A Victorian tiny-house company has won an international award for helping to make cities safer, more resilient and sustainable.

Fred's Tiny Houses teaches do-it-yourself builders the ins and outs of design and construction, as well as selling completed dwellings.

Founder Fred Schultz found out via social media that he had won a Flourish Prize in the category for Sustainable Cities and Communities for his house design.

"I just couldn't believe it, little old us, little old Fred's Tiny Houses," Mr Schultz said.

"I danced around a little bit."

He said it remained to be seen what the win meant, but he was pleased that after five years of working on perfecting the innovations he had been rewarded.

World-beating award

The AIM2Flourish organisation's Flourish Prize judged enterprises against the United Nations' 17 sustainable development goals.

Mr Schultz, a former industrial chemist and Presbyterian church minister, was one of more than 800 nominees from more than 80 countries.

He was nominated by a former student who attended one of the tiny-house workshops, which is one aspect of the Castlemaine-based business that sets it apart.

While there are many tiny houses on the market, Mr Schultz's business helps people build their own off-the-grid tiny homes, as well as helping customers understand the often-complicated regulatory framework around where to put the house.

Reclaiming shelter-making

Shannon and Fred now rent out their tiny house on Airbnb. ( ABC Central Victoria: Larissa Romensky )

While the company can build and deliver the houses, it also allows people to build their own lightweight, roadworthy, sustainable tiny house for an Australian environment.

"We're putting the hammer back into the hands of ordinary people, instead of professionalising building," Mr Schultz said.

"Were basically helping people to reclaim their shelter-making capacities."

Australian road rules allow tiny houses to be up to 4.3 metres high, 2.5m wide, and up to 12m long.

Mr Schultz said the advantage of the tiny house over a caravan was the longevity, evident after 10 years.

"A caravan's going to smell like every old caravan — because mould would have formed in the wall, because a caravan is not good at shedding water," Mr Schultz said.

"Whereas a tiny house is good at shedding water because it is using traditional building techniques to not let water get into your wall and grow mould and go off."

Much like a caravan, a tiny house on wheels attracts fewer restrictions when it comes to construction.

"It's not something that incurs the attention of local planners or council in terms of all the building regulations that are required for building a building on a foundation," Mr Schultz said.

The loft bedroom doubles as a cubby house for Theo and Olina. ( ABC Central Victoria: Larissa Romensky )

While there might be some freedom, living in a tiny house full-time has its limitations, depending on local laws.

"It's considered camping technically on your own land and you're only allowed to do that for a limited period of time in a caravan," Mr Schultz said.

As a member of the Municipal Association of Victoria's working group on tiny houses, Mr Schultz has an understanding of the varying local laws.

In the Mount Alexander Shire, which encompasses Castlemaine, it is possible to live in a caravan for six weeks or 42 days on private property.

But there are a few councils that permit full-time caravan living such as the City of Brisbane.

'You don't have to have much'

The solar panels on the roof charge the batteries that produce electricity. ( ABC Central Victoria: Larissa Romensky )

Along with these workshops about building and regulations are the lessons about how to kit out and operate an off-the-grid building.

"Eighty per cent of the people that contact us, their greatest wish is to have it off the grid," Mr Schultz said.

The tiny houses only use renewable energy sources in providing power; water is heated by the sun and wood is used in the wintertime.

For cooking, methylated spirits is used for the rocket stove design, which burns all the fuel, and there is a composting toilet.

"In a tiny house you don't have to have much," Mr Schultz said.

"It is a distillation of all of your values into a tiny little space."