In an effort to disincentivize the owners of abandoned homes from allowing them to rot and decay further, the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) is firming up plans that would see property tax breaks removed for homes that meet certain criteria.
Japan’s annual property tax system provides a 1/6th reduction in the tax on land (the portion under 200 sqm) with a home on it. Demolishing the home would see the tax rate on the land portion return to its full rate, encouraging property owners to keep whatever home is on the land for as long as possible. For homes that are no longer occupied and left to fall into complete disrepair, there is no incentive for the property owner to demolish the home.
This might change, with the MLIT working on a system that will penalize owners of designated deteriorated homes by removing the tax break if they fail to follow warnings to repair or maintain the property.
Similar rules are already in place. In 2015, the Vacant Houses Special Measures Act gives local governments the authority to designate vacant homes that are at risk of collapse, warn property owners to either repair or demolish them, and remove any tax breaks for property owners that fail to follow government orders. In extreme cases, the local government may have the power to demolish the home.
However, designating at-risk homes is a time-consuming process and has a strict set of criteria targeting extremely dilapidated buildings. Of the approximately 3.5 million unoccupied homes across Japan (excluding holiday homes and vacant rentals), local governments have only designated 40,000 homes under this Act. Of those, approximately 20,000 homes have been repaired or demolished by homeowners after receiving government orders. There are still another 200,000 homes across the country that don’t meet these at-risk criteria but are expected to require some kind of measures to be taken in the coming years.
The MLIT’s proposed plan would come with some looser criteria for what constitutes a poorly-managed ‘akiya’ or vacant home. It might be one with broken windows and overgrown weeds.
Source: The Yomiuri Shimbun, January 16, 2023.
