A neighborhood that locals reflexively associate with poverty and gangsterism may not be the most obvious place to open your first holiday rental. But an alleyway in Bethnal Green, a corner of London’s East End with a rough-and-tumble past, is precisely where industrial designer Nina Tolstrup and her husband, Jack Mama, a creative director specializing in sustainability, have opened their compact accommodations. Well off the Trafalgar-to-Piccadilly circuit, the home’s charms are apparent as soon as you enter the spacious ground-floor kitchen, dining, and lounge area.

A former carpenter’s workshop opposite the pair’s family home and Tolstrup’s Studiomama workshop, the two-story guesthouse is a stylish lesson in getting more from less. At just 485 square feet, the house can’t compete with the presidential suite, yet Tolstrup and Mama have marshaled enough room for a pair of bed pods, two large common areas, a bathroom, and plenty of space to sit and relax.

“I wanted to use the building as my studio when we first bought it,” says Tolstrup. “I was going to have other people in here with me, but it was just not going to work in terms of space. So we managed to get plans through for a change of use, and that was how the guesthouse developed.”

Though the look of the property is noticeably influenced by the design culture of Tolstrup’s native Denmark, the overall inspiration comes from the couple’s experiences of traveling with their children, who are now 10 and 12. They found that holidays weren’t terribly relaxing, as the routine hotel setup meant more time sharing beds with their children than with each other. “When we go to other cities, we often have to book two double rooms,” says Tolstrup. “The guesthouse is a far more comfortable way of traveling together. You get to eat meals here, so from that perspective it is cheaper than a hotel, and we know that like-minded people will enjoy it.”

Neither Tolstrup nor Mama has any formal architectural training, but viewing the residence as a large piece of product design allowed them to work to their strengths. “A lot of architects are doing things like door handles and lighting now, which they think is normal,” says Tolstrup. “But it works the other way, too. I may not be trained as an architect, but that is easy to work around.”

The couple did bring in a structural engineer when they needed assistance, however, particularly with the loft that houses the upper of the two bed pods. “The walls in the pods are put up to make it feel like a bedroom without creating the enclosure of one,” says Tolstrup. “You still have the privacy, though.”

The couple made or refurbished all of the furniture in the property, with Studiomama products such as the elegantly simple Pilot clothes hanger for Trip Trap and Pewter Bowls for Wentworth peppered throughout. Kitchen chairs picked up for $15 each at a local market were powder coated in bright orange; others were created from wooden pallets.

One element that is instantly apparent about the house is the amount of natural light that floods in, which is a real achievement given that it’s set in the middle of a terrace of other houses and lock-up garages. A glass light well in the floor and skylights help illuminate the kitchen; storage space is open-plan or tucked away in darker spots, so there are no blocky wardrobes or cupboards to deplete the luminosity. “When you have a very small space, it is about creating the feel of not being in one,” says Tolstrup. “It is about proportion and shape.”

The guesthouse’s design alone will draw design-minded vacationers, but what of its location? Ask any Londoner about the area and he or she will likely come back with the name of the Kray twins, the 1960s gangsters who ran protection rackets and committed the odd murder in the area. But Internet startups, boutiques, and coffee shops are starting to replace run-down shops and offices.

“I grew up nearby,” explains Mama. “It is a fascinating area with a lot of history. This may not be for you if you want a typical London trip, but this is the kind of neighborhood we’d want to stay in if we visited New York.”

That difference is more than evident in the street markets and ethnic diversity of Bethnal Green, making Tolstrup and Mama’s compact scheme reason enough to lodge on the wrong side of the tracks. Staying in a winsome guesthouse beats the Holiday Inn any day, and you can’t help but be inspired by the home’s playful brand of architectural innovation as you recover from a long day of seeing the Old Smoke’s sights.