Issue:
August 2024 | Japan Media Review
High costs mean few property heirs want to take on Japan’s millions of abandoned homes
The second-hand retail market in Japan has grown significantly in recent years. The huge boomer cohort is dying off, and it's leaving behind a lot of stuff that heirs are keen to get rid of. Anything of value can be sold, and there are companies that will come to your house and sort through the things that a loved one has left behind. And while they will likely take most of it, they are less likely to pay for all they take. In many cases they may offer to haul it away for a price, and much of it will end up as landfill.
These estate sorting agents have an industry association that counted 2,560 members in 2015. In 2021, the number grew to 12,541, a fivefold increase. The reuse trade publication Recycle Tsushin said the market for second-hand goods was about ¥1.1 trillion in 2009 and ¥2.9 trillion in 2022. It is expected to reach ¥4 trillion by 2030. This growth is being spurred by a "change in consumer sensibility," meaning that more people value secondhand goods than they did in the past, but that may be chiefly due to the enormity of the supply.
And it isn't just heirlooms. Reuse tsushin describes cases of people selling things not long after they buy them. A 38-year-old man brings a "baby gate" to a recycle shop that he bought five years ago for ¥40,000 after his child was born. Though it's practically new, the shop takes it off his hands for only ¥1,500. This new second-hand sensibility promotes recycling by providing a context where consumers always think of an item's value, even after they purchase it. As the president of one reuse service told the newspaper, the meaning of the phrase mottainai (what a waste!) has changed in recent years. It used to be uttered when something still useful was thrown away, but now it suggests that the user may not really know the item still has some worth to others. And with the spread of recycling apps, such as Mercari, that worth can be understood almost immediately. According to a Mercari survey, 40% of Generation Z users are already thinking of what they can resell something for at the time they buy it.
However, there is one category of heirloom that is becoming increasingly difficult to get rid of: real estate. Much has been reported in recent years about akiya, or vacant properties, mainly single family houses, with the foreign press trumpeting huge bargains to people in other countries where real estate can be unaffordable to the average person. In some areas of Japan you can even pick up a house for free under certain conditions.
But this news story tends to obscure the real reason for akiya, which is that the owner or the heirs of the owner don't want the property and cannot sell or otherwise unload it. This problem will become increasingly serious as the boomers die out, since they were the first generation of Japanese who bought residential property en masse during a fairly short period. And since in Japan there has never been a market for used homes, or, at least, not on the same scale as in other countries, homeowners don't keep their properties up the way homeowners in other countries do. More to the point, the homes the boomers bought up until the early 1990s were of poor quality because building standards were kept loose so that homes could be affordable to a larger cross section of workers. Since then, standards have improved (although they still lag behind those in Europe and North America), but the fact remains: Japan is full of old houses that, in many cases, are uninhabitable without extensive, expensive renovations. After all, new homes in Japan are very affordable. Who needs to buy an old house that will need work when you can easily buy a brand new one?
It has always been government policy to promote new home construction at the expense of existing housing stock. That policy has finally become an issue for the children of people who bought new homes in the past. Unlike previous generations, these children do not look forward to inheriting the family home because they bought their own homes at a relatively young age. When their parents die without selling their property, it becomes the responsibility of these children or other heirs, a responsibility that includes paying property taxes on the land, which is one of the main reasons heirs don't remove akiya —property tax on empty residential land is six times what it is for land that has a structure on it.
A recent report by ABC TV in the Kansai region explained the situation of an elderly man who wanted to sell his house and land in Nara Prefecture. The land covered 600-plus square meters and the house was 49 years old. After his wife died two years ago, he moved to a condo in the city. But while the property was only 10 minutes on foot from the nearest train station, he has been unable to sell it, the main reason being that it is located in a "semi-urban" zone, meaning that anyone who buys the property cannot rebuild the house. They can only renovate it, and it may be too old to fix. The man tried giving away the property but has still found no takers.
ABC says these kinds of properties are being abandoned at an increasing rate. One real estate company said they used to get inquiries about a smattering of such cases, but in the first half of this year alone they've received more than 100. The main reason for the increase is inheritance – either the elderly owners don't want to burden their children, or the children who have inherited the homes want to get rid of them.
According to the law, when the registered owner of a property dies without leaving a will, the property automatically goes to the person's spouse, then to their children, then their grandchildren, and so on. If there are no children and the parents of the title holder are still alive, they become responsible for the property. After that, it falls to sisters and brothers. In any event, the law makes sure that someone takes responsibility for the property, whether they want to or not. Heirs can waive their right of inheritance, but it is a complicated and costly procedure requiring the assistance of a notary or a lawyer. In addition, waiving inheritance must be carried out within three months of the heir becoming aware that they have inherited a property, even if it is years after the registered owner has died. And if a legal heir does waive their right to the inheritance, the authorities could still obligate the heir to manage the property if there is some sort of dispute attached to the land with neighbors or local government, such as an abandoned house that could be a fire hazard. The only recourse in such a case is to apply for an inheritance asset manager through a court, who will assign a lawyer to manage the property, and that will likely cost millions of yen.
The elderly Nara man has no children, and while the local authorities could attempt to find other relatives, most do not because of the time and expense; which is why there are so many abandoned homes in Japan. The title holders of many of these akiya are deceased, meaning their heirs, if they have any, did not re-register the property in their names. If an heir doesn't want to take responsibility for a property, they can simply lay low, hoping that the relevant authorities won't be bothered to come after them.
Inheriting an old house is just too much trouble owing to market realities, which make it difficult to sell even the land underneath it unless it's located in a major city. ABC lists seven primary reasons for the rapid increase in akiya: owners do not understand the market situation before they die; elderly owners stop maintaining their properties long before they die; complicated property and inheritance regulations; general lack of funds on the part of the property owner or their heirs; a lack of uniform policy regarding vacant homes; the lack of demand for secondhand houses; no long-term housing policy on the part of the government.
There are only two solutions to the problem on the individual level: sell the property or give it to the authorities. As already pointed out, selling in certain markets is extremely difficult, and while various government entities will receive unwanted properties, the hurdles are high. An NHK report from October 2023 talked about a new system (sozoku tochi kokko kizoku seido, or system for returning inherited land to the state) implemented in April 2023 for government appropriation of inherited but unwanted land. The conditions for acceptance will discourage most people who might want to take advantage of the system: the land can have no structures on it, meaning an applicant would have to pay to have any removed; no inconvenient geological features such as cliffs or unstable soil; no outstanding debt attached to the land; and no known disputes over the title or rights to the land, including border disputes.
NHK points out that even if the applicant can satisfy these conditions, they will end up paying the state to take the land. In most cases, the fee is ¥200,000, but if the land is located in an urban area, it will be more depending on the size. And until the state disposes of the land, the owner must maintain it at their own expense. At the end of August 2023, the justice ministry reported that the various relevant authorities had received 14,000 inquiries about the new system. Among these, 858 made applications, and so far only two have been processed, both in Toyama Prefecture. As NHK points out, when the system is this strict, the result is just more abandoned properties that become derelict, thus destroying the value of the properties surrounding them.
Perhaps the justice ministry watched the report, because a July 8 article in the Economist Online (the Japanese publication, not the British weekly) said that in the meantime, more cases had been approved – 460 as of May 31 – and while that is still only a very small fraction of the number of abandoned properties in Japan, it may indicate that the government has readjusted its screening process. In the end, the Economist says that the government is really only interested in land that it can conceivably sell or use constructively.
A woman who did inquire about the system was interviewed on the YouTube Channel Sozoku no Tetsujin (Inheritance Experts) by several people who have made names for themselves in addressing the akiya problem, most notably Yusuke Yoshikawa, whose own blog, urbansprawl.net, about entire housing developments that have gone to seed due to abandonment and neglect, has made him something of a star in the field. The woman talks about trying to sell her father's land before he dies, and that no realtor she talked to would take her as a client. One suggested she put solar panels on the plot to make money, but her goal is to just get rid of the land. Then she heard from a notary about the new government system, and thought that she would check it out, even though, technically, she cannot use it until her father dies and she inherits the land.
Yoshikawa points out that the land under consideration is categorized for agricultural use, specifically for growing rice, which is very difficult to unload, since before it could be used for some other purpose it would have to have its zoning category changed, and that's very difficult to do for rice fields. The woman said that they already tried that but the relevant authorities "shut the door in our face". The father, who also takes part in the interview, says that he has three daughters, none of whom want the land and who are already studying the matter to see how they can refuse anything they might inherit. All his neighbors, he adds, seem to be going through the same thing. As it stands, he is already receiving notices from the local government saying that he is not maintaining the land properly.
The situation with akiya has become so widespread – some 9 million vacant properties nationwide – that there is little the authorities can do in a practical sense. It can cost ¥3 million to ¥5 million to demolish a house and remove the rubble (which, if not recylable, will also go into landfill), so many people just don't bother until the local government puts pressure on them to do something. Another problem, as already mentioned, is that property lines are not always clearly defined, and before land can be sold or acquired by the authorities, borders have to be confirmed, and at the owner's expense. That means the owner has to hire a surveyor, which can be expensive. In 1951, the government enacted a land registry inspection plan to formalize property lines nationwide, but by 2013 only 51% of Japan's land had been surveyed, owing mainly to the fact that local governments carry it out at their leisure. In most major cities, only about 20% of property lines have been properly set. This lack of clear borders is especially a problem in a quake-prone country like Japan. Following the Great Hanshin Earthquake of January 1995, the city of Kobe found it difficult to rebuild roads and infrastructure because the municipal government had never conducted a thorough survey, and thus reconstruction was delayed. The Great East Japan Earthquake of March 2011 posed less of a problem because 60% to 90% of the affected region's municipalities had completed their surveys.
It is illegal to abandon a property. Once a piece of land is registered to a person, they can only sell it or transfer the title to someone else if they want to get rid of it. There is no process for giving up one's title to a property, which is why the registered owner or the closest heir will always be held responsible for the property. On his website, real estate lawyer Tatsuya Arai told the story of a man in Hiroshima who had to pay a municipality ¥60 million after a mudslide caused a tree on his property to fall on a third party people, killing them. The family of the deceased sued the city and won, so the city demanded that the man compensate them for the suit, saying he was liable for the death since the city had previously sent a notice about the dangerous tree. What is significant about the story is that the man did not purchase the land himself. It was registered under a deceased relative's name, but the city determined that this man was the legal heir to the land and was responsible for what happened on it.
Philip Brasor is a Tokyo-based writer who covers entertainment, the Japanese media, and money issues. He writes the Japan Media Watch column for the Number 1 Shimbun.
Sources
https://abc-magazine.asahi.co.jp/post-27472/
https://www.nhk.jp/p/ohayou/ts/QLP4RZ8ZY3/blog/bl/pDodEAXj7Y/bp/pDWm506Vk1/
