Would you buy a Micro-home?
By Vin Parmar on 21 Sep 2017 in Buying
In the last couple of years, the number of micro-homes in the UK has rocketed, as there’s a lack of supply in the property market. This means developers are slicing up buildings to create multiple houses.
These properties are called micro because they’re smaller than 37sqm, which is equivalent to the size of a tube carriage. The build of micro-homes are allowed because of the Permitted Development Rights Act, introduced by the Government in 2013.
The legislation allows builders and developers to change the use of buildings without needing planning permission. This also includes changing offices into residential homes.
Since this Act was introduced, the number of micro-homes in the UK has sparked. In 2016, 7809 micro-homes were built. This is the highest number on record according to Which? Analysis of Land Registry data. These micro-homes are mainly built in urban areas such as London, Bristol and Liverpool.
Are micro-homes cheaper?
While micro-homes offer a cheaper alternative to buying a regular house – in 2016 they sold for an average of £279,000. This is less than half the average cost of a London home sold in the same year (£580,000) – they may not be as valuable over the long term.
Price growth for properties smaller than 37sqm was 6.9 per cent, compared with 8.7 per cent for homes larger than this. This is despite almost two thirds of smaller properties in London and South East, which have experienced huge house price growth over the past few years.
David Blake from Which? Mortgage advisors said: “with the average London micro property selling for £279,000, smaller homes can represent a more realistic opportunity for many but can also be harder to mortgage.”
Smaller properties can put lenders off due to concerns of the future value of the investment. However, mortgage lenders are open to properties like these if demand is high enough and sustainable.
What do you think about micro-homes? Would you consider buying one?