Akiya Houses in Japan: Renovator's Dream or Money Pit?
Japan's hidden residential treasures, known as akiya houses, have been catching the attention of homebuyers and investors alike.
These abandoned or vacant houses, which have more than doubled in number over the past 30 years, now stand at a staggering 3.47 million.
Today, we cover the pros and cons of investing in these properties, the process of finding and purchasing them, and the various tax implications and renovation subsidies available.
An overview of Japan's abandoned house problem
Akiya (空き家) refers to abandoned or vacant houses in Japanese. Sometimes referred to as “ghost houses” by the press, akiya have become an increasingly serious problem over the past few decades.
According to the Housing and Land Survey conducted by the Ministry of Internal Affairs and Communications, the number of abandoned homes increased from approximately 1.82 million in 1998 to 3.47 million in 2018 over a period of 20 years.
This trend, often concentrated in the Japanese countryside, presents many hazards, such as building collapse, illegal waste dumping, arson, foul smells, and multiplying pests, to name just a few challenges associated with Japan’s akiya problem.
In light of the negative impact this has on local communities, the government has put in place various measures, penalties, and incentives to destroy or upcycle these houses
What causes akiya?
Elderly individuals with children may desire to pass their property on to their child after their death. However, the adult children may be working in major cities too far away from the parents' house (often located in rural Japan) for them to be able to care for the property properly.
Elderly individuals without children have no one to pass their property on to, and if they die without making arrangements for their house, the property becomes an abandoned house.
Pros and cons of moving into an akiya
There are plenty of motivations for house owners to sell or rent out their unused or unoccupied residences at an affordable price. And for buyers, there are many subsidies and incentive programs for buying and renovating akiya.
If the demand and need match, it’s a win-win situation for all.
However, although low prices and subsidies may sound attractive, there are both pros and cons one must be mindful of when purchasing an akiya.
Cheap houses—Some akiya properties are quite old or are houses that the owners want to get rid of, so it is common to find akiya for under a million yen. Some owners might even be willing to give away their houses for free.
Speedy move-in—Unlike building a house from scratch, if the condition of the akiya property is good, you can start moving your things in as soon as you strike a deal with the owners and complete all the paperwork.
Freedom to renovate to your tastes—Because purchasing an akiya is cheap, you can use the surplus money on transforming your house to your specifications.
Government and regional subsidies—If you fulfill the requirements, you can take advantage of many government and regional subsidies. There are many different types that cover up to a certain amount of the renovation fee, and other subsidies are given for moving into the region. Research beforehand and see what you need to do to be eligible.
Good locations—There may be cases in which old houses have been built in good locations but are priced lower due to their age.
Bad conditions of houses—Houses wear and tear with age. Some houses may be quite old and may be in need of major fixes. More often than not, the cheaper the price, the more expensive the repairs. “When buying an Akiya home,” explains Erik Wright, CEO, New Horizon Home Buyers, “one often overlooked aspect is the cost and logistics of maintaining the property, especially if you won't reside there year-round. Some Akiya homes can be in areas that require you to manage overgrowth, snowfall, or general upkeep to stay within local regulations. It's important to factor in these maintenance costs and whether local services are available to assist with property management when you are not there. This understanding is crucial to ensure that the home remains a valuable asset rather than a financial and logistical burden.
Renovation costs are high—Many akiya require extensive renovation work. 5 to 20 million is the average cost of large-scale renovations of many older buildings. But It really comes down to the condition of the house. An average of a million yen per room is a good reference point when considering renovating your house a little at a time.
Rural areas/neighborhoods with traditional or exclusive culture—As college-aged individuals move out of the countryside to bigger cities for better college or work opportunities, the demographic in rural areas climbs. While finding good deals in rural areas is easier, it also means they will be located in areas with an aging population that holds to traditional mindsets. “An important consideration when looking at an Akiya home is to assess the local community's receptiveness to newcomers, particularly foreigners, if you're not a native Japanese resident,” notes Gagan Saini, CEO, JIT Home Buyers. “Engaging with the community before making your purchase can give you a sense of how well you'll be able to integrate and whether the local lifestyle aligns with your expectations. Some rural communities are very welcoming and may even offer support for renovating and settling in, while others may be more reserved, impacting your experience of setting up a home there.”
Difficulty in finding a place that fills your requirements—When you build a house, you choose the ideal location, climate, and neighborhood and then pick the design of your choice for the house. When buying an akiya, although there is a chance you get lucky, you might need to compromise on one or more of the criteria points you set for your big move. One other aspect is future government plans
Mandated maintenance—When a property is designated as a "specified empty house," local authorities can advise and prompt the owner for proper management. If there is no improvement, warnings and orders can be issued. Failure to comply with these orders may result in fines of up to 500,000 yen, as stated in Article 14 and Article 16 of the Empty Houses Act.
Property tax—Owning land or property in Japan comes with various taxes, including property and city planning taxes. There are special provisions for "residential land," typically land where houses or apartments are built. For instance, the taxable standard amount for residential land up to 200 square meters (small-scale residential land) is reduced to one-sixth, while other residential land is reduced to one-third. However, these special provisions do not apply to akiya designated under the Empty Houses Act (properties where necessary management for habitation is not maintained with no prospects for future occupancy).
How to find akiya houses in Japan
From akiya bank pages to real estate agents, here are some ideas on where to start your search.
1. Akiya banks
Many local governments in Japan run an akiya bank, a portal site for empty houses. Follow this link to a list of government-funded portal sites that handle akiya regionally and all over Japan.
Although there are plenty of places not registered in akiya banks, it’s a good place to start when house-hunting in Japan.
2. Real estate agents
Some Japanese real estate agents may handle akiya as well. Get in touch with local real estate agents who represent the area you are interested in to see if they have akiya properties for sale.
See also our guide on buying real estate in Japan!
3. Looking/asking yourself
Some of the best deals are found through personal connections and references. But just going to the region and asking around for an empty house may get the locals suspicious.
Attending social events in the region you want to move to and getting to know the people in the area is a good way to not only build connections for future referrals but also see if the culture, neighborhood, and human dynamics suit you or not.
Here’s a site that lists events hosted by rural areas.
There are some municipalities that host move-in tours (移住ツアー) or move-in tryouts (移住体験) where you get to experience living there for a short period.
Also, it is extremely helpful when you have a friend or family living in the area already, as they will be able to ask around for you and bring you up to speed about local politics and how to maneuver socially in the process of purchasing a house.
4. Japanese vocabulary to help you search for akiya online
Finally, here are a few keywords in Japanese that you can use to search for empty houses online:
空き家 = akiya (empty house)
中古 = chuko (used, second-hand)
中古物件 = chukobukken (previously owned property)
中古住宅 = chukojyutaku (previously owned home)
中古一戸建て = chukoikkodate (previously owned free-standing, one-unit housing)
移住 = ijyu (moving in)
相場 = souba (market price)
Overview of purchasing akiya in Japan
The general process of purchasing an akiya is as follows:
First, set your budget and get a clear idea of what you are looking for, as well as the goals for the property.
Research by area and price range on the internet.
Once you narrow down your options, go to the physical location to scout out the neighborhood and the actual houses.
Based on the information gathered, narrow down your options even further.
Before signing the contract, have a house inspector 住宅診断士 check for termites or structural issues.
Also, once you decide on a place, make sure you research all the governmental and regional subsidies and tax breaks you can take advantage of beforehand. There may be paperwork or procedures to complete before signing the contract to be eligible for the subsidies or tax breaks.
Sign the contract (see the list of documents you may need).
Complete payment and move-in.
Once you finish your move-in, make the necessary tax deduction applications, e.g.: 住宅ローン控除.
List of documents you may need (not exhaustive)
実印 = jitsuin (your personal seal registered at the city office)
印鑑登録証明書 = inkantourokushoumeisho (seal registration certificate)
住民票 = jyuminhyo (certificate of residence)
抵当権設定書類 = teitokensetteishorui (documents related to the establishment of the mortgage)
住宅用家屋証明書 = jyutauyokaokushomeisho (residential housing certificate)
本人確認書類 = honninkakuninshorui (My Number Card, passport, driver’s license, etc)
Taxes related to house or real estate purchases
Last but not least, once you make the payment and the house is yours, don’t forget to take care of the tax-related paperwork!
Here’s a list of taxes that may accompany purchasing an akiya house.
1. Revenue stamp/handling fee
Inshizei (印紙税) is a revenue stamp and is a mandatory tax/government handling fee for all official contracts, including that of purchasing a house.
For deals that range from 10 million to 50 million, inshizei will cost 20,000 yen.
But for construction contracts signed between April 2014 and March 2024, the taxed amount is significantly reduced, thanks to tax reduction measures by the government.
2. Registration and license tax
Torokumenkyozei (登録免許税) is levied when a new owner of a property (land or building) is registered. This tax is calculated by the assessed value of the fixed asset X 2%.
3. Property acquisition tax
Fodosan shutoku zei (不動産所得税) is translated as property/real estate acquisition tax and is only paid once when acquiring the house.
This tax is calculated by the assessed value of the fixed asset X 4%. However, this can be significantly reduced if your house is eligible for tax reduction measures.
4. Fixed asset and city planning tax
Koteishisanzei/toshikeikakuzei (固定資産税・都市計画税) means fixed asset and city planning tax and is paid annually.
The amount for fixed asset tax is the assessed value of the fixed asset X 1.4%, and for city planning tax it is the assessed value of the fixed asset X 0.3%.
The assessed value of property in Japan is determined by how old the building is, and the adjustment percentage according to age differs from city to city.
Older houses have cheaper fixed asset tax as their assessed value is lower.
5. Gift tax
Zoyozei (贈与税) means gift or inheritance tax. When property (land or a building) is gifted to you, the amount exceeding 1.1 million of the assessed value of the fixed asset is taxed.
But if a property is given to you by your parents or grandparents, this tax is reduced. Also, you can take advantage of certain government programs that make said property tax-exempt (search for 相続時精算課税制度 or 住宅取得等資金の非課税制度). Consult the local tax office for details.
Tax deductions related to purchasing akiya
When purchasing a house in Japan, you may be eligible for some of the following tax deductions and subsidies.
Japan's housing loan deduction
Jyutakuro-n kojyo (住宅ローン控除) is a tax reduction measure that gives back taxes paid in correlation with your loan amount if your house meets certain requirements.
You must submit your tax return if you’re your own business to receive this tax refund. If you’re a company worker, tax returns are handled by the company, so this won’t be necessary.
Japan's renovation subsidy
There are many governmental and regional subsidy programs for renovations (リフォーム補助) that aim to make the house eco-friendly/cost-efficient in energy usage.
What’s more, if your renovation fits the bill, your renovated house can apply for tax deductions!
However, renovations are divided into many categories (earthquake-resistance, barrier-free, eco-friendly, etc.), and certain renovations won’t deduct certain taxes.
Also, some subsidy or tax deduction measures can’t be used with the housing loan deduction.
Since applicability will vary, it’s best to consult the contractors who will work on the renovation or your local tax office for advice as to how to take advantage of the optimal combination of subsidies and tax deduction programs.
How to evaluate an akiya house
The following are 5 must-ask questions to ask the seller of akiya or vacant homes in Japan.
Why did you decide to sell? There might be negative reasons for them to sell the house. But since it may be a very personal/sensitive issue, ask the agency first if you're using one.
What are the region's characteristics? Are there any notable inconveniences to living in that area? School reputation, recent crime, loud neighbors, traffic/transportation, etc. Ask for info that you can't get from the internet, or clarify info that you found on the internet.
What is the neighborhood like? There might be an annoying neighbor to watch out for or certain customs or rules that you should know about. Maybe there's an ongoing feud between different factions, and you want to stay clear of any drama. Ask the seller about the dynamics between the neighbors and any neighborhood association issues that you should be mindful of.
What past renovations have been done? Knowing when the house was built or when the house was last renovated is very important. Knowing what does and doesn't need repairs in the near future will give you an idea of possible costs that may occur after you buy the house.
What natural disasters are common in the area? You can search online about caution zones for disasters by searching "hazard map" plus the name of the place you're planning on moving into. But sometimes, the information online underplays or is unclear about the severity of past disasters.
Things to look for when inspecting an akiya
When inspecting the house on your own or with a real estate agent, keep an eye on the following things:
Location and number of electricity outlets
Problems with doors and windows
Cracks or damage to the outer wall and the foundation
Mold in the shower room, toilet, etc.
Grime or stains around the kitchen
Leaking roofs (rust as well) or cracks around the window frames letting water in
Creaking floors or warping floorboards
Age of appliances such as boiler, lights, heater, AC, etc.
Any noticeable rust or mold
Any damage to the drain pipes (rain gutter)
Once you have purchased your akiya property, consider using MailMate's virtual mail service to help you handle the mail at your second property.