Godzilla doesn’t even make the list
Steve S. posted a link to this article in a comment last month, and I kind of liked it so decided to do a Japanese version. So without further ado, here are my nine scariest things about owning property in Japan:
1. Loss of equity
This the big one. It’s the main reason why people outside of Japan cannot understand the situation here, and people in Japan can’t understand the real estate situation elsewhere.
Basically houses in Japan depreciate, and while land may keep its value, the house on it will be worth less and less as time goes on, going to zero or even minus numbers (to account for the costs of demolishing the building) after a number of decades.
One big consequence of this is that it can be very difficult to move once you have bought a house.
2. Natural disasters
Earthquakes, tsunamis, landslides, floods, volcanoes, typhoons, oh my.
Japan has more than its fair share of natural disasters, many of which can affect (or destroy) your property. Insurance may or may not cover you -definitely worth looking very carefully at the fine print.
3. Incorrect property tax
Property tax is set by the local authority, and sometimes they make mistakes. Like many bureaucracies, in Japan if you make a mistake it’s your responsibility to make things right, and if the bureaucrats make a mistake… well, these things happen.
4. Crappy neighbours
We had a bad experience with this when we rented a house. One of our neighbours was a troubled man in his 40s living alone in a small apartment in front of our house. He took a dislike to us that slowly escalated up to him repeatedly shouting at my wife in the street, grabbing her arm on one occasion, and coming round in the middle of the night to complain that our cats (that were sleeping in the living room) were walking around outside.
I was able to restrain my urge to put his head through a window and the police (who were great) eventually told him he wasn’t allowed to talk to us and should go through them if he had a problem. Very stressful and unpleasant, and seemingly not rare in Japan.
We were happy to see the end of him when we moved out, but if you don’t have the option to move…
5. New buildings going up next door
This is another big one tied into the lack of ability to move. You find the place of your dreams, build the perfect house and settle in to enjoy the wonderful view. Then someone buys the land next door and builds a larger house a couple of feet from your bay windows.
To ameliorate this you can look into the laws and regulations in your area (that can limit the height of houses, etc.), try to predict what the land around you will be used for (our in-laws’ land is next to a prefectural park and a cliff, so I think it’s unlikely people will build on it), and plan your house to avoid unpleasant surprises.
6. Unwelcome guests
Japan has some truly terrifying wildlife. For house owners, termites (shiro ari in Japanese) might be top of the list. Once they move in (burrowing in invisibly from underneath the house) they quickly eat the timber and insulation in your walls and require expensive repairs. There are a few ways to deal with them (the housebuilders we’re talking to were explaining a few of them) involving treating wood so that it is unappetising or poisonous to them, but the main factor seems to be vigilance and luck.
Cockroaches are less serious but potentially more unpleasant. We found one in our flat last week, and operating on the principle that where there is one there are more we bought a bunch of cockroach traps (gokiburi hoi hoi in Japanese) and spread them throughout the kitchen. Nothing so far, so either it was alone or we are infested with hyperintelligent cockroaches…
Suzumebachi (Japanese giant hornets) are potentially lethal, but rarer and easier to clear up. Avoid if possible, seek medical help if stung, and get professional help if you find a nest on or near your property.
7. Human disasters
Top of the list (if very unlikely) would be nuclear accidents, but chemical spills or leaks, major accidents, or fires can seriously affect your property, and as with natural disasters, your insurance may or may not cover you.
8. Maintenance costs
One reason houses fall apart after thirty years in Japan is that many people don’t carry out repairs and maintenance. Weatherproofing, termite coating, roof or exterior replacements may all become necessary at some point.
One consequence of the lack of awareness/implementation of repairs is that they cost more than they might if they were more widespread.
9. Depopulation
The way a lot of housing is handled in Japan is that development companies create large estates of houses all at the same time (sometimes called new towns). If all goes to plan all the houses sell and young families (mostly) move in. This means that everyone living there is about the same age.
In the early years there are a lot of kids and the area is lively, but as time goes by the kids grow up and move out. After that the owners get older and start dying and getting ill. There are no kids any more so the local schools close. Houses start being abandoned. In extreme cases local services, transport, and utilities are shut down.
This is actually the case in the area my in-laws live in (where we are thinking of rebuilding their house). It was a new town 40 years ago, so now it’s becoming a depopulated town. One benefit: it’s very quiet!
And one bonus one:
*. Mortgage liability
To be honest, this seems to be the same in the UK, but in Japan you cannot just give the property to the bank and walk away. You are liable for the remaining amount of the loan, minus whatever they can get from selling the property.
So even the people who were about to move into their new house only to see it washed away by the tsunami were liable to pay the mortgage. These may have been subsequently forgiven or reduced but in principle were due regardless.
How about you? Any stories to share? Anything we should add to the list?
The termites have me worried now! Our house is 40 years old but we weren’t told there were any issues with it. How would you know?
Also, I paid an awful lot of money for mortgage insurance (compulsory – I had no say) so shouldn’t that company have to pay the mortgage off? Otherwise what’s the point in the insurance?!
Hi Martin
Not 100% on the termites. Apparently depending on how the house was built there are ways to check (go into the foundations?) but they will cost you. Also if you notice termites near your house you’re probably screwed 😉
Also not sure about the mortgage insurance. I didn’t need it, apart from the free life and cancer insurance they provided (the mortgage gets paid off if I die or get cancer -any kind of cancer, even fairly trivial stuff).
Found this quite easily: http://www.doityourselftermitecontrol.com/termite-home-inspections.html
We have a guy come in every 5 years or so to check under the house for termites. He lifts the tatami and gets into the foundations, checks things are okay and sprays some sort of chemical which is supposed to work until the next check. I can’t remember how much it costs but it’s not cheap. Cheaper than losing the house to the termites, though!
Can’t imagine how much it would cost to replace/repair termite damage, so I imagine they can charge as much as they want to for that!
To add to the unwelcome visitors: Mice/ Snakes/ Lemurs. Be wary of old house demolitions near your house. We had an old house demolished next to ours (we’d always enjoyed all the cats who used to go in and out of that house) and had a HUGE mouse problem in a month. Mouse Japan (real name) came out to sort the problem out and he said we were lucky not to have lemurs which are even MORE of a problem because they are big and leave BIG POOS in the ceiling between floors—the ceiling gets weighted down and collapses. And this in in Urawa Saitama—wildlife everywhere. Snakes—in the countryside under the floorboards many times.
Bad neighbors—I know people who have sold and moved because of bad neighbors.
Eeek. Lemurs???
We have termites on our property. They show up whenever I leave out certain types of wood. Maybe that’s why so many 20 or 30 year old houses get torn down.
Interesting reading. I was aware of all of these factors but have still gone ahead and am in the middle of buying a house in Chiba right now. For me, it made total sense to sell my condominium in the suburbs of Tokyo and buy a small house in a rural area of Chiba with very reasonable land prices and a comfortable commute time into Tokyo for work once or twice a week. The rest of the time I work freelance from home. I think you have to make a comparison of the alternatives. Renting is also lost funds. Condominiums also lose value over time unless there is another bubble like around 1989-1993 (unlikely) but even though I am selling my condominium for a lot less than I bought it for, if I l look at the average monthly payments (for the investment and mortgage) over 22 years of living here, it still works out much cheaper than had we been renting over the same time period. Now I am looking forward to the joy of owning a small piece of land with an orange tree, persimmon tree and plum tree in a spacious garden. The house is 23 years old but has been completely renovated with termite treatment guaranteed to last 5 years. I had a friend who is an architect/house builder look at the place and he said it was in really good shape and better value (would need less maintenance in a few years time) than buying a new house (in the lower price range). Japan is a tough country to live in with earthquakes, volcanoes erupting, typhoons and flooding so we all live with the feeling of potential disasters at any time. I wanted to live near the sea. The first thing I looked at was the tsunami hazard map in each area I considered. My new house is up on a hill 10 minutes from the sea. Of course I may be down on the beach or in the town if a large tsunami ever hit the area but I decided it was a risk worth taking to have the lifestyle I have always dreamed of. I don’t know what the future may bring but I wish all of you long-termers the best of luck in your decisions.
Patricia, it seems to me like you have found the perfect place! Chiba is also where I’d like to go once my job situation evolves
Stockbeard – Chiba is a rather undiscovered and totally affordable paradise – particularly the Boso peninsular. Rail and road connections to Tokyo are good with the Wakakshio express only taking just over an hour into Tokyo from the Boso area. I was looking at Zushi and the Miura peninsular (too expensive for me) or Izu (just a bit too far for a commute into Tokyo). I looked at lots of properties before deciding on the bungalow in Chiba. No doubt I will discover more once I am living there. It will be a big change to go from my local area in Tokyo with a choice of 6 supermarkets a short distance a way to only one supermarket serving the whole town in my new abode!
Oh, I think it’s a personal decision with no right answer. Important to think it through and run the numbers though!
RetireJapan – I agree.
Real estate in Japan is definitely not a great investment although I guess some people will be making some money buying and selling condominiums in Tokyo in the run-up to the Olympic games. But we all have to live somewhere, so it’s a matter of choosing what kind of place you want to live in and whether to buy or rent. Often buying makes more sense even if your investment depreciates over time!
I think sometimes about buying here in the future, but almost everything I hear puts me off – the one exception being the fear of ending up homeless in retirement. Which I’m guessing is the main reason a lot of people buy… For now though this list makes me feel very good about renting 🙂 Maybe a complementary list of the better reasons for buying might be a good future post?
Great idea! I’ll put something together 🙂
“Crappy neighbours”
oh… I almost quit my job because of this. It was the only way to get rid of my crappy neighbour. Back when I was on JET program I had a bad neighbor. Drunk 7 days a week when he wasn’t broke. Begging for money when he was broke. Smoked constantly. Loud music 100% of the time. Resulted in calling the cops 3 times for music. They were great. But he had stolen property from junk yards, scooter, 3 sets of stolen rims he was trying to sell. They would do nothing about that. I went to his school, his supervisor, the kencho. They could do nothing but I was assured his contract would not get renewed. AND it was anyway, his boss was too ashamed to admit he was a problem, so he gave him 1 more year and acted like nothing was wrong with this psychopath who on numerous occasions was intoxicated around children and smoked in front of students. The bad neighbor just walked into my place one day wasted. I had to physically remove him after asking him to leave many times. Cussed at my wife a few times. I was on the verge of a nervous breakdown. Walked into the kencho and told the I would quit that day if they didn’t fire him or force him to move. To my knowledge he was the first JET ever fired in Fukui. He given a ticket home, but he was too drunk to fly when he showed up and was then then stuck in Osaka to what fate who knows. The police called Fukui Kencho and they said he was no longer a JET member and out of their hands. I still have PTSD thinking back to that neighbor from hell.
I am in the process of buying a 20 year old house myself, and while a new house does have the dis-advantages listed above, I am hoping to minimise some of these by buying a failrly good quality second hand
There is some helpful information but, overall, the piece strikes me as being far too one-sided & alarmist. Loss of equity & natural disasters are certainly Japan-specific but the other factors apply no matter where you live.
We raised our family in our own house in which they were kept happy, warm and safe. The kids never knew another address until they left for university. It was never about money; it was about providing a family home. We have absolutely no regrets. By this article’s logic, one should maybe not invest in the stock market as there is potential for loss of equity, disasters, taxes, currency fluctuations, recessions, etc. Better not leave the house in the morning either. The sky may fall.
Hi Bob
Thanks for the comment! I hope the title gives away that this isn’t supposed to be a balanced examination of whether to buy or not 😉
I am planning a couple of articles looking at renting vs buying and houses vs manshons -stay tuned.
Like I mentioned in another comment above, there is no correct answer but it’s important to think things through and run the numbers before making a decision.
I’m glad you said that Bob. I agree.
Interesting article! Unexpected and unknown factors, especially about wildlife in Japan, and how it influences on real estate prices, thanks!
I was glad to see you mention natural disasters, this one got a lot of attention when my wife and me were looking at properties. I used to work in the disaster preparation field, and I’m used to using Japanese resources. If anyone would like a second set of eyes to check out the likely hazards where they want to move or build here in Japan, I’m willing to do that.
That is a very kind offer 🙂
Jeez, with that list of downsides, I’m surprised anyone ends up buying a home in Japan! Thanks for sharing; this was a very interesting read.
Thanks, Angela! It’s certainly a different experience to buying anywhere else 😉
At the end of the day people still need somewhere to live though!
Can anyone tell me what happens if you want to sell an old property, but no-one will buy it? (In a small country town). There are some nice places i could buy that would work out cheaper than renting over ten years. But I am worried about one day leaving Japan but being stuck with a property I can’t sell.
Also, would an unsold old property eventually become a burden on my adult children here? (Would they automatically inherit it?)
Does anyone have any knowledge of these issues?