Start a Tiny / Small House Business

The first business in the property business series I want to look at is the tiny & small house business. Tiny houses are primary, full-fledged dwelling units on a small scale basically a small scale house. There is also a movement that is defined as an architectural and social movement that advocates for downsizing living spaces, simplifying, and essentially “living with less.” Another part of this movement is to be constructed with environmentally conscious and renewable materials. But this will not be my primary focus.

In South Africa, a tiny or small houses as a primary residence is not a common thing outside of the government’s RDP program. As I said last time to unlock potential in the property sector there will need to be a change in perception. One of the international trends of a tiny house is modular structures something that hasn’t really taken off in SA. If you have even been to Makro and see those garden sheds standing outside, well in the US you can buy a tiny house like that.

When we talk tiny houses we usually talk of a floor space between 37 and 93 square meters. These can be beautiful garden cottages. A friend of mine built a tiny house on his property and rented out the main house. He is retired and his adult children had moved out already. But childless people can also benefit from this type of living.

Market Need

The days of living in 300+m2 houses are long gone in SA unless you are a wealthy individual. Most South Africans live in shantytowns called “informal settlements” others live in a fantasy land that they will one day be able to afford a 500m2 property on a 1000m2 erf instead of being happy in a small house. The big house days in the city are gone unless you are a multimillionaire. People need to accept reality and go for smaller houses.

Target Market
I foresee three major markets in this industry: building a small house next to a house on the same plot. A small house as part of a smallholding or a small house on a farm.

Building a small house next to a house on the same plot
Cape Town recently amended single residential zoning to allow for three dwellings on a single plot. While this is a political move by the DA (life was becoming too expensive in Cape Town for the voting class) it is a big move. These changes now allow property owners to have three dwellings on a single plot. This allows the homeowner to not only monetize unused land but opens up opportunities for builders. In Cape Town suburbs there are lots of properties with 100m2 houses on 500m2 plots and 200m2 houses on 1000m2 plots that are a big waste in a city where a basic house in a mediocre suburb now costs close to R3m.

Small houses on new plots
We have also seen smaller houses being built on new plots. With building being expensive in SA and the cost of living increases this trend will continue as people simply cannot afford to go big anymore. In the West Coast Villages of the Western Cape we have seen fisherman cottage style houses built as small as 70m2. This shows a good example of this format:

Copyright Sunset Coast Properties

Building a tiny house on a smallholding plot
If you have looked at dispersed rural settlements such as Tesselaarsdal in the Overberg you will see many small houses on massive plots. Here is a 30m2 structure on a 13000m2 (1.3 ha) plot.
Copyright RealNet Overberg Tesselaarsdal

And here is a 90m2 structure on a 5371m2 plot:
Copyright RealNet Overberg Tesselaarsdal

To be continued…