Putting on heirs, Part 2

On April 27, the government will launch a new system that will allow people to “return” land they own but don’t want to the state. The main reason for this new procedure is that there has been a marked increase in recent years of land whose ownership is not clear. In 2016, a specially appointed research group found that 4.1 million hectares of land in Japan, an area larger than the island of Kyushu, had no clear titleholders. If this trend continues apace, then by 2040 there will be 7.2 million hectares of unclaimed land. The reason for the increase is that it is assumed that as more land-owners die, a good portion will not have heirs to take over that property. Unmanaged land becomes a problem for the authorities in terms of disaster prevention and general administration, which includes appropriating land for public works and other projects. 

There are many reasons why people either abandon property they own or avoid inheriting it from family or relatives. Mostly, it has to do with the cost, including property taxes, of maintaining land and structures that they will never use and can’t sell, especially if they are located in remote areas. Sometimes the property is a rental apartment building that still has a mortgage but no tenants. Sometimes it’s a parent’s home that no one wants to occupy and, again, isn’t sellable for some reason. Then there are forested tracts of land that require management by law, which can be expensive. According to a survey carried out by the land ministry in 2019, 42.3 percent of people who own land or expect to inherit land think that such ownership is a “burden.” This portion goes up when the land is either vacant or zoned for residential use. In addition, 63 percent of unused or vacant land in Japan was inherited by the current owner, a common situation given that land inheritances are taxed at a lower rate than cash inheritances. 

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Putting on heirs, Part 1

On Jan. 23, the Asahi Shimbun reported that in 2021, ¥64.7 billion in assets were left to no one by people who had died. In other words, these people had passed away with no heirs and no will. In the end, most of this money will go to the national treasury. The amount mentioned is 7.5 percent more than the previous year’s amount, making it the highest ever recorded, and it will likely continue increasing until sometime after the baby boom generation dies off. As it stands, heirless assets have doubled in the past ten years and sextupled in the past twenty years, coinciding directly with the sharp increase in single-person households, many of which are occupied by seniors. In 2020, there were 6.71 million single-person households whose sole member was over 64, a 40 percent increase over the number in 2010. By 2030, this number is projected to increase to 8 million. Another reason for the increase is the decline in the rate of marriage. According to the Population Research Center, 28 percent of men over the age of 50 and 18 percent of women over 50 have never married. These portions are on the rise. 

The lesson that Asahi wants readers to take away from this information is that they should draw up wills as soon as possible if they haven’t already, especially if they have no children or family to whom they can or want to leave their money and property. 

When someone dies without an heir or will, any so-called interested parties can apply to family court for resolution, and the court will then appoint an executor to manage the assets. If the executor finds someone who they think deserves a share of the assets, say a caregiver or neighbor who may have been close to the deceased, those people may inherit something, but whatever is left over goes to the state. In 2021, 27,208 executors were appointed by family courts, another record. 

In order to explain the importance of legally binding wills, Asahi presents an example of a well-off man with lots of real estate assets who died at the age of 92 in Morioka with no heirs. His funeral was carried out by the real estate company he used in his property transactions as executor per his instructions before he died, and he gave the company ¥20 million to set up a grave at a nearby temple. He also wanted to set up a foundation and a scholarship with his money. These instructions were done verbally, however, and later a court rejected this “will” because it wasn’t written down. 

The court instead appointed a lawyer to be the executor of the estate, who then acquired the keys to the man’s house and all his bank records. The money he had in financial institutions amounted to ¥492 million. The safe in his home contained ¥810 million in cash. His real estate holdings, including his own 1,500 square meter home, which was located 10 minutes by foot from the nearest station, were assessed at ¥700 million. So the total worth of the estate was more than ¥2 billion.

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Make Mine Maglev (4)

Shizuoka Governor Heita Kawakatsu predicts the Chuo Shinkansen won’t be ready by 2027. (TBS)

Our ongoing coverage of the Chuo Shinkansen, vernacularly known as the “linear motor car,” and usually referred to in English as the “maglev project,” continues apace even if construction itself doesn’t. This week, we found three distinct media stories about the maglev, and while they can be related to one another due to the way they describe obstacles toward completion of the Tokyo-to-Nagoya leg of the railway, they deserve to be addressed separately.

The first story, reported by the Mainichi Shimbun on Nov. 12, takes place in the town of Mitake in Gifu Prefecture. In 2016, two areas within the town had been selected as candidate landfill sites for receiving excavated soil and rock resulting from maglev tunnel construction. However, any formal announcement about the selection had been postponed after problems arose about the “impact” of the decision. Apparently, a portion of the candidate sites included a wetlands area that has been recognized by the environmental ministry as a vital habitat for a rare species of flora. Such designations do not automatically prohibit “development activities,” but those who carry out the operations regarding development are “required” to consider conservation efforts to protect precious resources. JR Tokai, the company building the maglev, has said it would transplant any rare species of plant in the area. 

On Nov. 10, Mitake held its fourth public forum with “experts” and representatives of JR Tokai. Residents expressed alarm, since it was the first time they were alerted to the fact that the landfill project would contaminate a valuable wetlands area, a fact that was actually revealed by reporter Hiroaki Izawa in a scoop for the weekly magazine Sunday Mainichi after he confirmed the environmental ministry’s designation of the rare species. Afterwards, the town’s mayor tried to explain why no announcement had been made previously, even though the environmental ministry’s designation had also been made in 2016. He said that he wasn’t sure what JR Tokai was planning to do at the time and so put off the announcement. After the company pledged to transplant the endangered plant species he became more positive about the landfill project. 

Though the environmental ministry applauded the dialogue between Mitake and JR Tokai, they didn’t address another problem, which was pointed out by a different media outlet, namely that the excavated soil and rock would contain natural heavy metals, which are toxic to living things, including humans. Consequently, the soil would have to be extensively processed before being dumped into the landfill. 

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Harumi Pre-flag

While searching for any news about the current state of the Harumi Flag condo complex in Tokyo’s Chuo Ward, we came across an older related article with detailed information we weren’t aware of. As we’ve written here before, Harumi Flag was originally the athletes village for the 2020 Olympics, after which the apartments were renovated into condo units, many of which had already been sold. Because of the one-year delay for the Games, people who had put down deposits and made plans to move in had to put off those plans for at least an extra year, thus causing a lot of grumbling among the buyers. 

According to a special report that appeared in July 2019 on the Min-IREN website, a consumer advocacy and social justice concern, people who already lived in the Harumi area of Chuo Ward on the waterfront had filed a lawsuit against the Tokyo prefectural government. The reporter was Nobuyuki Kitaoka, who often writes for the muckraking weekly Kinyobi, and he makes the point that the lawsuit had/has similarities to the 2017 scandal surrounding Moritomo Gakuen, the educational company that bought land in Osaka from the central government for a fraction of its assessed value, thus setting off speculation that this special deal was due to the fact that the wife of then prime minister Shinzo Abe was an honorary principal of the elementary school that Moritomo planned to build on the property. Apparently, the developers who would build the athletes village for the Olympics and then redevelop the complex into luxury condominiums also got the land at a fraction of its worth, and existing residents wanted to know why. According to Kitaoka, Moritomo paid only 20 percent of what the land it bought from the central government was worth, while the developers of Harumi Flag paid only 10 percent of the value to the Tokyo prefectural government, which owned it. Located only 3 kilometers from Ginza, the market value of the Harumi land was ¥959,000 per square meter, but Tokyo sold it to a consortium of 11 developers, including Mitsui Fudosan Residential, for only ¥97,000 per square meter. This consortium ended up paying a total of ¥12.96 billion for 133,900 square meters. 

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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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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. 

Baby you can park my car

We sold our car in 2006 and have never replaced it, despite the fact that in the meantime we moved out of the city and into a suburb where a car is considered essential. Our original reason for getting rid of ours was the cost. We were paying for insurance and biannual inspections and parking just for the privilege of owning a vehicle that we really didn’t use that much. Living where we did we had ready access to several train lines and as we both aged what we once considered the convenience of having a car at our disposal faded, mainly because driving in Japan isn’t very enjoyable, what with the narrow streets, highway tolls, and difficulty with street parking. Though we’ve often thought of buying a car again for emergency use, we keep putting it off because it’s really nice not to have that burden any more. We manage just fine with bicycles and car share services. 

The last place we lived had an underground mechanical parking facility. The space you rented was actually a pallet that moved vertically and horizontally. Parking lots are two-dimensional and thus require a lot of ground space. Mechanical parking garages, what we liked to call “3D parking lots,” used space both above and below the ground level to store cars, thus requiring less real estate. When we wanted to use our car, we went to the carousel assigned to us and, inputting a special code, “retrieved” the pallet by rearranging the other pallets in the carousel in order to place ours right at the front of the gate. This means, of course, that you have to wait for all the pallets to be rearranged properly, and sometimes it took a little time. It was especially troublesome if somebody else who had rented a pallet in your particular carousel was retrieving their car just as you arrived. On a few occasions, we needed our car quickly in order to make it in time for an appointment, and someone was already there getting their car so we had to wait. Fortunately, we never had, like, a medical emergency that required an automobile. The only saving grace was the rent, which was relatively cheap for Tokyo. Before living in that apartment we lived close to the Saitama border and rented a parking space from JR under the railroad tracks. It was unpaved but the tracks protected the vehicles from rain, and we paid ¥23,000 a month. The pallet we rented was ¥18,000 a month, and it was much closer to the center of the city. 

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Dirty deeds done dirt cheap

Mound of dirt created after we had our septic tank installed.

In the six years we’ve lived in our house we’ve done some landscaping and in many cases were left with soil that had been removed from the ground. The contractor would always offer to dispose of the dirt for a fee, but we always had them dump it on the adjoining property, which is mostly covered with a bamboo grove. We know this is illegal, because it is not our land, but the plot, which is quite large, already has loads of dead wood and bamboo, and the amount of dirt we leave there is hardly noticeable. Besides, we’ve often helped ourselves to the soil we put there for gardening purposes.

But there is a real problem in Japan of where to put excavated soil resulting from large-scale construction projects. This week, Asahi Shimbun ran a fairly in-depth story that illustrates almost too perfectly this problem. Read More

Make Mine Maglev (2)

Section of maglev route, in red, that goes through Shizuoka

Right now there are much more serious matters on people’s minds than the maglev Chuo Shinkansen, or “linear motor car,” as it’s called in Japanese. Nevertheless, the train, which will spirit bodies from Tokyo to Nagoya in about 40 minutes, is set to become a major public works project that many in government and industry probably think could help revitalize the economy in the new post-pandemic “normal,” though no one has actually taken the time to publicly explain its role in such a brave new world. But one thing is for certain. It’s not going to be finished by its planned completion date in 2027. Actually, we never thought that was possible in the first place, but now it seems to be definite because the major media have said so.

Though there are actually a lot of reasons why the project won’t be completed on time, the only one the media is talking about is the governor of Shizuoka Prefecture’s refusal to allow construction to proceed on the 10-kilometer portion that passes through his bailiwick. Consequently, Heita Kawakatsu is the scapegoat for everyone who has a stake in the maglev. The governor of Aichi Prefecture, Hideaki Omura, is especially aggrieved, since the city of Nagoya is spending a great deal of money redeveloping the area surrounding the new maglev station. If it doesn’t open by 2027 everything will be screwed up fiscally. A think tank has estimated that the maglev will generate ¥2.3 trillion for Nagoya during the ten-year period after the station opens.

Kawakatsu’s gripe is about water, specifically the water supply for the 600,000 residents who live along the Oi River, which is 168 kilometers long. In 2013, JR Tokai, the company behind the project, carried out an environmental assessment that found construction of the tunnel through Shizuoka would result in a loss of ground water amounting to between 1.07 and 2.12 tons per second, equivalent to 17 percent of the river’s volume at any one time. Read More

Heirs? Apparently

This land is your land?: Property marker in the middle of a residential street

An ongoing headache for the government, in particular the land and justice ministries, is all the land in Japan whose titleholders are only vaguely determined. The reason this is a problem, of course, is that the central and local tax authorities don’t know to whom they should send property tax bills, but also when public works projects are being planned that involve the appropriation of land the relevant authorities don’t know whom to deal with. For a more detailed discussion of this problem see here, but suffice to say that the volume of property nationwide with undetermined owners amounts to a piece of land the size of Kyushu.

The reason for this confusion has to do with inheritance laws. When a title holder dies, if no formal transfer of the property has taken place, their property automatically passes to their heirs, meaning spouse first and then children. If those heirs never properly register the land in their names, then it then passes on to all their heirs when they die, and so on. According to a Nov. 18 article in the Nihon Keizai Shimbun, there is one piece of land—location undisclosed—that has up to 700 potential titleholders since the land has not been re-registered since the registered titleholder died many years ago. The amount of money and resuources needed to sort out these matters is beyond the ability of local governments. Of course, in most cases, the land is worth probably nothing to the family—maybe it’s on the top of a mountain or in a remote forest—and they simply don’t want to be taxed for it. However, a good portion is located in already developed areas. In any case, the local government or maybe a developer may want to exploit that land someday. The central government would like to have everything properly registered.

The Civil Code states that the titleholder must be consulted in order to dispose of the land or any portion of it, so if the government really wants to solve this problem it should amend the law, and that seems to be the plan. The Nikkei article says the government is now considering an amendment to the law that will allow the sale of plots of land or any portions of it if a certain number of heirs agree to the sale. At present, all titleholders must agree to such disposal. The land and law ministries plan to send this bill to the Diet in 2020, and are currently carrying out research that will better define vague property lines. As of 2017, about 16 percent of the land in 80,000 “locations” classifed as “urban,” meaning designated for residences and commercial businesses, does not have a definite titleholder in accordance with existing records. The portion of undetermined land is probably more, since the 16 percent mainly represents lots that are being disputed for some reason—either neighbors want to buy the land for expansion or local governments want to use it for parks and other public facilities or a developer wants to build a condominium on it. None of these entities have the money to negotiate with all the heirs, and according to most local laws any property line disputes have to be mediated through the consultation of surveyors and other experts, and those services have to be paid for by the parties involved.

On the surface, passing such a law should be easy. All the government has to do is specify the problem and how many of the identifiable heirs or titleholders must be located in order to dispose of the land. But because Japan has such a weak concept of eminent domain, it’s likely there will still be limitations to what the government can do unilaterally. And it’s apparent that people who have rights to a piece of land but are coy about being located have a reason for being coy. The main obstacle will be defining how much work should be involved in “notifying” all the interested parties. They must also determine if unpaid back taxes can be waived. One solution, according to Nikkei, would be a condition that the land in question must be sorted out within a certain timeframe due to health or safety concerns, and while that may sound like a limiting condition itself, the government has never been averse to bending such laws when it serves them.