The issue of abandoned homes, or akiya, in Japan is well known.
In recent months, you may have come across articles in foreign media saying that Japan’s small towns are practically giving away abandoned homes in an attempt to get people to move to the countryside or to take up residence in an abandoned home to help revive the local economy.
The numbers are indeed alarming.
According to the Ministry of Internal Affairs and Communications, there were approximately 8.2 million akiya in 2013, or about 13.5% of the total number of houses in Japan. Some think tanks forecast that by 2033, over 30% of all Japanese homes will be abandoned and vacant.
This is because as people age and become less self-sufficient, many will move in with family members or go to assisted-living facilities, and eventually pass away. Some will leave behind homes without occupants or caretakers. Even in cases where children inherit these properties, they are often located in places where adult children, working city-center jobs, do not want to live.
The result, many fear, is that Japan’s countryside, and even some cities, will be dotted with aged, falling down properties, that are not only an eyesore but which will also drag down property values.
We have covered the issue of akiya in other articles on Real Estate Japan. For example:
- What you should know before buying a vacant home in Japan
- What to do with Tokyo’s hundreds of thousands of vacant homes
- Government plans to turn Japan’s abandoned houses into semi-quasi public housing
- Akiya Bank Japan vacant house database to now include government public assets
- 7 trends & events that will shape Japan and the Japanese real estate market in 2019
In this article, we focus on the importance of renovation costs as a factor in the decision to purchase a vacant home.
- Why it’s important to consider the costs of renovation when you’re thinking about buying a vacant home
- Return on investment
- Importance of using a local agent
- Approximate costs of renovation
- Government subsidies
Why it’s important to consider the costs of renovation
In many cases, a property that has been vacant for some time is going to be uninhabitable, so the question of whether you need to renovate may be moot.
Nevertheless, there are several, perhaps obvious, upsides to renovating as soon as possible after you purchase a vacant home.
First, making necessary renovations to a home that has been unoccupied will increase the value of the property simply because unoccupied homes tend to deteriorate due to the buildup of moisture caused by the lack of ventilation. In the case of wooden homes, moisture buildup will lead to damage in the wood, mold, and possibly insect infestation.
High humidity is the norm in most of Japan’s prefectures, which intensifies the buildup of moisture in a home where the windows aren’t regularly opened.
So whether you intend to renovate an akiya to live in, to use as a home sharing business, or to sell, dealing with the results of moisture build up will likely be at the top of the to do list.
Renovating an abandoned property soon after you purchase it will also decrease the risk that it will physically collapse or become the target of a break-in or burglary. These are low risks, but something to consider when you are planning out the timeline for what to do with an akiya after purchasing it.
Considering the return on investment
One of the main reasons many people are hesitant to embark on a renovation project is the perceived cost and the calculation that it may not offer a good return on investment.
A house that has been vacant for many years may require a full-scale renovation, the cost of which may not pencil out in terms of returns, for example, for an AirBnB-style home sharing business.
In addition to deterioration due to neglect of the home, another key consideration is earthquake retrofitting.
In 1981, Japan upgraded building codes to require stricter standards for earthquake resistance in buildings.
If the home you purchase received it construction confirmation certificate before June 1, 1981, it is considered a kyu-taishin building. “Kyu” (旧) means prior and “taishin” (耐震) means resistance.
In some cases, you may be required to seismic retrofit the building to make it compliant with post-1981 building codes.
What to renovate? Partial or full-scale renovation
The building age and state of deterioration of a vacant property are the two main factors used in determining how much renovation the property may require. A newer vacant property may only require renovation of some features, such as the plumbing, rather than a full-scale overhaul.
Even more so than for conventional properties, it’s important to have professionals check the integrity of structural elements, for termite damage, earthquake resistance, and insulation, among many other things.
The importance of using a local agent
For this reason, among many others, it’s hard to overstate the importance of seeing the property for yourself, accompanied by a local real estate agent.
All of the agents listing properties on Real Estate Japan are bilingual in Japanese and English. Use this list of bilingual agents in Japan to start your search for an agent.
Real Estate Japan also holds free webinars on buying a home in Japan as a foreigner, where you’ll have a chance to connect with local bilingual agents. One of the topics our speakers discuss is special issues to consider when buying an akiya.
A local agent will also be able to introduce you to contractors and sub-contractors who have experience renovating vacant homes.
Below are very rough estimates of renovation costs for select home features. Please keep in mind that the actual cost may vary significantly based on the actual condition of the feature, how much you actually choose to spend on materials (the quality of materials), and the location of the property.
- Wallpaper replacement: ¥1,000/sqm
- Flooring replacement: ¥10,000 to ¥70,000 yen per tatami mat
- Toilet: ¥200,000 to ¥500,000
- Replacing a unit bath ¥500,000 to ¥1,500,000
- Renovating a conventional bathroom to a unit bath: ¥1,500,000
- Kitchen renovation: ¥500 to ¥1,000,000
- Exterior wall repair: ¥500,000 to ¥3,500,000
- Roof repair: ¥500,000 to ¥3,500,000
- Seismic retrofitting: ¥250,000 to ¥1,500,000
- Insulation: ¥4,000 to ¥40,000/sqm
- Window installation (double-glazed glass): ¥80,000 to ¥150,000
- Termite extermination: ¥1,800 to ¥3,500/sqm
- Rain/water damage repair: ¥10,000 to ¥450,000/spot
Government subsidies and tax deductions
Due to Japan’s demographic trends, especially the graying of Japanese society, the government forecasts that the number of vacant homes in Japan is likely to continue to increase. For this reason, there are various subsidies and tax deductions available from national and local governments to help with renovating vacant homes, including for such things as seismic retrofitting and improving energy savings.
We will cover these subsidies and tax savings in a follow up article.
Yes. You can buy property in Japan regardless of your nationality or country of origin. There are also no residency requirements for buying real estate in Japan. Securing financing as a resident foreigner is more complicated. For info on financing, please see Basic Requirements for Getting a Mortgage as a Foreigner in Japan
Please see our seminar page for a current list of seminars on: how to buy a home in Japan, investing in Japanese real estate for beginners, how to apply for permanent residency in Japan, how to sell property in Japan, and much more.
Please see this article for information on: Getting a property loan as a foreigner in Japan
Please see our step-by-step guide: Guide to Buying Property in Japan
See how much you can borrow and your monthly payments in yen: Yen Mortgage Loan Calculator
For information about purchase and brokerage fees: Breakdown of real estate purchase fees and taxes in Japan
Need to know: Earthquake building codes and technology in Japan
Bilingual Real Estate Agent in Tokyo Answers Your FAQs on Buying and Managing an Investment Property
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