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Japan's Vacant Housing Problem

Recently, there's been a lot of interest in Japan's real estate, especially among people from other countries. Many foreigners are buying properties in Japan, thinking about investment and development. It's easy to find information tailored for these individuals.

But, I think there's not enough info for foreigners who want to enjoy life in Japan by fixing up old Japanese houses, not just for making money. In big cities and popular tourist spots, real estate prices are going up because foreign investors are buying a lot. However, in the countryside, many houses are empty, and you can find used properties at very low prices.

I recently got a used house for less than $10,000 and am fixing it up now. Sometimes, you can even get a house for free. The idea of getting a free house sounds amazing, right? But it's important to know about the challenges and risks that come with these properties.

After finding and renovating many empty houses and living abroad, I understand the difficulties foreigners face when living in Japan. So, I want to write a series of articles to share cautionary points and renovation tips for people from other countries who dream of revitalizing properties in Japan.

The author purchased a home at a reasonable price. While many Japanese people might avoid second-hand properties, I find the vintage wooden fixtures charming and appreciate the ease of self-renovation that comes with the wooden structure.

The problem of vacant houses in Japan and the availability of these properties at low prices can be traced back to a mix of changes in the population and societal trends. One significant factor is the demographic challenge marked by a declining birthrate and an aging population, which is a problem faced by many developed nations.

The decreasing number of births, combined with young people moving from rural areas to cities, leads to a surplus of available houses. This situation is similar to what has happened in some European regions where the departure of young people has caused an increase in vacant houses, along with a decrease in public safety.

However, the vacant house issue in Japan has some differences compared to Europe and other countries. In Japan, cases of vacant houses being occupied by illegal immigrants or vagrants, causing a decline in public security, are relatively rare. While Japan is not completely free from such issues, they are considered exceptional cases. This rarity sets Japan apart from other regions dealing with similar demographic challenges, creating a unique situation in how vacant properties affect public safety.

The problem of vacant houses in Japan is complex, and one crucial aspect is that these empty properties, instead of being assets, become liabilities for their owners.

In Japan, the idea of aging strongly influences the real estate landscape. Buildings lose value over time, and when a building becomes too dilapidated, the only options are renovation or demolition—both seen as negative consequences of owning a building on the land. Even if a structure has cultural significance, its value is often not fully recognized by the owner, real estate agencies, or potential buyers. Unfortunately, the cultural value of a building is rarely considered in its real estate appraisal in Japan.

Moreover, building regulations in Japan, like the Building Standard Law and the Fire Defense Law, undergo regular reviews, especially after major disasters. Significant changes in regulations often make older buildings non-compliant with current standards. This leads to a preference for newly constructed buildings in Japan, with used structures often seen as significantly inferior.

In this context, even if a building is considered a liability, it may still find a buyer if the land beneath it holds value. However, the challenge arises when the land itself is not highly valued. This is particularly common in rural areas of Japan, where many vacant houses are left unattended with no prospective buyers or heirs to inherit them. The combination of evolving building regulations and the devaluation of older structures has worsened the problem of vacant properties across various regions in Japan.

These vacant houses and lands are also subject to taxation, adding to the burden of owning an unoccupied property and contributing significantly to Japan's vacant house problem. The taxation system itself plays a crucial role in worsening this issue.

In Japan, taxes on vacant land without structures are six times higher than those on land with buildings. As a result, many owners choose to leave deteriorating buildings as they are, even if they are negative assets. Over time, owners pass away, leaving behind hazardous vacant houses that pose collapse risks. With unknown heirs, the government has had to bear the cost of demolishing these dangerous structures. In response to this challenge, the law was amended in 2023, stating that unmanaged vacant houses will face a sixfold increase in the normal tax rate, equivalent to vacant land.

As measures against neglected properties increase, the pressure and financial burden associated with home maintenance rise. This has led to a growing number of property owners seeking to quickly sell and relinquish their homes, even at reduced prices.

Additionally, various factors contribute to vacant houses being offered for sale at low prices, including:

1. Elderly owners with no heirs struggling to find a solution for property disposal.

2. Properties located in inconvenient areas with minimal population or on remote islands.

3. Regions with strict local rules and a closed environment, making it challenging for newcomers to integrate.

4. Areas prone to natural disasters such as tsunamis, floods, landslides, etc.

5. Locations with inadequate infrastructure.

6. Proximity to an unsafe environment, such as being near a Yakuza office.

7. Severely damaged houses.

8. Houses that are excessively large or small.

9. Previous occupant(s) passed away in the house.

10. Properties with illegal constructions.

11. Houses not meeting current regulations, including issues like limited access by car, reliance on someone else's property for access, restrictions on rebuilding, and concerns about seismic or fire resistance.

For instance, the inexpensive property I acquired for under $10,000 had characteristics falling under categories 4, 7, and 11.

A part of the house faced significant damage, including the beams being infested by termites.

If you're thinking about buying one of these affordable properties as an investment, it's crucial to approach the decision with careful consideration. The costs of maintaining and renovating the house, along with the potential risk of the property becoming a financial burden, might outweigh the expected profits.

However, for those interested in the idea of renovating a property and wanting to fully experience living in Japan, it could be worth considering a purchase after thoroughly understanding the pros and cons involved.

In my upcoming article, I plan to explore the entire process and important factors to consider when starting the journey of buying a house in Japan.