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Japan: New Law and Tax Measure to Promote Demolition and Reuse of Abandoned Houses

(Dec. 5, 2014) Japan has recently taken two measures that apply to the management of vacant housing. Abandoned houses may collapse, be fire traps and sanitation hazards, and disturb the look of the neighborhood. Strangers may sneak in and live there. (Takeshi Fukuda, Akiya mondai no genjo to taisaku [Current Situation of Vacant Houses and Countermeasures], Issue Brief No. 791, National Diet Library website (May 30, 2013) (in Japanese).)

Japan previously did not have strong, enforceable measures to deal with abandoned houses, even when hazardous. Many local governments have enacted ordinances in recent years to tackle the issue, but their capabilities to resolve it were limited. (Id. at 5-9.) This year, the Ministry of Internal Affairs released statistics on houses, based on a survey that has been conducted every five years. The number of vacant houses has increased, as expected. (Brief Overview of 2013 House and Land Statistics (Quick Estimation) Result, STATISTICS JAPAN (July 29, 2014), at 2 (in Japanese).) Following the release of the statistics, national level legislation was enacted to address the problem.

New Law

The Diet (Japan’s parliament) adopted a law to promote the demolition and reuse of abandoned houses, the Vacant Houses Special Measures Act. (Akiya tou taisaku no suishin ni kansuru tokubetsu sochiho [Special Measures Act on Promotion of Measures on Vacant Houses], Act No. 127 of 2014; the text of the bill that became the Act without amendment is available on the House of Representatives website.)

The new Act authorizes municipal government employees to enter and investigate any vacant house that poses a threat to the neighbors or that severely detracts from the appearance of the neighborhood. (Vacant Houses Special Measures Act, arts. 2 & 9.) The municipal government may give recommendations to the owners to maintain or to demolish the property and give them warnings if they do not take sufficient remedial measures. If the owners still do not take adequate action, the municipal governments can institute measures, including the demolition of houses, and demand payment for the costs. (Id. art. 14.) The Act also provides for an administrative penalty of up to approximately US$5,000 against owners who did not take sufficient actions. (Id. art. 16.)

It is sometimes hard to locate the owners of vacant houses. The Act enables the municipal governments to utilize their property tax information to find owners. (Id. art. 10.) In other situations, it is not clearly legal for municipal government employees to release tax information for purposes other than taxation. (Regarding Confidentiality Obligations of Local Government Employees Who Engage in Local Tax Collection Administration, Local Government Agency Circular No. 159 (Nov. 19, 1974), Kanagawa Prefecture website (in Japanese).)

The new Act also promotes the reuse of vacant houses. Municipal governments are encouraged to create vacant house databases and provide information for the public, to promote the reuse of these properties. (Vacant Houses Special Measures Act, arts. 11- 13.)

The Act also obligates the national government to financially support local governments’ administrative efforts on the issues covered in the law. (Id. art. 15.)

Tax Measure Considered

In addition to the new law, the national government is taking further action in regard to vacant houses. For some vacant house owners, it is more beneficial to keep the houses, even if they are in bad condition, because the land property tax rate is reduced for land that has a house on it. (Local Tax Act, Act No. 226 of 1950, amended by Act No. 72 of 2014, art. 349-3-2, Ministry of Internal Affairs website (in Japanese).) If the owner of the land demolishes the house on it, the property tax rate will go up. The national government decided to exclude specific vacant houses from the tax reduction. The government announced it aims to make such a new regulation effective in 2016. (Kiken akiya no zei yugu haishi [Abolish Preferred Tax Treatment for Dangerous Vacant Houses], YOMIURI NEWSPAPER (Nov. 23, 2014), on file with author.)