Last year, Prime Minister Theresa May declared the UK’s housing market broken, and this year, the crisis continues. Housing is not being built fast enough to keep up with demand, and prices are surging way above income growth. Recent figures from the Institute for Fiscal Studies shows just how bleak the situation is. Twenty years ago, 65 per cent of 25 to 34 year olds earning a salary between £22,200 and £30,600 owned their own home. In 2016, home ownership for the same demographic fell to just 27 per cent.
The result: generation rent. In both the US and the UK more people are renting now than at any point in the last 50 years. Aside from the costs – the average rent in London is a third of the household income – renting is risky. Under a section 21 agreement, landlords in the UK can evict tenants with just two months’ notice.
Generation rent may well be living with this concern for a very long time. Figures suggest that up to half of millennials will be renting way into their 40s, and a third will still be paying rent when they claim their pensions.
That’s unless tiny home developers have anything to say about it. The latest attempt to fight the affordable housing crisis is slowly spreading across the US and the UK. Instead of waiting for prices to fall, or for help-to-buy schemes to improve, tiny homes offer many young adults looking to buy a home an immediate solution. The micro-homes can be bought as a cheap first home, or rented while saving up for a full-size house deposit.
The only downside is the dramatic downsizing: tiny homes are, at their largest, 500 square foot, and consist of a bedroom-cum-lounge, kitchen-cum-dining area and bathroom.
Constellation ATX is an established tiny home community in Austin, Texas. The company describe their residents as not only receiving a home and a small yard, but also gaining a place in a tight-knit community. Due to the space restrictions, tiny homes encourage residents to leave their micro-abodes and enjoy communal spaces with their neighbours. Constellation plans to build a communal pool, a 5,500 square foot clubhouse, a communal kitchen, and a rooftop patio to provide residents with more places to socialise.
Most importantly, the company is one of the first to offer a 99-year lease. Those shut out by the housing market can settle in a tiny home and find security unoffered by any full-sized rented property.
The construction of tiny homes has more than doubled since 2010 in the UK. Despite the allure of a small, simple and stylish home, these micro-communities do not offer a long-term solution to the housing crisis. The average deposit needed to buy a house in London is £80,000, and despite saving money on bills and rent, the average tiny home owner may be saving for a very long time before they can afford to upsize.
Read more about the IGTV here.