“Japan is giving away their abandoned homes for free!”
Sound familiar? You may have seen these headlines going viral recently. That’s largely thanks to coverage by CNBC and CNN and other popular news sites that reported on how you can now get one of these abandoned houses in Japan for free. You could hardly scroll through your Instagram or Facebook feed without someone announcing they’d found their one-way ticket toward home ownership in Japan.
That’s right. You could now buy a house in Japan for ¥0! Why?
Because there are so many of them, thanks in part to Japan’s aging population and preference for new houses over old ones. A Tokyo-based real estate media company, Real Estate Japan, even reported that they received a few inquiries from foreigners about how to nab one of these abandoned homes in the past few months.
— LADbible (@ladbible) December 4, 2018
Well, here’s some news for you.
These homes aren’t 100 percent free. In fact, they require renovation, investment, and come with strict terms and conditions to make the home livable — the kind of terms and conditions that would make any potential buyer think again because of the price tags that go along with them.
What are ‘akiya’, and why are there so many in Japan?
The abandoned housing epidemic in Japan by the numbers
So how did this abandoned houses thing, become a thing, anyway?
Houses that have become abandoned are referred to as akiya or 空き家 in Japanese. In 2013, just over 8 million out of 60.6 million homes in Japan were considered to be akiya, or vacant, making that one in seven houses that are abandoned. According to the Ministry of Internal Affairs and Communications. That’s a lot, but currently, the estimate of akiya in Japan has risen to exceed 10 million.
By 2033, it’s estimated that 30 percent of all homes will be vacant or abandoned.
In addition, it’s thought that 900 small towns will no longer exist by 2040, so the government hopes that the akiya scheme (or the Special Measures Act on Promotion of Measures on Vacant Houses — more on that later) will act as a last-ditch attempt to revive these threatened areas.
Why are there so many abandoned houses?
There are numerous and complicated reasons why these once memory-filled homes became vacant. The most obvious is the declining birthrate and an aging population, but other reasons aren’t discussed so often.
Buyers must be willing to live in the house despite the town’s low population and little financial potential.
As the old saying goes, it’s all about location, location, and location — and property tax. Most akiya are located far away from major cities where a good portion of jobs are found.
The houses are way out there. Millions of vacant homes are spread throughout Japan, but 10 percent of all akiya are in the rural prefectures of Kagoshima, Kochi, and Wakayama. Akiya are specifically centered in rural and suburban areas where populations are rapidly declining.
Although other areas have higher numbers of akiya, Tokyo does have its fair share of empty homes. In the apartment-dominated capital city, one in 10 homes are left to rot which is a higher ratio than London, New York and Paris, according to an article in the Japan Times.
Buyers must be willing to live in the house despite the town’s low population and little financial potential since the point of this program is to repopulate dying towns. Even if the abandoned house was in good shape, younger families often don’t want to relocate in a town that may not exist in the near future with no sustainable development.
For a lot of foreigners, you might have to drive hours to your job in the nearest large city, work from home, or start your own business in your new little neighborhood.
Money is also a factor as to why these houses are abandoned, according to an article from Real Estate Japan. The younger generation often abandons them because they don’t want to pay the lofty property tax. Therefore, a main driver of the akiya problem is that the actual owner does not want to admit ownership because of the tax liability.
So, another big reason why people don’t buy akiya is it is very difficult to check the title (ownership) of akiya. If you cannot find the owner of a property, that presents a very real difficulty in trying to change ownership to your own name, according to Real Estate Japan.
After a while, the value decreases due to risks including fire hazards, termites, hygiene problems and property decline. These factors overall lower the property’s value and deter new buyers from investing in the house. But that is just part of the issue.
How to buy, restrictions and other fees
What kind of hidden fees might I have to pay if I get an akiya?
Congratulations! You just got approved to buy your new akiya home… Are you ready to pay the extra fees besides the house and land value? Be prepared to pay other fees that could include administrative and management fees, registration and license tax, agent commission, other taxes such as an acquisition and property tax. The cost for each of these varies on a case by case basis based on the property, but as an example, these fees could end up costing more than USD$4,000.
Are you willing to spend money to renovate and fix up the property?
Most akiya are in very poor conditions to the point where renovating and repairing the house could equate to the cost of buying a new home. Sometimes the government can give assistance by providing up to ¥200,000 (USD$2,000) if renovating the house benefits the community, but there are eligibility requirements depending on the prefecture. Otherwise, to fix up the house could cost thousands of more dollars.
If you really want to check out a listing — go to an “Akiya bank.”
Abandoned houses are listed on “akiya bank” websites, which list properties for sale at a low rate.
While many homes are listed at low prices and sometimes even the eye-catching “price” of ¥0, there are still conditions that have to be met which certainly require work — and money — be put into the house before it is even livable.
The listings, which are in Japanese only, show the price and a few photos of the akiya, but a majority of the property details aren’t available online. You’d have to see the akiya in person to see the true conditions of the property.
Here are the two websites, as recommended by Real Estate Japan, that all of the 558 municipalities and local governments that have akiya contribute to.
There are also blogs dedicated to promoting the country life experience and their akiya homes.
So, can a foreigner even buy one of these houses?
While a foreigner can buy one of these homes, there are restrictions to keep in mind.
For example, some contracts to purchase an akiya require the buyer to permanently live in the house. You must make sure this clause is not in your contract because it could go against restrictions on your current visa.
Next, many of these available homes can’t be purchased at first but are instead rented out. One instance is a few hours north of Tokyo in Miyagi Prefecture. An akiya can be listed at just ¥35,000 (USD$350) per month, tenants are required to live in the house faithfully, and then the land and house will be transferred to the renters after 20 years or so.
Similar stipulations apply in some Okinawa vacant homes with ¥50,000 (USD$500) per month for 22 years.
In Tokyo prefecture, there are sometimes specific requirements to rent akiya that favor younger families, which is common. For example, rent will be reduced by ¥5,000 (USD$50) per child per month. Other restrictions include that the renter must:
- Be under 43 years old
- Be a younger, married couple (only sometimes)
- Have children under middle/junior high school age
Have you noticed there is farmland within the akiya property? Welcome to farm life!
Have you noticed there is farmland within the akiya property? Welcome to farm life! There are more restrictions if the house comes with farmland.
- If farmland is present, potential buyers need to get approval from the local agricultural committee (Nogyo-iinkai) since the buyer will have to engage in full-time farming (not as a hobby)
- If the property comes with farmland, you must become a farmer
- The committee will visit the farmland to collect, organize, analyze, and provide information about the land to appropriately fulfill its functions
Don’t want to be a farmer?
Yamamoto Property Advisory, who help foreigners buy homes, say you can temporarily register to preserve your title rights which can postpone farming on your land. When that expires, you’ll be expected to eventually utilize the farmland. As an alternative, owners can rent out the land for other farmers to use instead. If you don’t like any of these options, perhaps it’s best to find a different akiya without farmland.
So, is it really worth it?
At the end of the day, you may want to ask yourself, is it worth it to meet the rigorous requirements to save Japan’s empty house syndrome? Or is it just a really great marketing ploy?
If you still have more questions, check out resources on akiya homes in Japan on Real Estate Japan.