Apartment redevelopments may become easier

The government is considering a further loosening of rules regarding the redevelopment of older apartment buildings. Under current regulations, at least 4/5ths of the apartment owners must vote in favor to redevelop an apartment building. To demolish the building and sell off the land, a 100% vote in favor is usually required. 

The proposed change would reduce the voting ratio to 3/4ths for redevelopment, and 3/4ths to sell off the land.

A further discussion is underway that could potentially see owners that are either unknown or unreachable not included in the vote count. Unknown owners becoming a worrying trend in older buildings where units have been inherited but heirs have not updated the property register. This is also something overseas owners should keep an eye on as they may be left out of any important notices or activity happening within the owners association (this is not an issue if you hire a real estate company or manager to oversee your property while you are out of the country and act as your local point of contact). 

Typically, when a building has a large number of unreachable owners, it can be impossible for the owners association to obtain the necessary vote to redevelop. If just one owner cannot be reached, it is impossible for the owners association to even obtain the 100% consensus normally required to demolish and sell the land. 

The Ministry of Land, Infrastructure, Transport, and Tourism (MLIT) estimates that there are as many as 1.03 million apartments in buildings over 40 years old across Japan, accounting for about 15% of the total. By 2040, this number is expected to swell to 4.05 million apartments. Of the 1.03 million old apartments, about a quarter are located in Tokyo where there is at least the potential financial viability of redevelopment or selling off the land.

Redevelopment is not an easy or quick task and is not guaranteed to happen in all cases. One redevelopment in Shinjuku took over 30 years to get off the ground due to some early opposition from apartment owners. 

Sometimes redevelopment is given up on completely. The owners association of the 53-year old Inasan Danchi housing complex in Chiba Prefecture talked about redevelopment during the economic highs of the late 1980s but discussions stalled after the crash of the asset bubble. Obtaining approval in the years that followed proved too difficult. More recently the apartment owners have decided to focus their efforts on maintaining the older buildings with the goal of getting at least 80 years out of the 1960s apartment blocks. 

*We use the word apartment, while in North American English it would mean condominium. 

Suumo Journal, December 7, 2021.
The Nikkei Shimbun, December 10, 2021.

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