Author: catforehead

Home Truths: property taxes

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Our Home Truths column this month, which appears in the Japan Times today, is about property taxes, a fact of economic life that is taken for granted. As we imply in the article, most first-time home buyers don’t really take taxes into consideration when they embark on the biggest purchase of their lives, presumably because, like death and…well, taxes, it’s something you can’t avoid so there’s no reason to worry about it. And maybe it isn’t, depending on where you buy property. Outside of large cities and productive suburbs, property taxes can be minimal. What we found troubling, and the reason we decided to write about it, was the frequent looks of bewilderment we received from real estate agents when asked how much a particular property would run a buyer in terms of annual taxes. Some knew approximately, but some said they didn’t know at all and would check at the office (and then never called back because they sensed–rightly, in most cases–that we weren’t that interested in buying in the first place). This was odd in more ways than one. In the most significant way, property tax should be something a realtor knows by heart, since it has a direct bearing on the financial ability of the buyer to maintain whatever loan repayment schedule he or she will be responsible for. In a less signficant but more bizarre way, many real estate companies actually print the annual property tax levy in the ads for properties, so for their agents to profess ignorance is just downright laziness, and also indicates that none of them are ever asked such questions by potential buyers. In other words, the inevitability of property taxes has rendered them a moot concern; maybe people just prefer not knowing. Read More

Put out

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We recently received a DVD screener of “Sayonara UR,” a video documentary by Yumiko Hayakawa. The doc chronicles the situation of a group of residents of Bldg. 73 of the Takahamadai apartment complex in Hino, Tokyo, which is run by the semi-public housing concern UR. The structure was built in 1971 and Bldg. 73 did not meet earthquake standards that were made mandatory in 1981. The company was going to carry out reinforcement work, but in 2007 it announced that the work would cost too much and everyone was asked to move out. The company would help residents relocate to other UR apartments if they needed it. They would also compensate them in part if they agreed to move out within two years of the announcement. Nevertheless, some residents refused to move, saying that they were simply being made victims of UR’s well-publicized move toward privatization. Bldg. 73 was not profitable and so UR planned to tear it down and sell the land to a developer. The quake-proofing story, according to these tenants, was merely an excuse, and not a particularly believable one since there was no inspection made by third parties, even though the tenants asked for it.

It was a classic eviction tale, and Hayakawa clearly sided with the tenants. As advocacy journalism goes, “Sayonara UR” has its good points. Throughout the doc, she refers to UR as representing “social housing,” something she believes is essential to the well-being of a well-ordered and responsible society. UR, as noted thoroughly in our blog, is semi-public, which means their obligations as a public housing provider are limited, and Hayakawa is careful about this point. She shows how UR still uses a lot of tax money in its operations, and interviews an outspoken professor who describes how UR is a money sink, more than ¥1 trillion in the red. The government has been trying to find ways of setting the company free. One of the main reasons they can’t, as evidenced by this documentary, is that people who rent UR apartments, especially those who have lived there a long time, don’t want the company to be made 100 percent private. There are many reasons for this, including the fact that UR does not follow the extortionary practices private landlords are known for, such as charging extra fees–gift money and contract renewal fees–that have no purpose. Hayakawa doesn’t address these reasons or the lack of laws that would protect tenants, but she does an excellent job of interviewing all sides of the story and giving equal weight to each. However, viewers not familiar with Japan’s housing situation may mistakenly equate social housing with low-income housing, which it is not. It’s a difference Hayakawa neglects to clarify, and because she doesn’t specify how much rent these people pay some will think they are poor, when actually they are quite middle class. In fact, given their economic status and the superannuated state of their abodes (most public apartments built in the 1970s for families are less than 60 square meters), many viewers may wonder why these holdouts aren’t jumping at the chance to move to newer, cleaner apartments that will cost proportionately about the same. She also doesn’t clarify that only ten of the 250 households asked to leave refused to do so by June of 2010, when the topic was covered by TBS. By April of the next year, the number was down to 7. Read More

Field Diary: Onjuku-Kamifuse

Posted on by catforehead

Type: One-story house; slate roof; wooden frame; siding exterior
Age: 14 years
Land: 165 square meters
Floor area: 76.6 square meters
Distance from nearest station (Onjuku on the Sotobo Line): 3.8 km
Price: ¥7.9 million

Unlike the previous property we inspected in the coastal town of Onjuku, Chiba Prefecture, this one was firmly embedded in a subdivision, albeit a sparsely occupied subdivision. Slammed up against a dense forest, the sad-looking little gray house had no southern exposure to speak of, and so was situated perpendicularly to the road, offering the vacant lots to the west and east its only views. The fact that the house is 14 years old and nobody has snatched up these lots in the meantime probably means they never will, what with other, more elaborate and better planned subdivisions going up elsewhere in the town–and closer to the station.

We couldn’t imagine anyone buying this house, which, aside from being dark, was mold-infested and falling apart. Given the low price, one might think it could be fixed up, but up close the structure, at least, seemed hopeless. The design was out of whack: The toilet on the west side? The agent was polite and helpful but obviously understood the property’s unsellability and didn’t even bother taking our data the way he’s supposed to. There would be no follow-up. We all agreed, however, that it was nice to see somebody install double-glazed windows.

Field diary: Onjuku-Jikkoku

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Type: One-story house; slate roof; wooden frame; siding exterior
Age: 12 years
Land: 404 square meters
Floor area: 78.3 square meters
Distance from nearest station (Onjuku on the Sotobo Line): 3.9 km (6 min. by car)
Price: ¥10 million

Situated on the edge of a huge rice field, the land that comes with this property is probably its most attractive feature, providing a sizable front yard, which the previous residents tried to make into a combination vegetable/Japanese garden. Considering how overgrown and tacky it’s become–not to mention the fact that the original asking price was ¥11 million–no one has obviously lived there for a while. The agent told us that the house was originally connected to its almost identical neighbor to the west. At some point the corridor that bound them was torn down, leaving a mysterious windowless storeroom off the bathroom as its only evidence of prior existence.

The layout was reasonable: two Japanese rooms situated in staggered parallel, both looking south; an open living/dining area perpendicularly positioned to the kitchen, which is large and airy. Despite the efficient use of space the rooms are darker than we like, owning mainly to the low ceilings and small windows. Also, a small wooden deck was built outside of the double sliding doors on the east side of the living room, facing the farmhouse next door, which is uncomfortably close. The agent said that someone still lives there though we couldn’t see any signs of recent life. It was the model of a derelict fire trap and would make any venture out on to the deck for purposes of enjoying the sunrise or whatever depressing.

Verdict: House would need at least 3 million more to make is livable, and the land size alone, not to mention the distance from transportation, couldn’t justify the price.

Dying to get in

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Who died here?

Further on the subject of the property values of places where people died, which was started in the comments section of the previous post, there was actually a book titled “Tokyo Laundering” published last year about a fictional occupation: people who are hired by landlords or realtors to live for one month in houses or apartments where people just died. By having somebody occupy the place legally, the owner can rent or sell the property at its listed value rather than the cut-rate price that most owners are compelled to advertise for such a property since, according to law, they have to tell prospective buyers/renters that a person died there. If someone lives there for a month, they’re no longer obliged to reveal that information. It’s such a clever subterfuge, we’re surprised no one has actually put it into practice.

As far as we know, the only outfit that openly advertises such properties is UR, which lists rental apartments where people have died for something like half the normal price for up to two years. Supposedly, within their system 300 units become vacant each year because someone died. We’ve also heard of realtors soliciting doctors, people in the funeral business, and foreigners for such properties since such people usually aren’t grossed out by the idea of someone having died in the place they just moved into. There’s also a website that lists properties where “incidents” occurred, and though they detail the incident that took place (with the help of inadvertently humorous illustrations) and even show you the location on a map, you’ll need to do a bit of detective work to find out about renting or buying, since all they give as contact is the name of the realtor or owner. It’s a great site, however, for those into ghoulish walking tours.

And lastly, some insurance companies offer coverage to landlords for apartment deaths. If a tenant dies in one of their properties, they can receive up to ¥1 million, which should cover the money lost as a result of an extended vacancy or decreased rent.

A riddle

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The house pictured above is on a major road in the city of Inzai, Chiba Prefecture. It was built in 2004 on a 446.28-square-meter plot of land. The floor area of the house itself is 82.29 square meters. It is less than one minute from a bus station. The bus ride from that station to Inzai Makinohara station on the Hokuso train line is 13 minutes (from Inzai Makinohara to Nihombashi is a little less than an hour). Since the land is relatively large, there are none of the usual privacy problems one gets in Japanese housing developments, and the lack of buildings in the surrounding area means the house gets a lot of sunshine from three different directions.

According to Inzai city records, the average price of a single-family home in this particular area of the city is ¥24 million. This house is now on sale for ¥15 million. It has been on sale for more than three months, which is why we went to see what it looked like. With the conditions we mentioned above, this should be a steal, but for some reason no one seems to want it. Of course, normally in Japan, a house that’s older than 20 years, unless it’s in the middle of a major city, has no value. This one isn’t that old, and though it’s hardly impressive in terms of design or style, it still seems to be in good shape. Moreover, the land, which is on a major thoroughfare, should be worth quite a bit (if Inzai’s assessment protocols can be considered accurate).

But even if the property’s continued vacancy seems a mystery, it’s not a place that we ourselves would ever want to own, and maybe that feeling, more than the logic of the economics, says something.

Whose view?

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Most place names in Japan are derived from geographical or topographical traits, and one of the most common names in the Kanto area is Fujimi, which indicates that the place has a view of Mount Fuji. The Japanese place a lot of spiritual stock in mountains. Traditionally they were the objects of worship, and Fuji, of course, is practically a religion unto itself. It’s probably no coincidence that “fuji” itself is a homonym for a word that means “live forever.”

Nowadays, any address with the name Fujimi attached is highly valued–if, in fact, it still affords a view of the sacred mountain. Tokyo, in particular, is so built up that, according to Tokyo Shimbun, there are only three locations left in the city named Fujimi from which Mt. Fuji can still be seen from the ground. The most famous of these is in Nishi Nippori, a place called Fujimi-zaka, or Fujimi Slope. In early November and late January, photographers and tourists converge at the top of the slope to wonder at the Fuji Diamond, when the sun happens to set behind the mountain’s summit. This year, rubberneckers almost lost their chance, since the weather was cloudy for two of the three days when the diamond view is possible. As it happens, it may be the last time.

That’s because Sumitomo is building three tower condominiums that will forever block the view of Mt. Fuji from the vantage point of Fujimi-zaka. This almost happened before. Back in 1999, another developer announced a plan to build a tall condo within the neighborhood that threatened the view, and local residents formed a committee to protest construction. Naturally, the developer paid no attention, but as it turned out, the building only blocked a small portion of the foot of the mountain. The new Sumitomo project will definitely block the whole thing, so the committee has asked the mayor of Arakawa Ward to lodge a formal complaint with the developer, which reportedly was quite “annoyed” by the request owing to the fact that the buildings under construction happen to be in Okubo, all the way on the other side of the Yamanote Line. Sumitomo bought the land five years ago and says it has complied with all relevant prefectural and ward regulations in planning the housing project, and the ward in question isn’t Arakawa, it’s Shinjuku.

Where there’s smoke

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Last Sunday morning at about 7 o’clock, a fire broke out at the Rose House Higashi apartment building in the Okubo section of Shinjuku, Tokyo. More than half of the two-story structure was destroyed. Four residents died and two remain in critical condition. Of the 26 units in the building, 22 were occupied by 23 residents. That means one unit had two people, which is sort of remarkable since each apartment is only 4.5 tatami mats in size, or about 8 square meters.

Rose House is fifty years old. Each room has a cold water faucet and a gas burner. The toilets are communal. There is no bath, which is characteristic of these kind of wooden apartment buildings. Rents were between ¥51,000 and ¥53,000 a month, which is cheap for Shinjuku but quite expensive for this kind of residence. For ¥10,000 more you can probably find a six-mat apartment not far away with its own private bathroom, but as media have reported 17 of Rose House’s residents were on welfare, and most of them were “very old.” The Shinjuku welfare office told reporters that they did not “recommend” Rose House to any of the people they administer, but it’s common for welfare recipients to “live in the same building.” That’s because their incomes are extremely limited and most landlords will not rent to welfare recipients. As it happens, welfare recipients in Tokyo tend to receive a higher housing allowance than people in other cities in Japan, the maximum being ¥53,000. Rose House apparently catered to welfare cases, which makes sense. Landlords usually can’t demand that much money for such old, cramped apartments, even in Shinjuku, and public housing is usually off-limits to single people; but since welfare recipients don’t have a lot of choices the Rose House landlord could ask them to pay that much. Also, Rose House didn’t demand a guarantor. Even at less than full capacity the place makes more than a million yen a month.

So far the police have not isolated the cause of the fire. Some media initially suspected it had something to do with “old wiring,” since there was a small electrical fire in one of the apartments several months ago, but the Asahi Shimbun has reported that theory has been discounted. Though the building was situated on the edge of a parking lot, Rose House is what is called a saikenchikufuka, a structure that “can’t be rebuilt” because it was erected in the middle of block, thus making it very difficult for firemen to gain access. Nobody will be moving back in, which means the surviving residents now have to find some other hovel to accept them.

Now on sale

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It’s fairly well-known that Japanese people like new things, and if their budget allows they prefer buying a brand new house or condo rather than one that’s already been lived in. Half of the almost six million condominiums in Japan were built within the last 15 years, and reportedly the pace of construction is slowing due to the ongoing recession. According to statistics recently released by Reins Tower (East Japan Real Estate), sales of older condos also went down over the past year. Sales contracts were concluded for 1,943 used condos in August in the Tokyo Metropolitan area. That’s a 6 percent drop from the same month last year. However, the 920 sales in Tokyo alone represented a 0.9 percent increase over last year. The suburbs were a bit different, with Chiba seeing a 6.8 percent drop and Kanagawa a whopping 14.1 percent decline.

But that isn’t the whole story. While sales on the whole have gone down slightly, the average prices of the condos sold have gone up, as much as 4.6 percent in Saitama, for instance. What this would seem to indicate is that more newer used condos are being sold, since condominiums lose their value with time on a pretty consistent basis. In Tokyo, the trend is more localized. Sales of used condos in the three central wards (Chiyoda, Chuo, Minato) decreased by 15.4 percent, while those in the eastern portion of the city increased by 8.6 percent. Condos in the center of the capital are, of course, much more expensive that those in the eastern part, even though prices in central Tokyo have dropped 6 percent while those in eastern Tokyo declined only 1.4 percent (for comparison’s sake, prices in the western wards dropped the most, 8.2 percent, while those in the southwest–Meguro, Shinagawa, Ota–lost only 0.6 percent).

All indications point to a buyers market for used condos, which is hardly surprising. The stock is increasing. For the entire Tokyo metropolitan area, the available stock of used condos is 52 percent higher than it was last year, and in central Tokyo it’s gone up by 25 percent (all Tokyo by 35 percent). What this means is that it’s becoming more difficult to sell older condos, even in those areas like central Tokyo where it used to be considered easy to do so.