The Cabinet has approved a reform to the apartment redevelopment law which will lower the voting ratio required before an apartment building and land can be sold. Previously, 100% of apartment owners had to be in agreement before the building and land could be sold, but the revision will reduce this ratio to 80%.
It is hoped that the loosening of the regulations will encourage the demolition and redevelopment of ageing buildings and reduce the number of buildings at risk of collapse in an earthquake. It could also open up opportunities for developers to re-purpose the use of the land from residential to commercial.
The decision will be submitted to the ordinary session of the Diet in mid-March and could be enacted within 6 months.
The revision applies buildings built before 1981 to the former earthquake-resistant building codes (called ‘kyu-taishin‘). To be eligible, the apartment owners must make a request for a building inspection which will determine the relative strength and earthquake-resistance of the building. Once they receive certification, they can sell the building and land.
If at least 80% of apartment owners agree to the sale, they will form an association which will sell the building and land to a buyer. The owners that disagreed to the sale will be compensated by the association, while tenants will receive compensation to assist with moving expenses.
For old apartment buildings that are being redeveloped and have received the certification, the total floor space index (yosekiritsu) may be increased to allow additional apartments. A developer can then sell these extra apartments which will reduce the financial burden to the existing apartment owners.
According to the Ministry of Land, Infrastructure, Transport and Tourism (MLIT), of the 5.9 million apartments across Japan, approximately 20% are in kyu-taishin buildings. Redevelopment has stalled in most cases as agreement from all owners has been a difficult task.
Source: The Nikkei Shimbun, February 28, 2014.
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