Japan free homes: Empty houses given away and sold cheap

Akiya, Japan’s vacant home phenomenon is now trending. The Ministry of Land, Infrastructure, Transport and Tourist (MLIT) reported in 2013 that about 8.2 million (about 13.5% of total) houses and apartments were empty. The number is now estimated to have exceeded 10 million. Some organisations expect that by 2033, more than 30% of all Japanese homes might be abandoned or vacant.

With the country’s population falling by 271,058 last year, and many of those who remain migrating to Tokyo, the Japanese are leaving their houses behind.

Akiya are a social issue with many aspects: Apart from being thought of as unsightly, they can also attract hazards like vandalism, pests or the deteriorating structures can collapse over time. Furthermore, municipalities with a multitude of abandoned homes not only receive less tax income, but the empty buildings also devalue the area in general.

On the other hand, the akiya are an opportunity — and not just a business opportunity, but a chance to reimagine Japan’s postwar culture of disposable housing and suburban sprawl. The akiya are a symbol of decline, social failure, yes, but they may also be the path to a better future.

Akiya banks provide lists of all abandoned properties for sale in a municipality, usually posted online, that offer the homes at low rates and with a simplified buying and selling process to move things along fast. These properties are cheap, often spacious and they sit on large plots of land in the Japanese countryside — no wonder that they are becoming popular with foreigners looking to change their metropolitan existence to a slow life in the country or Japanese city folk interested in a second home.

Properties listed on Tochigi’s “akiya bank”

On one website, several homes are free, with the buyer having to pay only taxes and fees such as agent commissions.

“This is usually because the owners cannot take care of the property anymore or do not want to pay the property tax that applies in Japan for a home that they do not use,” said real estate site REthink Tokyo in an October report.

The free homes also usually require major refurbishment because they are old and run down. But some local governments — such as the Tochigi and Nagano prefectures — offer subsidies for renovation work on vacant houses.

For vacant homes that are not free, prices can range from 500,000 Japanese yen ($4,428.50) to close to 20 million yen ($177,140) depending on location, age and condition of the house, according to the listings seen by CNBC.

Are you considering to buy akiya?

Generally, there are three main problems with akiya. The first one relates to acquisition of the property. Say, for example, you find an abandoned home in a good location that seems to be in reasonably good condition. How can you buy and obtain clear title to the property if you can’t find the owner? In Japan, there is no requirement for transfer of ownership to be recorded at the Legal Affairs Bureau, so how can you find out who the rightful owner is? You can look at Fixed Asset Tax records, but that doesn’t help when the owner is deceased and isn’t paying anymore. How can you be a buyer when there is no seller? The answer is you can’t, and so the property remains vacant and abandoned.

The second main issue with akiya has to do with the actual physical condition of the property: oftentimes the structures are so dilapidated that a simple refurbishment or even renovation will not be enough. You can divide the main physical problems into two categories (1) problems having to do with insufficient air circulation, and (2) problems having to do with (sometimes undetected) leaks or standing water. The first problem can lead to mold and condensation problems, while the second can cause total functionality of the building to break down. With the average cost to renovate a bathroom in Japan totaling approximately 630,000JPY (according to a 2011 report from the Ministry of Land, Infrastructure, Transport and Tourism), there are big costs associated with almost any renovation. And no one should forget that enduring the trials and tribulations of refurbishing, renovating, and rehabilitating a whole akiya, room by room, is not for the faint-hearted.

The last issue with akiya that always seems to come up is abandoned personal property at the house. It can cost significant time, money, and effort to remove and dispose of furniture, radios, books, television sets, plants, garden gnomes, statues, tools, etc. belonging to the prior owner. People leave behind anything and everything you can think of, literally. Needless to say, sometimes it can be a highly unpleasant experience discovering exactly what you have bought when getting intimate with your new akiya.

On the plus side, you may be able to find a real bargain in your akiya, and the location may be ideal. If you are willing to put in the extra effort of acquiring and renovating a vacant house, it can be worth the trouble. And for some, the rare opportunity to design your own living quarters the way you want with the exact renovations you desire is enough to take the akiya plunge.

It should be noted that there are a variety of local government subsidies for those wishing to refurbish or renovate an akiya. For example, Toyoshima-ku in Tokyo gives owners subsidies for refurbishments and renovations of up to 100,000JPY and 200,000JPY, respectively, if certain conditions are met. If you are seriously considering purchasing an akiya, you should find an advisor who knows the applicable national and local rules for taxes and subsidies to help save you money.