Renovated apartments offer cheaper alternative to new

A renovation by Rebita. Apartment size: 87 sqm / Building age: 32 years / Time required: 3 months

There is a common belief that Japanese only like new things – new cars, new appliances and new homes. However, with the price of new apartments rising and incomes falling, buyers have been turning their attention to older properties on the resale market.

Second-hand apartments can be about 20% lower than the price of a brand new one, although in prime locations in central Tokyo the difference in price is almost zero. As you move to the outer suburbs, eg. 40 minutes by train from Tokyo or Osaka, you can find older properties for about half the price of new ones in the same area. Travel even further and you may find secondhand apartments in 10-year old buildings selling for just 30 ~ 40% of the price of a new apartment.

An apartment’s interior can be upgraded to almost the exact finish as a brand new apartment, although consumers do need to be wary of factors such as the building age and possible issues with piping.

There are two types of renovations in Japan:

  • Reform: This may include replacing the wallpaper, flooring, kitchen and bathrooms. The layout is usually kept as-is.
  • Renovation: A renovation can be more intensive and may include completely stripping the apartment back to its bare shell before reconfiguring a layout more suitable to current lifestyles.

Home buyers have two options:

[1] Buy a renovated property

[2] Buy an un-renovated property and re-design it to their own tastes

When choosing a property, buyers will need consider their total budget and the time required for renovating. According to a survey by renovation company Intellex, buyers aged in their 50s and over tended to prefer renovated properties over brand new ones. Buyers in their 30s and 40s placed preference on the quality of the renovation and the layout. The average cost spent on renovations was approximately 7 million Yen.

To ensure the quality of a renovation, it is essential to use the services of a company that provides a warranty or after-sales service. Renovation and real estate companies that are members of the Residential Renovation Promotion Council are required to meet certain obligations which include a water and gas pipe inspection and must provide a two year after-sales service.

Before you buy

If you are looking for an apartment to renovate yourself, it is a good idea to do the following before purchase:

  • Hire someone from a renovation company to inspect the apartment with you.
  • Check the management association guidelines: Some buildings, particularly older ones, may have rules that prohibit the use of wood flooring and only allow carpeting. This rule may have been introduced in buildings with concrete slabs that are not thick enough to provide adequate sound insulation, and also in older buildings that do not have floating floors and dropped ceilings.
  • Check for any possible obstructions within the apartment (eg. duct space or interior supporting walls that cannot be removed).
  • Does the apartment have floating floors or is the flooring laid straight onto the concrete slab? Floating floors have a gap between the slab and the floorboards which allows space for running piping. Older apartments may not, which means relocating kitchens and bathrooms may be very expensive or not even possible.
  • Does the management association have a long-term schedule of repairs and maintenance for the building and are repairs being carried out as planned?
  • When was the last major repair and renovation?
  • How much is in the building repair reserve fund and is it enough?

While you can upgrade the interior of your apartment, changes to the rest of the building are the responsibility of the owners association.

Buyers should also take note of the building’s age and earthquake resistance. The most recent change to earthquake-resistant construction codes was introduced in June 1981. Buildings built to the newer codes are called ‘Shin-taishin’ and are designed to provide extra reinforcement against earthquakes.

Reinforced concrete structures have a service life for tax depreciation purposes of 47 years, but there are 50 ~ 100 year old concrete buildings that are still standing. The actual life of a building will depend on how well the owners maintain and care for it.

A renovation by Renoveru. Apartment size: 77 sqm / Renovation cost: 9,570,000 Yen
A renovation by Renoveru. Apartment size: 68 sqm / Renovation cost: 7,000,000 Yen

Source: The Mainichi Shimbun, March 7, 2015.

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