Recent media reports say that housing starts are dropping in Japan, which is understandable but also worrying to those who gauge Japan’s economic health. Japan has long promoted new housing as a prime economic stimulus to the point of downplaying sales of used homes. It’s one of the reasons for the so-called akiya (vacant home) problem, and with the population also dropping, the government can no longer count on high volume sales of new home to fuel the economy, regardless of how attractive they make them. 

It’s also why the central government has done mostly nothing about the akiya problem. As long as new home sales grew, there was no problem, as far as they were concerned. But local governments have always had to contend with empty houses, which are dangerous eyesores that threaten property values. There’s also the problem of absent owners who disappear and stop paying property taxes. Consequently, it’s been local governments that have come up with measures to address the problem.

But now it seems, the central government is getting involved, albeit cautiously. On Oct. 2, Yomiuri Shimbun reported on a new national plan that would have the government subsidizing renovations of houses that may become vacant in order to make them appealing to young families. Next year, the land ministry will launch a model project that will target “homes in cities and surrounding areas” that can be renovated into homes for couples who are raising children. 

The specific type of homeowner for the project will be people who are thinking about moving out of their homes in the future and moving into care facilities. Such actions often lead to vacant properties because the owner does not have an heir or otherwise cannot sell the property. The ministry will interview such owners and, depending on the circumstances, offer the owner subsidies to have the property renovated into a home that would be more suitable for young families or facilities like daycare centers. The subsidy would likely not cover the complete cost of renovation, which the owners would have to carry out themselves. 

Obviously, there is a limited benefit to the plan. The target is only properties in cities and their close suburbs, though the most serious akiya problems are in rural areas and more distant suburbs. Moreover, the subsidy system addresses homes that are not yet vacant but could be, meaning that there is still a possibility that the owner, especially if they live in a major city, can sell their property easily if they try. Presumably, the ministry is thinking of homes that would sell more easily if renovated properly, but, in our own experience, we’ve found that buyers of older properties tend to want to renovate according to their own tastes. When owners or realtors renovate for an assumed general taste it doesn’t necessarily make the property easier to sell. 

The Yomiuri article also leaves out a lot of details that are needed to judge the viability of the project: At what age would the ministry contact homeowners, and what criteria is used to assess their eligibility? How would the ministry persuade the owners to carry out renovations themselves? If the purpose of the project is to check the number of vacant homes in cities and provide properties that will be easier for young families to buy as urban real estate prices go up, it would probably be more effective for the government to just buy real estate itself and rebuild to desired specifications, but that would contradict the tenets of laissez faire capitalism. 

According to a ministry survey, the number of homes in Tokyo and the three surrounding prefectures where the owner is 85 or older is about 340,000. The number is projected to increase to 940,000 by 2033. The increase is similar in the Kinki region: from 210,000 now to 580,000 by 2033. A good portion of these homes were built between the mid-1950s and 1980, meaning they predate quake-proofing technology that is now required. They are beyond renovation. They need to be torn down.

As do many houses that were built after 1981, when quake-proofing standards were first implemented for residential housing. The cost of renovating some structures built even before 2000 may be prohibitive for many of their owners, especially if they are living on fixed incomes. The proposed subsidies, though not finalized yet, will not cover the total cost. 

Demolition may be a more desirable option, especially for the government, since removing a house would create the opportunity for building a new one in its place, which is what the government really wants. (We won’t go into the obvious outcome of generating more waste, which this scheme entails, because that would involve the type of creative thinking the government, with its typically short-term view, seems incapable of) And we found that, in fact, the central government does have a policy for subsidizing the destruction of superannuated residences that the owners cannot or will not maintain. 

Again, the main purpose of this policy is to free up property in cities, where it’s assumed more people want to live. The impetus at present is increased construction costs, so demolition would provide more land that could be developed for affordable housing. According to the Yomiuri, though the policy is still in the discussion stage there is already a budget for it in FY2026 of “several hundred million yen.” The money will come from the land ministry but will be administered by local governments, and will be available annually on a first-come-first-served basis. 

In principle, the subsidy will pay for two-fifths of the cost of demolition, with another two-fifths coming from the local government and the remaining one-fifth covered by the property owner. If the average cost of tearing down a house in a city like Tokyo is ¥2 million, then the central government covers ¥800,000, the Tokyo Metropolitan Government covers another ¥800,000, and the property owner pays ¥400,000. This ratio may change depending on the local government. 

Obviously, in order to qualify for the subsidy there must be a reason for the demolition, and most are for the benefit of the authorities rather than that of the owner: improve community safety and aesthetics, and get rid of structures that are not up-to-date on building codes. Only single-family homes qualify for the subsidy, no apartments or condo complexes. In addition, demolition can be applied to buildings that still contain asbestos, and cinder block walls that are in danger of collapsing.

We looked up some demolition companies on the internet and found a few who are obviously up for the challenge. One even adopted the catch phrase “Akiya Zero,” as if it were providing a public service. As already pointed out, demolition costs in Tokyo start at about ¥2 million, but in the far west portion of Tokyo Prefecture the price can be as low as ¥300,000. In Nagoya, which is considered a major city, the cost can be as low as ¥400,000. Apparently, if you apply for the subsidy, you have to pay the cost of demolition yourself and then receive the subsidy payment later and, of course, there are conditions usually set by the local governments. Some, for instance, insist that they will only subsidize demolition if the land owner plans to rebuild on the land, but in many cases the local government will also partially subsidize the subsequent construction. Anyway, it’s something to think about.