Self-renovation

[jpwood]

Hi. We have recently moved back to Japan after a number of years overseas and currently in Fukuoka Prefecture where we are likely to settle.
We are in no rush to buy and want to be well set on an area with jobs, schools etc in mind before we do so and are happy to rent until then. But eventually aim to get our own house.
We would be cash buyers which I read somewhere would negate some tax benefits not having a mortgage? And buying an older property to renovate would mean lower city taxes?
As I see it the options would be building a new house to our own specifications, buying a typical new build development from one of the big companies or buying an old place and self renovating...

There seem to be many older wood framed houses in this area built 30 years ago up for sale at 1/3 the price of a comparable new builds. These seem to be typical plastic-type material claded houses with no insulation and single paned aluminum-framed windows. The floors and doors are typically fake laminate wood etc. The actual structure of these houses seems quite solid however.
It seems most people here when renovating pay a small fortune to get contractors in to update the interiors. I was wondering if anyone here had attempted to renovate any of these houses themselves? Not sure how easy it would be to rip if the cladding for example, add decent insulation and then clad with a more appealing material such as a treated wood.
Inside, maybe strip floors and lay new real wooden floors yourself and then get a contractor in to fit good quality double glazed windows. I think there would be jobs which would be beyond my ability of course like fitting a new bathroom etc however.

I just wonder how feasible this may be to say take a 6 months or so break from work to renovate such a place. Is it a case that such DIY culture isn't a thing in Japan, people don't have time or interest to do it or that the costs and effort aren't worth it compared to simply building a new house with better build quality from the start?

Would love to hear your thoughts...

[RetireJapan]

Great question. Sadly I am not at all qualified to answer it! We ended up paying for high impact renovations to our manshon that were great value for money: https://www.retirejapan.com/blog/home-i ... s-windows/

and a fortune to renovate my in-laws' place (option 3 in this blog post). It was expensive but we're pretty happy with the results: it's basically a new house for less than it would have cost to build it from scratch, and very high quality. Ended up costing 24 million though! https://www.retirejapan.com/blog/renova ... n-japan-2/

I wouldn't worry too much about the mortgage tax credit. Older properties are eligible based on how old and earthquake proof they are. Any estate agent or builder will be able to give you advice on this.

Anyone else?

[Beaglehound]

We ended up building new as we figured old house plus renovation costs would only be a few million less and it just seemed a better option to start afresh and get it just how we wanted it. If you are able to do a lot of the work yourself, that might tip the balance in favour of renovation.

On property taxes, I think the house would be assessed after major renovation in a similar way to a new build, so likely not a huge saving. If you or your missus are over 50, you may be eligible for this subsidy, even as cash buyers:

https://japanpropertycentral.com/real-e ... me-buyers/

I have no idea why they limit it to over 50s, but thems the rules...

[StockBeard]

We would be cash buyers which I read somewhere would negate some tax benefits not having a mortgage?

If you take a mortgage on a recent house (new or less than X year old) there is a significant tax deduction of up to 500'000 yen per year for ten years (limited to 1% of the remaining mortgage per year I believe). I'd assume al of that is gone if you don't go through a loan or if you buy an older place, which seems to be your intent anyway.


As far as renovating the house itself: a friend of mine went through a contractor to do that for an old "farm" style near kobe. They re-did the whole flooring from the ground up, but did not touch the walls or roof. So, it felt like they did a bit more than the typical "remodel" you see here in Japan, but significantly less than what you want to do.

I don't think there's anything preventing you from doing that, but in the circles I'm part of, it's certainly not the culture: everyone I know bought new. I recall a good "freakonomics" podcast ( https://freakonomics.com/podcast/why-ar ... /?c_page=2 ) were they explain the love of "new buildings" comes from a tradition of increasing earthquake rules which means houses built e.g 30 years ago are not up to par in terms of those requirements. The freakonomics podcast made a point that those rules have been over the top for several decades now, and that there is no statistical proof that houses built on the new thresholds are more resistant "IRL" than those from e.g. 30 years ago <-- don't quote me on that, I haven't listened to that particular podcast in a long time.

There was a paper a while ago from Nomura also explaining how the tradition of always buying new houses is a huge destruction of wealth for households and for the country. They were at the edge of calling it criminal. Very interesting read ...and... I can't find it anymore! But I certainly side with the idea that most people here buy new because they don't know better, and a lot of people have money to make in keeping things this way (disclaimer: we bought new...)

[jpwood]

Hi.

Thanks so much for your comments. Lots of food for thought!

I guess in the end the answer may lie in one of those suggestions. Maybe more modest improvements such as the windows to keep costs down on an already cheap house, or a new build...

We have lots of time to consider all these options and do a little more research maybe.

Thanks again!

[captainspoke]

...
On property taxes, I think the house would be assessed after major renovation in a similar way to a new build, so likely not a huge saving. ...

My impression, correct me if I'm wrong, is that one reason for reforming is that property taxes won't change. I've seen places taken down to the barest skeletons and then effectively rebuilt--I'm sure the companies know how to do that so that it counts as a reform rather than new construction.

(Besides taxes, the other factor are conditions/restrictions on rebuilding. A reform won't have to satisfy those things, building new would.)

[Beaglehound]

I think you are right Captain, not sure why I had it in my head that the taxes went up with renovation.

Good point about restrictions on new build. We demolished an ancient house which my wife’s family owned but found that we couldn’t build as wide as the old house, due to not being allowed to build too close to next door. The old house had actually shared a wall with next door.

[RetireJapan]

My in-laws' place is too close to a cliff to be built now, which is the main reason we renovated it instead of building new (which we might not have gotten permission for).

[Jake]

If you are capable of doing the work yourself I would do it, materials are available if you know where to look.
I bought a house in '06, it didn't need renovation as such as it was only 5~6 years old, the previous owner was about to be kicked out by his bank I think so I got a really good deal.
It did however need upgrading. Although the house was in very good condition, I found the build quality lacking. Over the 13 years I owned it I did extensive mods like secondary double glazed windows (icy windows in winter!!), built a carport, installed a wood burning stove, replaced the aircons, landscaped the garden etc. Then before I sold it last year, new wall paper and paint top to bottom, new kitchen, new flooring in some rooms and various other jobs. All of which I did myself.

The result of that, I sold the house after almost 13 years for more than 95% of my original purchase price. Not only that, had the offer within a week of the agent taking the keys.......
Of course I spent quite a lot over the years but that's a hobby of mine anyway. The tax had continued to go down as the estimated value used was never reassessed. I don't know about the new owner though . Go for it, I would do it over again knowing what I know now.

[Wales4rugbyWC23]

If you are capable of doing the work yourself I would do it, materials are available if you know where to look.
I bought a house in '06, it didn't need renovation as such as it was only 5~6 years old, the previous owner was about to be kicked out by his bank I think so I got a really good deal.
It did however need upgrading. Although the house was in very good condition, I found the build quality lacking. Over the 13 years I owned it I did extensive mods like secondary double glazed windows (icy windows in winter!!), built a carport, installed a wood burning stove, replaced the aircons, landscaped the garden etc. Then before I sold it last year, new wall paper and paint top to bottom, new kitchen, new flooring in some rooms and various other jobs. All of which I did myself.

The result of that, I sold the house after almost 13 years for more than 95% of my original purchase price. Not only that, had the offer within a week of the agent taking the keys.......
Of course I spent quite a lot over the years but that's a hobby of mine anyway. The tax had continued to go down as the estimated value used was never reassessed. I don't know about the new owner though . Go for it, I would do it over again knowing what I know now.

I am very interested to know how you got 95% of your original purchase price after 13 years. We bought a new house about 8 years ago and I am looking that if I would ever sell it in the future I would only really get the value of the land, which is about two fifths of the original purchase price. However, we have been approached by our house builder to see if we were interested in a reform after 10 years. Is it worth it? Does it keep the value of the house? I am not a DIY specialist even though my brother is a carpenter.