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Land ownership mysteries in aging Japan stifle economy

49 Comments
By Hideyuki Sano

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In the end this land is going to end up in the governments hands. The laws are archaic, and people who say that Japanese "value" the land more than the money, should read and learn, that it isn't always so!

9 ( +14 / -5 )

Partly due to inheritance tax too. I have friends who had to sell valuable land just to pay the tax!

15 ( +16 / -1 )

What a mess!

What do Japanese politicians do?

It certainly isn't work on land management.

I know of a house abandoned locally worth hundreds of millions of yen.

Whoever the owner is they don't have the money to pay inheritance, registration taxes.

Clearing the land would be millions of yen too.

The irony is that there are three real estate agents within a stone's throw of the place.....

9 ( +12 / -3 )

I guess somebody at city hall lost that piece of paper. After many years of being totally astonished and bamboozled by the ancient paper and rubber stamp based administration system at the city halls I am in no way surprised by this. This is the same for the police, driver's licence center and the car registration center. The Japanese love their rubber stamps! Unfortunately, this system is no longer efficient or accurately manageable in a population of 130 million people.

6 ( +11 / -5 )

I believe urbanization would've taken over the Japanese countryside, if the government inherited every unlisted property of Japan. Preserve your countryside instead of integrating it into several cities, which lacks the "natural" feeling as a village have!

-4 ( +0 / -4 )

DisillusionedToday  07:13 am JST

After many years of being totally astonished and bamboozled by the ancient paper and rubber stamp based administration system at the city halls I am in no way surprised by this. This is the same for the police, driver's licence center and the car registration center. The Japanese love their rubber stamps! Unfortunately, this system is no longer efficient or accurately manageable in a population of 130 million people.

I suppose they'd have to fire about half Japan's workforce if there weren't all those bits of paper to fill out, stamp, process and file away...

10 ( +13 / -3 )

Strikebreaker555Today  07:18 am JST

I believe urbanization would've taken over the Japanese countryside, if the government inherited every unlisted property of Japan.

Urbanization or dereliction and abandonment. Take your pick. Personally I think local governments should take the unclaimed properties and give them to anyone who's willing to cover the costs of re-developing them, e.g. clearing away old houses and building new ones, or renovating old houses that can still be inhabited.

5 ( +6 / -1 )

Partly due to inheritance tax too. I have friends who had to sell valuable land just to pay the tax!

Hence the phrase " there are no 3rd generation rich" in Japan. Inheritance taxes have to be paid in cash, but the inheritance taxes kick in after I believe it is over 80 Million yen.

5 ( +6 / -1 )

Many land owners do not bother to register because it is not mandatory.

Or because they do not wish to pay taxes on something they are not using.

Its the same reason the government doesn't want to receive the land. It wants cash.

7 ( +9 / -2 )

In most parts of the world if you abandon property, eventually it is seized for tax payments or the like and auctioned off.

9 ( +10 / -1 )

Yup. Same here. MIL's mother took over the care of a small single-level house in their home town shortly before she passed away. She hadn't had time to do the paperwork with the aunt who owned it. Aunt lived too far away to do the upkeep on it, so she gave it to her sister, leaving no documentation. They both passed away the following year, and MIL took it over, dividing it into four small apartments and rented them out. She didn't do the paperwork, either, it was 'mendokusai' (too much trouble). When she finally got around to starting on it, in the late 90's, there were 40 people who had to put their seal on the documents.

Some were in their 90's and sent the wrong paperwork, and had to do it over. Three or four direct descendants of the original aunt refused to sign, and demanded it be sold and they given the money, when they hadn't even known about it. MIL and FIL had made 2-4 man a month from it depending on how many of the apartments were rented out at any one time, the apartments were tiny so they only rented for 10,000 yen, but the relatives thought they had made a mint and wanted their share. They didn't consider that MIL/FIL had been paying the property taxes on it for decades, they had put a new roof on it, and had converted the house to flush toilets, and other improvements and upgrades over the years that the rent didn't really cover. It's a Taisho-era wood and tile building, it's unusable now. They hung in for 6-8 years demanding it be sold and the money handed over. Eventually MIL got dementia and now nothing can be done about it, and our lawyer has all but given up. It will be taken over the by government once MIL passes.

12 ( +13 / -1 )

So they own property but it is not registered to them and thus no proberty taxes are paid.

Right.

What is the tax office/government doing? I fully support seizing those properties, auctioning the off to cover unpaid taxes.

7 ( +8 / -1 )

The whole system is a convoluted mess, add to that urban planning confusion. My area what was a legally built house can't be rebuilt and 1 or more meters have to be shaved of any new structure. Reducing a small house to a useless size. Then there is getting agreement from neighbors. 1 can caboch any plans. The simple fact is dealing with officialdom is just not worth the cost the stress. So now we have all these limbo properties.

8 ( +11 / -3 )

@GyGene. my colleague and her sister had to sell the parents house where they lived to pay inheritance tax. after WW2 finished, my partners fathers family had most of their land confiscated by the J Govt. Many temples also lost land at that time. they (govt) have done it before and nothing will stop them from doing it again.

1 ( +3 / -2 )

This problem will continue to mushroom as the population ages and declines. What a mess!

1 ( +4 / -3 )

imminent domain?!

-4 ( +0 / -4 )

Looks like a situation in which before long the government is going to enact something that knowing private parties are not going to like.

In British-tradition places, the 'Crown' or the state owns all the land and private or corporate parties only own 'title' (or right)to occupy and use the land. That way the government can just appropriate the land giving 'compensation' as appropriate.

In Japan, if 'ownership' means actually owning, good LUCK!

0 ( +3 / -3 )

In many cases, the fixed assets tax won't have been paid for years. So the government should just seize the property. I think ten years' of non payment is enough. Put an advert in the paper, a sign on the land, and a message on the internet and give whoever thinks they own it six months to sell it if they think they can prove ownership. Place the burden of proof for ownership on them. If they come to the town hall and claim some mythical document must exist, have a little look and then tell them where to go.

I am not an anti-tax person, but if the government fails to collect it from everyone, it becomes a tax on honesty and makes an idiot out of everyone who pays. Cheap land is actually a boon for the Japanese countryside, because wages are so low that newcomers could not afford to live there without a near-free old house.

6 ( +9 / -3 )

Japan has over 8 million abandoned properties in Japan, many of these have derelict home on them, even with the increased taxes on homes that arent lived in it become more expensive to demolish the homes/pay inheritance taxes than actually what the land is worth. Many people just abandon them and from a taxation perspective it actually better not to register them especially in low value rural areas.

8 ( +10 / -2 )

The ownership issue is only part of this, mostly these properties are left to ROT & are eyesores & dangerous as well over time!

Toss in the idiotic way property taxes are paid, or NOT paid(just don't use the property!) and non-existent by-laws means you see totally absurd situations ranging from mini factories among houses, garbage collectors who can fill their properties with garbage etc

And currently there are around 8million non used houses & this is increasing very fast

Its all theatre of the absurd! And damned UGLY to boot!

9 ( +11 / -2 )

Cheap land is actually a boon for the Japanese countryside, because wages are so low that newcomers could not afford to live there without a near-free old house. exactly , I bought a very large building almost 2 yrs ago in a rural area,(even though theres around 60,000 people in my city its classified as rural in Japan, LOL) a similar sized/condition building in a urban area would have cost almost 3 times as much. Factoring in taxes depreciation loan repayments It wasnt difficult decision. I dont need to work in the cities so a rural property is perfect for my family, much larger homes, land size, and when I do need to go to the city its less than a 50minutes away, actually even if I had to work it the city daily Id still commute by motorbike which would take around 40minutes, considering many Japanese do this by train everyday there not much difference. Except I can avoid heavy traffic , large crowds, small home/apartments. Japan is a great place for families if you dont live in the cities, I personally think Japans best attractions are its rural areas not it urban ones.

6 ( +9 / -3 )

May be a result of poor policies. Inheritance tax might be too high?

5 ( +6 / -1 )

i did the same as @wtfjapan. except my prefecture tax is too high because of land area. but life is much better than when i lived in Osaka in a 4DLK.

i am worried what will happen when father-in-law passes away. 50% to the LDP. can't agree.

5 ( +7 / -2 )

“Japan has over 8 million abandoned properties in Japan, many of these have derelict home on them”

“mostly these properties are left to ROT & are eyesores & dangerous as well over time!”

You can thank the government for that as well. If you knock down a house and grade the land etc to sell it, the property taxes almost double! It’s ridiculous, actually an incentive to leave the building to rot...they should offer a deep discount in property tax if the owners clean up the lots. As the laws stand now, they encourage people to abandon houses. That’s why so many people make parking lots out of small parcels.

7 ( +8 / -1 )

On the plus side, all this unclaimed land laying bare will be out of reach from all the greedy real estate fatcats.

1 ( +3 / -2 )

When fire would cleanse the problem you know there isn't any useful gov't policy on this

3 ( +5 / -2 )

The inheritance tax is one of the driving causes of this, its stupidly high.. My wifes parents as they age are already signing over property, if I am correct the family house already belongs to the oldest brother and the parents are just living in it. They are also "assisting" with rent payments where we live, plus money towards kids schooling.. All basically in order to burn it up, and not get taxed away as an inheritance.

6 ( +7 / -1 )

My wife and I bought a 7DK , older, but in nice condition, for 6 million yen. We had it put in her name, but after she passed away I was worried that we had to hurry and change the deed, but the lawyer said, "you don't have to change it, just as long as you pay the taxes, but, have it changed before your children get to old, because it will become a messy situation after that." It will cost about ¥400,000 yen to do the deed change with fees and taxes, but our yearly tax on the land and house is only ¥60,000 yen, so we keep putting it off. Guess I need to stop procrastinating and get it done!

4 ( +5 / -1 )

Note that a dozen or over forty or however many people are only claiming ownership when they think they can get something for nothing. They are not fighting to maintain anything or to pay taxes on it.

I say confiscate it all and sell it on, even for next to nothing if that's all someone will pay. Put the new owner on the hook for cleaning up anything dangerous or unsightly though. Do this in the name of civic pride. For inheritance, put very little tax on the primary residence so no-one gets turfed out of their home. Tax inheritance of secondary and other properties higher if there is a tax shortfall. Noone needs two houses. Inheritance tax on your uncle's house you didn't live in is a nuisance, not a burden.

Re. the photo at the top, my in-laws's place just has been shifted several meters for a similar road widening project. Their neighbour was told by a priest that they shouldn't move in an unlucky year, a "yakudoshi", so the huge expensive project involving lots of rights holders was delayed by a year, based solely on something a fortune teller said. One of my friend's had a neighbour rebuild a house ignoring a 1m setback rule intended to widen a road, and will now never be able to get a car into his place. He complained multiple times to the neighbour and went straight to the local government as soon as the foundation was poured, but they did nothing. They simply told him to try sueing in the civil courts. Governments are too soft. They are hopeless at dealing with anyone who perps up or ignores them.

10 ( +11 / -1 )

Inheritance tax is double taxation. It should be removed much like Australia.

5 ( +7 / -2 )

@Criky - The simple fact is dealing with officialdom is just not worth the cost the stress. So now we have all these limbo properties.

Yep! I've always said that, buying property in Japan is not an investment or an asset. It is a burden with no returns! They are cheap because they cannot be resold or they are not zoned as residential. There is a place for sale right on the beach just south of Kujukuri near Isumi. The house is a little rundown, but it is quite a modern house on a decent sized block and could be refurbished by a decent handyman. The house is just behind the sand dunes, so it's five minute walk to the beach. This house been for sale for over 5 years since I first noticed it. I enquired about the price and its only ¥3,000,000 (30 grand). I asked them why it was so cheap and they told me the price was just for the land and the house must be demolished, even though it is still quite new. They then went on to tell me that, due to the local council regulations, it cannot be used as a holiday house. It must have permanent residents in it. It was at this stage I started to get a headache just thinking about all the 'rubber stamps' that would be needed to buy this property and gave up. You must be extremely careful if you intend to buy property in Japan. I bought a beautiful 18 years old, rooftop apartment 8 years ago for 200 grand and spent another 40 grand on the inside of it. I had it evaluated last year and it's now worth 150 grand. Go figure! If I had continued to rent I would be in front by nearly 30 grand.

3 ( +6 / -3 )

Disillusioned I know your story only too well, the number of times Im actually about to stamp/ Sign for a property, and then they mention that there is this problem or that. Totally negating the worth of buying it. Why don't they tell you at the start! And why do the regulations change so bizarrely, your example both the unusable beach house and rooftop depreciating are examples of a flawed system. My wife made a company so inheritance tax not such a problem, also assets are the companies not an individual asset. Grandkids are directors, I'm the CEO...blah,blah. Fact is as a company you get less tax and less hassle. Also not treated with such distaine by real estate or city hall staff.

3 ( +5 / -2 )

i give up. city tax is crazy. can't resell. can't develop. lost everything financially. but when i lived in a western country, i had to lock my front door. i don't even have a key for my house or lock my cars. as much as i want to grumble, everybody will die eventually, just most important is to find a great place to live.

0 ( +3 / -3 )

Blockchain!

0 ( +1 / -1 )

Registration of land ownership is not compulsory in Japan

There's your problem.

6 ( +7 / -1 )

I wonder if you could build a temple upon the Land, and then reap its tax free status thereafter ?

3 ( +4 / -1 )

Haha I should erect a Tori gate end of my driveway!!

I am sure others have crazy stories about buying property in Japan, I have 2 patches of dirt, the 2nd one was an office for me, now more of a man's cave, miniature kominka, very cool, took up the entire patch of dirt, empty lots all round me from the 80s, so I contacted the fudosan on the patch out behind & the owner was more than happy to sell for Y500,000 I could have bargained down but didn't want to piss off an old man over a few yen, when paying  & doing all the paperwork it turns out he paid Y3,500,000 back in the 80s....ouch, but if I didn't buy it was EXTREMELY unlikely another enquiry would have emerged.

Like a couple others above I am out in the sticks a bit, big yard, gardens, fire pit, great fun compared to the city & for a pittance!

0 ( +2 / -2 )

I don't have any plans to purchase land in Japan, and none of these comments have given me the desire to do so.

1 ( +4 / -3 )

I am not certain with Japanese property tax, but if legal notices were to be mailed with delinquent taxes to the last person(s) listed as property owner, shouldn't it suffice to forfeit the property? Notices can be printed in the legal section of newspapers, like it is done here in the USA.

2 ( +3 / -1 )

"The land belongs to Nhanderu (God)" is a belief of Guarani Mbya indian tribe in Brazil (and certainly by all indian tribles around the world. This is one reason that they had not fought for land ownership, land property, they do not believe at all that someone can own a piece of land, it belongs to God and so, all, each one, has the right to live and use it in its own capacity. To them it is something weird to imagine that someone can possess more land than its own capacity of alone taking care, cultivate. Private property of land is to be questioned. Around the world there are billions of people that has no land ownership and have to live in very poor conditions or pay rent. People who lives below the porverty line being exploited by powerful land owners. We can make a difference and try to build a fair society by creating common sense laws that benefits 100% of people, not a small group of people. Regarding this land issue in Japan, I heard that a friend, Japanese descendant, received a letter, from a lawyer in Japan, and they came here, to make him to sign a paper, and he had received some money related to a piece of land, it was a sum enough to purchase a new car here, that was interesting, he did not expect that, it was a pleasant surprise to him !

0 ( +2 / -2 )

There is no tax on forest land, why local government does not bother to find out who owns such land. The is forest land behind me. I wanted to contact the owner to get him to cut some trees down, but he no longer lives at the address registered at the land office. I asked it the city would cut some dangerous trees down. No. I asked if I could cut them down. No because they are his trees, not yours. Does the tax office have his address. No, he doesn't pay city tax as there is none on forest land.

The way to solve this is really quite simple. Place a tax on all owned land. If the tax is not paid, a writ should be delivered to the registered owner at the registered address. This would place the onus of registration on the owner and solve many problems.

Some people have said they know of unoccupied buildings. Do they realise that if they can ocupy it for ten years, under Japanese law they can claim squatter's right and legally take possession of the land.

2 ( +3 / -1 )

i am worried what will happen when father-in-law passes away. 50% to the LDP. can't agree. you can gift up to 1.05 milion yen per year tax free, so its best to start doing it now to your kids/family members, bank accounts. even if they have to pay income taxes it far better than the 50% inheritance tax. I will donate most of my wealth to an overseas charity long before I let the J government apply double taxation on something thats already been taxed ( or if im wealthy enough Ill move to a country where there are no inheritance/death taxes upon retirement.

5 ( +5 / -0 )

Do they realise that if they can ocupy it for ten years, under Japanese law they can claim squatter's right and legally take possession of the land

They would need not 10 but 20 years to acquire the land since they would be aware it's not theirs :)

(Civil code section 162 paragraph 1)

Just thought you'd like to know

3 ( +3 / -0 )

No goverment can exist/ function without knowing/documenting her land ownership. All property is registered with manually or electronically. Ownership indentured of a country’s landmass is basic. Townships are formed on a grid pattern and recorded by local and prefectural goverments. Births and deaths are also recorded with the afore-to-mentioned goverment entities. Many countries have “homesteader” problems when people set up residents on property and go unchallenged/noticed for a given period of time which allows them to establish quasi-ownership if same. Upon reports of deaths, government needs to publicly post notice of properties with unpaid/claimed taxes/ownership followed by a public auction of properties. Failure to claim or purchase these lands will result in all future property claims being null and void and the properties reverting to goverment control and desposed of as they see fit.

2 ( +2 / -0 )

Those laws that do not require land registration and still ask for inheritance tax would explain the weird buildings'situation when you can have an abandonned two strorey house neara 100 meter top of the class high rise building...and so on.

It would also explain why Japan seem very poor to use land outside very urban areas, making people all live one on each other while you discover there is plenty of free space in that country.

0 ( +1 / -1 )

Just stopped reading to flash down here and knock off a comment. Land registration is not mandatory? wWhat? i'm paying taxes on my land for nothing? ( cheapo tax level,but still ) How can that be?

1 ( +1 / -0 )

@Yubaru. Ave is notable exception to the “no third rich generation” rule!

0 ( +0 / -0 )

Not only does the inheritance tax apply to land and assets in Japan, it actually extends beyond Japan's shores I'm pretty sure. So, my wife and I own properties in Australia, as well as other investments, and stand to inherit, say my parents assets, which is not an insubstantial amount. I think technically that if I die, she needs to pay some of the proceeds of that to the Japanese government.

Now, I don't mind paying pax at the point of earning in this country, but I think it is completely unethical for any government to put their hand out again when you exit stage left, let alone on assets offshore. I can promise you, I will absolutely make sure they won't be getting a cent of it.

They absolutely stitch the Japanese people here, they shouldn't be trying to do it offshore.

1 ( +1 / -0 )

Registration of land ownership is not compulsory in Japan

And therein lies the problem.

0 ( +0 / -0 )

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