Renting in the plague years

At the moment, the government continues to debate a plan to give families with younger children whose incomes are below a certain line payouts of ¥100,000 per child as a countermeasure to the continuing financial strain brought on by the COVID-19 pandemic. One point of contention is that the government would like to pay half the funds in “coupons” that can only be used to purchase items at offline retailers, preferably within the municipality where they live. The obvious reason for this scheme is to stimulate businesses that are suffering due to the pandemic. Reportedly, the government has said it is up to local governments, who would prefer coupons since the money would likely be spent in their bailiwicks. However, the coupon scheme automatically limits the recipient families’ discretion with what they can do with their handouts. Many would obviously like to use that money for things other than purchases.

Like rent. In a front page article that appeared Dec. 15, Tokyo Shimbun reported that there is a good possibility that the rate of evictions nationwide will increase “rapidly” in the coming year. Actually, the newspaper doesn’t use the word “eviction” since there is really no exact equivalent in Japanese. The word that’s used is “taikyo,” which means “leaving” in various senses of the term. In principle, it is difficult for a landlord legally to evict a tenant for any reason in Japan, but there are many other ways to get a tenant to leave a property if the landlord doesn’t want them there anymore. 

The thing about the anti-eviction law is that it is the only national law that protects the interests of tenants, and while it sounds like a major protection, other tenant rights that are taken for granted in other countries regarding things like fees and rent control and property maintenance are not similarly protected in Japan. However, tenants who are not formally receiving government assistance and find themselves in temporary financial straits can apply for rent relief from the central government. After the pandemic hit almost two years ago, the government relaxed some of the conditions so that more people could receive the subsidy and for longer periods of time. It proved to be popular. According to Tokyo Shimbun, the number of approved applications in fiscal 2020 was 34 times what it was the previous year.

Obviously, many renters were suffering financially and the subsidy was a big help, but while the period for applications was extended, it wasn’t made indefinite, and many recipients who have been relying on that money will soon be cut off. According to the emergency revision to the rental subsidy law, households in need could receive the funds for a maximum of 15 months. Tokyo Shimbun, in fact, covered the matter because a number of citizens groups had a meeting in Tokyo on Dec. 14 to demand the government make the rental subsidy program permanent and open-ended. 

In order to convey the ramifications of a possible end to the subsidy program, Tokyo Shimbun profiled one recipient, a woman in her 60s who lives in a rented house with her husband in an undisclosed location. Before the pandemic, the woman worked as a freelance pianist, playing at weddings, restaurants, and the like. Due to the nature of her work, no bank would give her a housing loan, so she has always had to rent. Fortunately, she found a place that allowed her to have a piano, and she has lived there for 30 years, paying ¥100,000 a month. She made on average about ¥370,000 a month in income before COVID, but afterwards many of the venues that hired her either closed or cut their hours, and her income dropped to about ¥50,000 a month, so she applied for the rental subsidy and was approved. She has been receiving about ¥64,000 a month in rental assistance, the amount designated for a two-person household, but November was the last month she could receive the payment. Without it, she has insufficient income and savings to pay her rent in full. Her only recourse is to apply for welfare, but approval of government assistance is based not only on income, but also on assets, and she wonders if the authorities would make her sell her piano before they approved her application.

According to the chairman of the tenant support groups that met on Dec. 14, the pandemic has brought to light a situation that was in the shadows before, namely that there is a crisis in housing for low income households, a situation that is not limited to Japan. However, as mentioned above, there are few laws that protect renters here and thus tenants have to either rely on the goodwill of their landlords or on the government, which places strict controls on the dispersal of welfare and emergency subsidies. The tenant support groups have submitted a petition to four opposition parties to demand a permanent rental subsidy system, since many people who have been receiving the subsidy are still unemployed or underemployed almost two years into the pandemic. What will happen to these people if they can’t make their rent?

In addition, the amount of subsidy, as well as the conditions for approval, differ from one local government to another, even if the money itself comes from the same source. For instance, in order to receive the subsidy, a single-person household in the 23 wards of Tokyo has to make less than ¥137,700 a month in income and have savings of less than ¥504,000. If approved, they receive ¥53,700 a month for 3 months and then have to reapply for extensions, but only up to 15 months maximum. 

As we’ve mentioned countless times in this blog, renters are neglected because they don’t fit into the government’s overall growth scheme, which prioritizes homeowners. Another article in the same edition of Tokyo Shimbun addresses this phenomenon directly by talking about a major revision to the tax system related to housing loans. The ruling coalition announced it would lower the tax exemption rate for borrowers from 1 percent to 0.7 percent due to continuing low interest rates. However, the period for which the tax cut would be in effect was extended from 10 years to 13 years for loans beginning up until 2023. Tax cuts for homeowners have always been controversial since they automatically discriminate against renters, and Tokyo Shimbun points out that the extension of this policy by any means shows that the government doesn’t really care about renters at all. Both the tax exemption extension and the rent subsidy were implemented as measures to counteract the effects of COVID, but the exemption is for all intents and purposes open-ended, while the subsidy isn’t. 

A long time ago, the central government stopped subsidizing public housing, leaving the matter completely in the hands of local governments. As a result, the number of public housing units in Japan peaked in the 1970s. In addition, over the years the bar for public housing elegibility has been set higher and higher by local governments, while incomes have mostly remained the same. A smaller portion of the population has been able to buy homes since the end of the bubble era in 1990s as the number of single-member households increased and the percentage of regular employees decreased. 

In essence, the portion of the population that falls into low-income brackets is on the rise, and those people invariably rent. In order for Japan to maintain a stable social order housing must be guaranteed, and not just on a month-to-month basis. 

One comment

  1. Lee · December 18

    Hi,

    Another interesting article. Always enjoy reading them.

    The various Japanese social insurance and welfare assistance schemes really sound cheap and frankly pathetic, but the country still manages to spend trillions of yen over the years in the budget on ‘stuff’ that boggles the mind. IMO more money in Japan needs to be spent on welfare and social assistance programs and less on things like construction….

    I am wondering about rent during the pandemic in Japan.

    Here in Australia there was a big impact depending on the area. Inner city areas and areas that had lots of apartments for rent to mainly international students have seen rents fall. Areas outside Melbourne in regional towns have seen rent soar.

    And in the USA rents have been allover the place with some huge increases and others falling.

    I haven’t heard of any really big population movements in Japan in the news and basically nothing about how rents have changed over the duration of the virus pandemic.

    Has there been much change?

    (I look at the apartment we used to rent in Nagoya once in a while and see that the rent hasn’t really changed much over the past 30 years and the building and apartments are still in very good condition too.)

    Like

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