Large-scale repairs may become a growing problem for new and old apartments

As many as 14 million people live in 6 million apartments across Japan. In Tokyo’s central 3 wards, over 50% of the residents live in apartments. Of those 6 million apartments nationwide, 1 million are in buildings over 30 years old. In 10 years from now, a third of all apartments will be over 30 years old.

The main issue facing ageing buildings is maintenance and large-scale repairs. 

“Replacing an elevator car at the 20-year mark can cost 9.5 million Yen, and repairing or upgrading intercom and security features can cost 7.5 million Yen. To repair a building’s exterior, it can cost between 600,000 ~ 800,000 Yen per apartment for a building with a painted exterior, and 800,000 ~ 1,000,000 Yen per apartment for a tiled exterior (based on buildings with 50 ~ 100 apartments). To pay for these future repairs, a monthly levy is collected from each apartment owner.”

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) recommends that long-term repair plans are revisited every 5 years. Some experts advise that it is better to revisit the long-term plans in the first year following the building’s completion.

“15 years ago it was common to conduct large-scale repair work once every 10 years. Nowadays, it may be once every 12 or 13 years. There are even examples of the first repairs being carried out after 18 ~ 20 years.”

Developers will prepare a long-term repair schedule which is a forecast of expected building repairs and major maintenance work to be carried out over the life of the building. Many developers tend to forecast major repairs once every 10 years.

Buyers must pay careful attention to the developer’s repair schedule and estimate of future funds available.

An apartment owner will typically have two monthly fees to pay – a fee to the management company who runs the building and another fee that goes towards the building’s repair fund. Developers decide these fees when selling new apartments and usually set the repair fund fees low to entice buyers. It is not uncommon to see the repair fund fees start to creep up a few years after a building is completed.

If there is not enough money in the repair fund, necessary repairs and maintenance may not be carried out and a building can deteriorate rapidly. Owner’s will see the value of their asset drop accordingly.

Of particular concern is repairs on apartment buildings over 30 years old, as well as new high-rises over 20 storeys.

Old buildings were built to now-outdated building methods. Construction materials may have aged and become worn out over time, which can lead to maintenance issues. Replacing the building’s water pipes, for example, can cost over 300 million Yen in some cases.

As for new buildings over 20 storeys, construction companies tend to build each one using the latest cutting-edge construction methods available at the time. As a result, no two buildings may be alike. When it is time to conduct repairs down the track, normal off-the-shelf materials and equipment cannot be used and repairs become costly.

The high-rise apartment boom began in the early 2000s, and we will soon be at a point where these buildings need to carry out their long-term repairs.

What can you do?

Before signing the dotted line to purchase an apartment, new or old, take the time to investigate the building’s repair history or future repair forecasts, the financial situation of the repair fund and train your eye to look for things that may become costly over time (eg. machine parking can be a money pit).

The era that the apartment was built in can also affect future repair costs. In the 1980s, more and more buildings had tiled exteriors. In the 1990s, water pipes were made of PVC rather than metal.

Sources:
Business Journal, August 19, 2013.
Toyo Keizai, June 10, 2013.

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