Coby Koster (Above right) knew when she retired that she did not want to be shackled to the ever-growing rental crisis.

The 64-year-old is among a growing group of people investing anywhere between $50,000 and $200,000 in tiny homes — small houses attached to a trailer bed that can theoretically be transported and installed anywhere.

Ms Koster is on a property on the NSW South Coast, with a sizeable front yard, a deck, kitchen, laundry bathroom, bedroom, and even a spare bed tucked beneath the floorboards.

She said making her life in the small space had been an adjustment, but well worth the monetary savings and housing stability.

"Me, like many women who are a bit older and haven't been the brightest with their money, they don't have millions or half a million or whatever, so this is a really good alternative," Ms Koster said.

"Once you buy it outright, you buy the odd gas bottle every now and then but [that's] my only expenses, very minimal."

Council tackles tiny home planning:

A NSW council on the Illawarra coast is trying to make it easier for more people to follow Ms Koster's example.

Shellharbour City Council wants to open tiny homes up as a potential rental option.

It has backed a pilot program that would allow tiny homes to be installed on residential blocks as long-term rental properties without development consent.

The policy would outline specific local planning regulations, including setback requirements, bushfire and flood planning and amenities connection.

While other NSW councils have used tiny homes for temporary and crisis accommodation, Shellharbour mayor Chris Homer believes theirs is the first to develop a pathway to legally install the structures long-term.

"The approvals policy [will have] the guidelines and standards and what needs to be done to get tiny homes put on your property. We're doing our due diligence," he said.

Cr Homer said the tiny homes pilot was part of the council's attempt to tackle a "diabolical" housing crisis.

"We're growing at a rate of knots and it will help ease and provide housing for people who can't find a home," he said.

He said because the homes can be built quickly — the Australian Tiny House Association estimated anywhere between two weeks and three months — they could be deployed quickly.

But some councillors remain unconvinced, voicing concerns about the safety of allowing tiny homes on properties without development consent.

Those concerns were highlighted last week when, during record rains, a cabin was washed out of a suburban backyard and onto a bridge just north of Shellharbour in the Wollongong suburb of Figtree.

In murky planning territory:

The NSW Department of Planning, Housing and Infrastructure told the ABC tiny homes were not defined in planning legislation, but would most likely meet the definition of a caravan.

Caravans or campervans can be installed permanently on private land if they are to be occupied by a member of the household.

For any other occupant, the caravan can only be occupied for two days at a time and for a maximum of 60 days per year.

The NSW government is currently considering changes to planning legislation around caravans and moveable structures that could see a council development application required for installation.

Planning Minister Paul Scully said looking at defining tiny homes in their own category might form part of the review.

"That's all part and parcel of looking at something that hasn't been looked at in 30 years," he said.

The Australian Tiny Homes Association's Southern NSW spokesperson Michael Duffy said there was confusion among local councils about how to approve or monitor tiny homes.

"The legality of it is a bit up in the air," he said.

"Plenty of [homeowners] don't mention to council they're putting it in their backyard, or on their acreage. They just do it for years, no dramas."

Pilot underway in Victoria:

Surf Coast Shire Mayor Liz Pattinson said it took her Victorian council months to prepare a local approvals policy for a very similar tiny-home pilot.

It includes assessment of environmental impacts, energy access, and utilities on the site.

The tiny homes cannot be installed within a flooding or bushfire overlay, and the approvals do not apply for Airbnb properties.

"There are instances of tiny houses that exist [without council approval] and this is a way to regulate that to ensure managing the safety of residents," Cr Pattinson said.

Five months into the project, the council had been approached by 40 owners of tiny homes, and had approved one.

A call to make it 'easier':

Settled on an armchair on her tiny porch with a cup of tea, Ms Koster reflected that her life would be very different if she had remained in the rental market.

As for other women in her age bracket at risk of homelessness, she hoped it could be made easier for them to own their own home.

"I'm sure many people are struggling with all the red tape they have to go through with council and government," Ms Koster said.

"If that could be changed and simplified it would make it a lot easier."

Above | Left : Mayor Liz Pattinson said it took her council two years to finalise an approvals policy for tiny homes | Right : Coby Koster said removing red tape would make tiny homes accessible to more people.

Original Story By | Penny Burfitt