our Housing- Rental Crisis
Unfortunately, not, they will alleviate some problems and help some people but these units can only ever be used as a secondary dwelling which means it’s a stop gap solution and doesn’t cure the fundamental problem. Current legislation stops them being used permanently on vacant land where there is a time limit.
Most of the Caravans, Tiny Homes and Granny flats have low ceilings and will never pass through a development application where the national building code is 2.4 metres
This is partly due to shipping container sizes being 2.4 so anything that has a ceiling height taller will require an ovesized shiping container and the prices will increase dramatically..
A DA aproved dwelling for a reasonable price will cure the problem as it can be used on any land as a primary dwelling .
So lets take our example of the Central Coast and our wage earner is earning $1000 a week. Rent is $700 a week leaving just $300 a week for cars expenses, bills, food and children.
The longer this equation plays out the closer to the wall they get...until something breaks, losing a job, the wife gets pregnant, kids braces, car blows up...ect ect..
So what is the solution, mum and dad live on a decent sized property with over 500m2
They can buy a decent Granny Flat, Tiny Home, Caravan for anywhere around 25K to 45k, they can loan the money at around $150-$200 per week.. A saving of $500 per week and they still maintain their asset
Financially they are in front by thousands every year and may have a chance to get on the property ladder with these savings.
On paper it’s a great solution but the limiting factor is you need a person with a primary dwelling willing to let you add the secondary dwelling to their property...
As time goes by and housing is less affordable those numbers of people are dropping and the bank of mum and dad is dropping off..
Fundamental changes in legislation Australia wide and an adoption of the NSW legislation Australia wide will change things dramatically, Victoria is following suit with their DPU’s, dependable person Units.. but the rest of Australia is still in the dark ages and individual councils make their own decisions..
If there is no council contributions then there is no incentive fro them to pass these..