The Lie of the Land

Here is another chapter from our unpublished book about housing in Japan based on our own experience of trying to buy a home. This one is about residential land usage.

Example of a private road built for a future fukurokoji housing development

“It’s about the size of a cat’s forehead” – proverbial Japanese rejoinder when asked how much land a person owns

The real estate agent picked us up at the train station in a company car with long scratches on the side, probably inflicted during attempts to park in tight, unfamiliar spaces. We drove to the property through dense suburban sprawl overshadowed by pylons and interrupted by small plots of farmland. 

The two-story house had royal blue siding and was sixteen years old. The owner moved out two years ago. The wallpaper was discolored, the laminate wood floors spongey, the second floor “veranda” filled with debris. The price: ¥5.8 million. We estimated it would take at least ¥6 million to make it livable, but ¥12 million for the whole thing seemed too much. Moreover, anyone who bought the house would have to assume the lease for the land, which was ¥38,000 a month.

The agent explained that the same landlord owned the property under the other four houses on the street. The owners all had them built at the same time and paid the same rent. The leases were 50 years, which meant the owner of the blue house was still paying rent even though he didn’t live there any more, and would continue paying rent until he found someone to buy the house and take over the lease. He originally wanted ¥12 million, but had come down to ¥5.8 million about a year ago. We asked what the options were if he couldn’t find a buyer.

“Oh, he could easily rent this place, depending on how much he asked,” the agent said. “Many people in this situation do that.”

This concept of owning a house on rented land, in Japanese called shakuchiken, isn’t uncommon. According to the land ministry, between 1993 and 2007, 35,492 single-family homes and 18,937 condominium units were built on rented land, a trend that peaked in 2001, when many companies in the Tokyo Metropolitan area starting selling off property, fueling a development boom characterized by cheaper condos. When prices rose after 2005, shakuchiken started becoming popular again. The agent said that the number of people building houses on rented land was increasing, “but you don’t see so many for sale.”

As a rule, the value of homes in Japan depreciates rapidly, but land is still expensive, and not just in urban and suburban areas. Because of usage laws that make it difficult to shift land designated for agriculture to residences, even the countryside can be costly. 

We had decided to check out shakuchiken after talking to a friend, also self-employed, who had a house built on rented land seven years earlier. He and his family wanted to live in Kamakura, the trendy center of traditional culture located on the Miura peninsula just south of Tokyo, but were looking to rent since they didn’t think they could afford to buy a house there. A real estate agent directed him to a plot of land being developed by a housing company. The plot was owned by a local Buddhist temple.

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Guilty as charged

Storage heater and friend

In the previous post we talked about our decision to go all-electric from the perspective of not wanting to deal with gas any more. However, this reasoning should not be taken as an unconditional endorsement of all-electric houses. Electricity is what it is—electrons moving in a certain way to transfer energy—and is separate in meaning from how it is produced. Natural gas is a substance whose mining and combustion have negative effects on the biosphere. Electricity is not a substance, so the issue surrounding electric power is how it is derived, and since we weren’t going to install solar panels—a choice that, at the time, was based on our financial outlook, and one we now regret—we assumed that we would have to buy all our electricity from the monopoly that supplied it in our area, Tepco, because at the time the energy market had not yet been liberalized. So it was a devil’s bargain, since at the time (2014) Tepco generated electricity chiefly from burning fossil fuels, though it was no secret to anyone that the company’s main wish was to bring back all the nuclear reactors it shut down in the wake of the Fukushima meltdown. We weren’t comfortable with either of these energy sources, and therefore had to live with the fact that we would (by buying thermally derived power) or could (by buying nuclear power) be paying into a system that was in some way unsustainable. 

In terms of climate control, summertime wasn’t a problem since we haven’t used air conditioners for years, mainly as a matter of preference. In fact, one of the criteria for choosing a place to build a house was relatively cooler temperatures during the summer. Given that we still opted to live in the Kanto region, that wasn’t very easy, but we managed to find a plot of land within a wooded area that was two to three degrees cooler on average than surrounding areas. So the main problem was heating the house in the winter with electricity, which can be expensive. We opted for storage heaters, which tend to be more popular in northern Japan and along the Japan Sea. The units are large boxes filled with ceramic bricks that heat up at night using electricity and then radiate this stored energy during the day. This method takes advantage of two phenomena—the human sleep cycle, and Japanese power companies’ practice of charging less for electricity at night than they do in the daytime. This latter point is based on the idea that large power generators are always online, but that the electricity they produce at night mostly goes unused, so businesses and homes that can use that surplus power pay less for it. Of course, our storage heating solution did nothing to help the environment, but at least it used power that would otherwise have gone to waste. Our water heating system, called Eco-Cute (a play on the Japanese word kyuto, or “hot water supply”), used the same cycle—heat the water at night for use in the daytime. We’ve been happy with the storage heating system. There is one unit on the first floor and another on the second floor, and by adjusting the amount of energy absorbed depending on projected temperatures, we’ve enjoyed a uniformly warm house throughout all the rooms during the winters we’ve lived here, something we, as a couple, have never really enjoyed in Japan, as anyone who has lived here for any length of time knows well. Moreover, we calculate that we don’t pay anymore to heat our home exclusively with electricity than we did to heat our home with gas, kerosene, and/or electricity in the past. 

But that may not last much longer. We recently received a notice from Tepco outlining payment changes for the future. The notice is supposed to be good news, since it essentially says that unit fees for electricity will be going down. However, the nighttime discount that we take advantage of for our heating uses will be discontinued. We were a bit taken back by this development, since the whole point of the storage heating system is to tap that surplus energy, but then we realized what it was all about. Some years ago, when we started writing about energy issues in Japan, especially with regard to nuclear energy following the 2011 meltdown, we learned that the nighttime discount was originally implemented because of nuclear energy. Reactors cannot easily be shut or powered down, and thus, unless they have to be serviced for whatever reason, they always run at full capacity. Thermal power stations that use fossil fuels—furnaces, to be exact—can be shut off or powered down more readily. So the nighttime discount became a normalized business practice in Japan because nuclear power by definition always produces a large capacity surplus at night. After the Fukushima meltdown, Japan shut off its nuclear reactors, and only 10 have come back online since, so the reasons for nighttime discounts are no longer as compelling, even though thermal power also produces a nighttime surplus. More importantly, as renewable energy becomes widespread, nighttime discounts become meaningless, especially with regard to solar power—the sun doesn’t shine at night, so there’s no excess power being generated. None of these functional aspects make our storage heating system any less effective in the task it was developed to perform, which is heat our house, but it does change the whole economic rationale for the system. 

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Gas pains

In the last three years, almost 30 cities in California have moved to reduce the use of natural gas in buildings, mainly through banning installations of gas lines in new structures. Last summer, the state legislature, in fact, approved energy standards that, while not actually prohibiting the use of natural gas, would greatly expand the use of electrical appliances for heating, cooling, and cooking in a move to greatly reduce consumer reliance on fossil fuels, including natural gas, which is considered a prime contributor to global warming. In December, New York City went California one better with an outright ban on fossil fuel combustion in future construction of residential and commercial buildings, thus bringing about the beginning of the end to gas use in the city.

This trend seems irreversible as more countries approach their deadlines for reducing greenhouse gases as dictated by various global agreements. Though some pundits insist that replacing natural gas with electricity will not solve climate change since electricity has to be generated somehow, and often through the burning of fossil fuels, the concerted worldwide push toward greater use of renewable sources will eventually obviate the need for these fuels. And, of course, the problems of natural gas go beyond its immediate and long-term effects on the atmosphere. Mining damages soil and water resources; gas is inherently dangerous and expensive to transport, whether across continents or across cities; and gas usage within homes is now known to cause health problems, including cancer. 

None of these issues entered into our decision to not use gas in the house we built in 2013 since “city gas,” as it’s called in Japan, is not accessible in the place where we built the house. However, it didn’t really bother us because we had had it with gas and even if it had been available we wouldn’t have used it. This attitude had less to do with worries about the environment than with our own preferences and convenience. Using it as a heating source, we’d always felt ripped off by Tokyo Gas, the monopoly in the places we rented up until 2013. The company is the perfect example of a capitalist enterprise that uses its stranglehold on a utility to bleed customers. Not only does Tokyo Gas (and probably every regional gas utility in Japan) overcharge for the gas itself, but it makes it so that the infrastructure that delivers the product requires serious investment. When we moved to a high-rise rental in Tokyo that had just been built, in order to use gas for heating we had to buy special stand-alone units for each room from Tokyo Gas because the piping system was unique to the building. Each unit cost as much as ¥45,000, and then when we moved out of the building more than ten years later and into a new rental that had gas heating from Tokyo Gas, we couldn’t use these units because the apartment we rented didn’t have the same system, even though it was built after the one we lived in previously. Tokyo Gas had already moved on, and there was no demand for the units we owned, so we had to throw them away.

Moreover, we had fallen out of the habit of deep frying foods at home or even grilling fish. If we wanted those dishes, we’d buy them already prepared at the supermarket. Mainly we were tired of scrubbing the burners and the range hood with steel wool, and storing and disposing of rancid cooking oils, and tended to associate these things with gas ranges and open flames. 

So our house is all-electric, the stovetops IH, which are easy to clean. That isn’t to say we couldn’t have gas in our lives any more, only that we couldn’t have natural gas. We could have liquefied petroleum gas, sometimes called propane, which is available everywhere in Japan, but that would require appropriate piping within the house, and when the builder suggested it to us we thought about it and declined, also mainly for aesthetic reasons. When we lived in Omiya for 3 years we rented a house that used LPG, and didn’t really like the sight of all those cannisters lined up outside under the kitchen window. So our decision to not use LPG in our new house was consistent with our dislike of natural gas: We didn’t want to use it for cooking or heating. We were through with open flames.

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Last Resorts

Here is another draft chapter from our unpublished book about our house-hunting adventure. This one is about second homes and so-called resort mansions. 

Second-home inspecting in Nikko

One late summer morning in 2012 we were on the Tokaido Shinkansen super express and ran into a friend we hadn’t seen in years. He asked us if we were still living in Tokyo and we said we had moved some time ago because of the earthquake. He then asked what we were doing on the bullet train and we said we were on our way to Atami on the Izu Peninsula to look at some properties we might be interested in buying. He gave us a funny look. “That would seem to be the worst place to live if you’re afraid of earthquakes.”

True. Just the day before Japan’s Cabinet Office Disaster Council had updated its projections for a major earthquake occurring in the Nankai Trough, the deep indentation in the sea bed off the Pacific coast, and Shizuoka Prefecture, which contains Izu, was deemed the worst location in terms of projected casualties, though, technically, most of those casualties would be in the western part of the prefecture, not Izu. In any case, we weren’t completely serious about buying a place there. Having been frustrated in our search for a home we could afford, we were entertaining the idea of keeping our rental and buying a cheap old fixer-upper in a location with cooler summers. If our income situation worsened and we had to give up renting, then we would at least have a roof over our heads, and if things continued as they had been then we’d have a weekend/summer place. There are plenty of old dumps in the highlands of Tochigi and Nagano, or in the wilds of Chiba that can be had for under ¥7 million, though they’d require another ¥3-5 million to make livable. And during our search we noticed there were quite a few such places in Izu, too, mainly besso (separate homes), which we had avoided so far. Second homes tend to be built in specially designated developments managed by companies that charge yearly fees. Also, besso are usually impractical for year-round living, but since we weren’t necessarily going to be living in one year-round we thought we’d see what was available. And Izu is, as they say, the “Riviera of Japan.” More to the point, it’s cooler in the summer.

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The good landlord

In our previous post, we talked about rent relief, and how the Japanese government had expanded its assistance to at-risk renters after the onset of the pandemic. As a result, the number of approved applications in 2020 was 34 times the number approved the previous year, though, in the end, it may not be enough since the people who need the money have to apply anew every three months up to a total of 12 or 15 months. Groups that advocate for at-risk households have tried to convince the government to make the relief open-ended, but the current limits are in line with government policy regarding public assistance, which, as once outlined by former Prime Minister Yoshihide Suga, is made available after an individual had tapped their own individual resources, and then those of their “community.” Government aid is the last resort.

An article published by the Asahi Shimbun on Jan. 5 gives some idea of what kind of assistance the “community” might offer in these cases. The piece profiles a 42-year-old landlord named Tomoyuki Matsumoto, who owns about 80 rental units in Osaka, Kyoto, and Tokyo. He rents the properties to people who may have difficulty finding places to live otherwise because they are poor and/or elderly. The article illustrates Matsumoto’s business model by describing one of his properties, a 3-story nagaya (town house) located in Daito, Osaka Prefecture, that’s more than 50 years old. The interior walls are traditional doheki (wattle and daub), the roof occasionally leaks when it rains, and the toilet sometimes overflows. The tenant, an 81-year-old widow who has resided there 3 years, doesn’t seem to mind these inconveniences because the rent is only ¥35,000 a month, which means she can live there on her national pension. Matsumoto shows up once every two months to collect the rent in person, which she finds very agreeable. As he tells the newspaper, having a personal connection with his tenants is very important to him, and as a result he responds to maintenance problems fairly promptly.

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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. 

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Harumi Flag Rising

That view!

Renovation work on the Tokyo Olympics Athletes Village that will turn the apartments into condominiums-for-sale won’t commence until after the Paralympics end in September, but already business media are exploring the future of the Harumi Flag residential complex, as it’s been dubbed by lead developer Mitsui Fudosan Residential. In the end, the various buildings will comprise about 4,800 units, and so far a bit less than one-third of those have already been sold. Since the Olympics was postponed in the spring of 2020, the date for moving into the complex has been moved back by at least a year to spring 2023, and there was talk that some buyers were angry because that means considerable added expense for them. Whether they have been offered a refund and an escape for their contracts isn’t clear, but, for sure, matters such as mortgage terms for the new condos and leases on rentals that the buyers may have to extend in the meantime could be serious hits to their bank accounts, especially given the current pandemic-affected economy.

However, those who have already signed contracts should be happy in one regard: the value of their condo seems to have gone up in the meantime, which means they got even more of a bargain than those who will sign contracts in the future. Condo prices in Tokyo have been steadily going up in recent months after dipping a bit last year, and it’s likely these increases will be reflected in the prices of the condos that will be put on sale starting in September. After the pandemic struck, sales activities for Harumi Flag were halted, which now seems like a good decision since Mitsui will likely be able to charge more. According to various real estate web sites, Mitsui will not put all the remaining units on sale at the same time, which would flood the market and bring the prices down. Though nobody seems worried right now that prices will drop over the coming months as more units are put on sale, the idea is to maximize demand as much as possible. As it stands, the units were already cheaper than comparable new condos on the waterfront by 30-40 percent, a situation that reportedly upset neighbors who paid premium prices for their apartments. The reason for the lower prices is that they are being repurposed and that the nearest train station is at least 20 minutes on foot (not counting the time it takes to get from one’s apartment to the ground floor), but also because Tokyo sold the land, which is reclaimed, to Mitsui and its partners at a 10 percent discount just because of the Olympics, a move that has also been criticized since Tokyo can’t really afford such largesse considering the larger-than-expected bill for the Games. 

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Dead houses

In the last year, we’ve seen a lot of headlines on social media about how you can buy a house in Japan for a song. The usual figure quoted is about $500 US, which makes us think that all these articles spring from one source that’s likely American. We haven’t bothered tracing the articles to one source, though we read a few of them and they all say basically the same thing: local governments throughout Japan are promoting the acquisition of abandoned houses in order to get people to move into their regions and lift the tax base. In some cases, they are even giving houses away, but in any situation these structures will need a lot of work before they are at all habitable. We’ve written extensively about the problem of akiya and since you get what you pay for it follows that the lower the price the more work that will need to be done. The worst akiya, it must be said, are not even on the market, meaning they were literally abandoned by the owner for any number of reasons—either because they moved out and couldn’t be bothered to try and sell it, or they did try to sell it with no success, or they simply disappeared in order to avoid having to pay property taxes, which, in all probability, were very low to begin with. Or they died—with or without an heir. There are a lot of akiya whose owners are dead, meaning they never transferred the title to anyone, and though heirs are still legally responsible in Japan they can be difficult to contact if they don’t want to be found. Those houses are probably unihabitable since they’ve been left to rot, and the local government doesn’t want to spend the money to have them demolished.

There are more than 8 million akiya and, not counting dedicated rental units, many are not livable and fewer are even sellable due to other factors such as location. So when you read an article about somebody who bought a house for nothing and fixed it up into a nice place it’s not just an exception to the rule, but almost an anomaly. Anytime a foreign person buys an old farmhouse or kominka and turns it into a monument to traditional Japanese craftsmanship they’re bound to get it featured in the news, but, again, it’s exceedingly rare. Most people prefer new homes, and because government policy has always privileged new house construction, potential buyers can always find something they can afford that’s new; and in many cases it will even be cheaper than an older house that requires extensive renovation, which describes a substantial number of old houses that are on sale. 

The reason these articles about cheap houses have proliferated in the past year is mainly the pandemic, which, for a while, cut into new home construction. People are moving out of the cities because they can now work from home, so used houses starting selling well, but, again, a lot still aren’t selling. We know of several houses in our general vicinity that are in good condition but they’ve been on the market for months, some even years. There are just too many cheap old houses that people want to sell and not enough buyers. Of course, much of it has to do with Japan’s decreasing population, but mainly it has to do with oversupply. When construction resumes apace, those old houses will become even more difficult to sell. 

More to the point, people who do sell their homes almost never make back what they paid for them. The exception is certain areas of big cities, but even in those cases it isn’t guaranteed, and then the seller will be even less likely to see a profit, especially when you factor in the interest they paid on their loan. (You’re more likely to make a small profit if you bought an old condo in a popular area of Tokyo and resell it later.) At this point, we think most Japanese people know this, despite all the talk about “maintaining property values” at all cost. We certainly know it. Almost as soon as we moved into our new house in 2014 the assessed value dropped by almost two-thirds—and that’s for property tax purposes, which tends to be higher than market assessed value. (Assessed value for land is a different matter) So we know we will never be able to make money on this house, which is one of the reasons why we had it built the way we wanted—meaning few other people would probably want it. But the problem as we get older is: What can we do with it when we reach the age where we can no longer live here? There’s a very good chance we won’t even be able to sell it. Since we don’t have children, there’s no one to inherit it. We’ve already brought up the possibility with some younger relatives that any of them can have it for free, and while they sound interested, we’re not sure if the idea of taking on a property is something they have the wherewithal to carry out. We’ve even thought of donating it to some organization, but that might run into problems with neighbors who find out about it beforehand. 

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The sky above, the mud below

Typical “morido” terrace formation for housing development

The disastrous mudslide that hit the city of Atami on July 3 brought attention to the term “morido,” which has no real equivalent in English, though some people might use “landfill.” In some cases, morido does qualify as landfill, but as it literally means “added soil” it has a wide variety of applications. In the case of the Atami mudslide, the consensus now is that the disaster was caused by an accumulation of soil at the top of a ravine that came loose during torrential rains and rushed down the ravine toward the sea, destroying dozens of houses along the way. The soil in question was apparently deposited there by a real estate company more than ten years ago, though it hasn’t been clearly explained what the purpose of the soil was. Media reports say that the company submitted a “report” to local authorities saying that they planned to build housing on the land, which they owned at the time, but the local government never properly checked the progess of this plan. Neighbors, however, startled by the succession of dump trucks that constantly came through to deposit soil on the site, contacted the authorities, who then “warned” the real estate company that it might be breaking the law. The company never responded to the warning and, in any case, there is no indication that they ever really intended to build anything on the “added soil.” Local regulations only permit soil accumulation of up to 15 meters, but just prior to the disaster it is estimated that the mound was 50 meters deep. The volume of soil, rock, and what is deemed to be industrial waste that flowed down the ravine is estimated to be 56,000 cubic meters. 

Some anti-solar (i.e., pro-nuclear) elements have pointed to the subsequent owner of the land as being to blame for the mudslide, since they cleared trees above the already existing mound and installed a solar farm. For sure, the clear-cutting removed some of the area’s water-retention capability, thus contributing to the disaster, but the solar energy company did not create the morido, and whatever the drawbacks of so-called mega-solar installations in terms of environmental impact, it appears that the company was operating within the law. The real estate company, which has since gone out of business, has yet to explain what the purpose of the mound was, but circumstances seem to point to it being a place to simply dump refuse and excavated soil, probably from construction projects far away. The local residents, for instance, said that the dump trucks all had Yokohama license plates. And then, of course, the industrial waste mixed in with the mud. This sort of problem is becoming more prevalent as construction continues undeterred with a dwindling number of places approved for refuse landfill. We’ve written about this before and the measures some contractors go to in order to find places to get rid of soil and other junk. 

Another kind of morido is that which is used to fill in valleys or create terraces on the sides of inclines in order to create level land for residential or agricultural development. As with all situations where soil is deposited on existing land, drainage must be assured by laying pipes within the mound of soil and the soil itself must be manually compacted so that it will not come loose. Unfortunately, even these measures may not be enough, though from what we’ve learned the main problem with this kind of morido doesn’t come from excessive rain but rather from earthquakes, which can cause the soil to shift, or, if it contains lots of ground water, liquefy. This happened throughout residential subdivisions affected by the 311 earthquake. Consequently, when we were shopping for land in 2012-13, we consulted topographical maps of the areas we were interested in in order to find out if a particular property was the result of morido. If it was, then we avoided it. We also avoided low-lying properties because of Japan’s problem with typhoons and heavy rains. But, in any case, morido is more prevalent than you might think, and most of it is perfectly legal, though not necessarily safe. That said, media reports have also said that the kind of morido that caused the Atami disaster is also very prevalent, despite the fact that it is illegal, so we can probably expect more of this kind of catastrophe.