The owner took over the property from his former father-law Charles Allen, The Telegraph said.
Mr Higgins said: “The railway carriage was lived in by a local woman Elizabeth Richards.
“It was known as Lizzies Place to when she died in 1966.
“It then stood empty for a number of years until my ex-father-in-law came down looking for somewhere to retire.
“He was a master carpenter and was looking for planning permission to build a retirement home.
“He came down from Middlesex and fell in love with the spot where the railway carriage was.
“But when he applied for planning permission to build a bungalow he was told the railway carriage had been there so long it had grandfather rights.
“It couldn’t be moved. So he decided to build around it.
“He actually built the bungalow as a home with kitchen and lounge etcetera but the bedrooms are in the railway carriage.
“And he set about restoring the carriage – called Waverley – to its original 1882 state too.
“A few years ago he decided to move away but he asked me if I wanted to move down and take over. I thought about it for a couple of seconds and accepted.
“It’s such a beautiful location with fantastic sea views I couldn’t refuse.”
“Living in an old railway carriage was relatively common once upon a time,” he said. “But I’ve never heard of a house being built around one before.”