Purchased New House In Japan
 

Great news, last week my Japanese wife and I purchased a house in Yamagata, Takahata-machi. This will be our retirement home and plans are being made now to ship our house hold goods. Good things come to those who plan, prepare, and wait. Life is good...

Wonderful! Guaranteed peace and quiet, yet even with a Shinkansen station, yeh? Hope you have loads of fun there.

Just curious...is it a New House or just a New House to you?

Its a new house to us. We purchased a used home to keep the taxes low.

I thought taxes were higher on used homes...that's why people tear down perfectly good homes and build new ones.

5 out of 6 homes bought in the US are used.

5 out of 6 homes bought in Japan are brand new.

You`re right, MMM. Taxes are higher for used homes all but the first year or two - and the additional fees and higher interest for loans on used homes make up for that by far. We looked into buying a used house, and for one priced the same as the new place we bought - over the length of the loan we`d have been paying 25% more. We went with a new place.

Unfortunately, this is what my neighbors say. A few even wish they didn't have to build new homes, but it just isn't cost-effective to do otherwise.

Why is that? Seems rather backwards to my mind.

That`s because it is generally the other way around in other countries...

In Japan, the value of a place is determined by the value of the land - not by the building. Of course, the building adds to the value of the land for the first so many years, but after a certain point will actually reduce the value of the land. This is similar to a nice garden adding to the value of a house, but a lawn full of unkempt weeds subtracting from it.

The biggest difference in end cost though is the difference in interest rates, fees, and the lack of benefits from the government that you get with a new house. As the majority of "used houses" sold are land sold for reconstruction (that just happen to have an old house on top) you can`t get any of the benefits that you would with buying or building a house.

With a new house, for the first 5 to 10 years you only have to pay a certain percentage of the property taxes. This is huge as yearly property taxes are something like 20~30万. They are calculated by the value of the land and the size and construction materials used for the building standing on it. The age of the building doesn`t matter, so buying a used building won`t change anything (although wooden buildings are cheaper than the steel and concrete used in most now...)
You cannot apply for the ultra-low-interest housing loan from the government (usually used for 30 to 50% of the property cost with virtually no interest), and the loans offered by banks are for "multi-purpose land" and not for a residence - so instead of a normal housing loan, you get something close to a business loan that has a completely different set of interest rates and the like.

When we bought this place new, the housing loan we got was 2.2% interest (since refinanced to 1.6%). To buy the used place we were looking at for the same price, the loan would have been 5.4% interest. Plus we`d have needed to pay the full property tax from day one (260,000) along with paying for all the change of hands fees out of pocket, no warranty on anything in the building (our new building has a warranty on all parts - some have expired, some last another 20 years), calculate in necessary repairs, having all pipes and wiring checked, etc etc.... And it would have been much much more expensive to buy somewhere "used".

Thanks for explaining it. I mean, in some ways it makes sense now, but it still seems a bit of a shame to be ripping down perfectly good housing and going through all the procedure of building a-new just to beat the paperwork.

It isn`t really just to beat the paperwork.
Japan has earthquakes - sometimes serious ones. In recent years techniques for strengthening a building have been developed, and there are currently strict earthquake tolerance requirements in place for buildings. However, in the past there were not. (Or those that were in place were much less stringent).
As buildings age they become weaker and more prone to collapse. And the heavier the building started, the greater chance of dying if it falls down on you.

So buildings were usually built with the assumption that they`d be torn down and rebuilt in so many years. Most were built with the assumption of a life of 20 or 30 years. 30 years later, the buildings are in terrible shape and are sort of at the end of their lifespan... Which is why they are torn down and new ones built. This is particularly true of buildings built in the first 30 or 40 years after the end of the war. The first batches were built with a 10 to 15 year lifespan in mind, and then usually replaced with something better but not by all that much.

If something is built to last 100+ years, then it is a shame to tear it down and build something new. But if it was built to last 25 years and 30 have passed... Well... Things are different.

Ah, that's true. I hadn't considered earthquakes into the equation, although I did wonder about the life expectancy. If it's a safety issue then that makes much more sense, and actually, thinking about it, the houses I saw tended to be either very new looking or distinctly pre-war. I guess it's as you say, it seems very odd to me as in the UK the trend tends to be that houses will stay in service for a long time. You don't tend to expect your house to have a shorter life expectancy as your kids. I take it then, most people will move more than once; you couldn't really do what my Gran has done and pass the average family house onto the next generation.

Yes, and no. The important part is in the land - it counts for more than the house. Usually people will retain the land, and rebuild a new house on the same spot. So while the house is new, they don`t really "move". Buying a house, selling, then moving to another is quite uncommon. Children moving out of the family home and buying their own land with a new house on top or building a new house on top is quite normal. Which then becomes the family home for their children, one of which will probably grow up to build a new house on the same spot... While the others move out and establish their own homes, etc, ad infinitum.
Once people buy land and house, it`s not common to move.

I had heard the major construction companies also have influence on government officials. It's nice for them to help create a culture of disposable housing, isn't it.

I don`t know if that is as big a factor in the culture of disposable housing as a lot of people seem to think. People tend to like building their own houses. Even if you remove the lifespan of the house from the equation there are beliefs about spirits of the dead lingering in an old house, bad luck, etc. I don`t really think those are due to construction company influence as they`ve been around for hundreds and hundreds of years.

What the construction companies do is manage to keep the cost of building materials high even for short lifespan construction. They take advantage of the culture of replacing houses, but they didn`t make it.

I guess I meant not the CULTURE but the ECONOMICS INFLUENCES that inspire people to build new houses and tear down "old" ones.

Correlation doesn`t always mean causation. :)
If we follow the thinking that people build new houses largely because it is cheaper (in fees) to do so - then yes, it can look that way.
But if we look at it from another angle - things can seem a bit different.

The culture of rebuilding houses has been in place for a very long time. Regardless of benefits available to build a house, people would likely still be tearing down and rebuilding. They would just take longer to get the money together to do so, and spend a longer period of time in rental housing. More people in the rental housing, and the cost of rent goes up making it even harder for people to buy homes. But making it cheaper to buy land and houses for everyone doesn`t work, as it just makes it easier for someone to buy land and build apartments... Or wait until all the land around is full of apartments and sell it at a higher price. Even now, most used houses are purchased by speculators who do not live on the property and often leave it in limbo until the value of land rises only to resell it once they think they can make money. There are a number of anti-speculation laws in place but it isn`t that hard to get around by "giving" the land to an employee or renting out the space. This was a huge problem at one point, and people who wanted to buy houses honestly couldn`t because it was so expensive just to live in rental housing that there was virtually no hope of saving the money to build a home.

Instead of penalizing speculators or businesses... This is where real buyers are rewarded. Under the current laws, benefits for purchasing or building a new home can only be used once. If you buy a new house or build one, that`s it. You can never take advantage of the benefits again even if you build or buy another new house. This makes it easier for a family to buy a real home, which in turn keeps rental costs lower, which makes it easier for other families to buy homes, and so on (and as a distant result more money comes in as property tax...). It also makes it less likely that employees will "pose" as real buyers as they will lose their benefits for when they really do want to buy a home.

What the construction companies have done is gotten protection for the cost of raw materials - much like Japanese produced rice has protection. This keeps the price of the materials at a certain rate. They take advantage of people building new houses, but the reasons behind the tax benefits, etc, are unrelated in my eyes. The goal is to penalize speculators - but instead of giving them the chance to find loopholes by making it a straight penalty... There is a "reward" of sorts for not being one.

In terms of the benefits for building/buying new - I think it works quite well in the way it is intended. Construction companies taking advantage of the culture kind of sucks, but it`s not the reason laws regarding new building exist.

The original - 日本ブレイク工業

We bought the cd. Seriously. :D

a couple of years ago, the PM at that time Fukuda i believe started a campaign ２００年住宅ビジョン. partially explained here
住生活基本法 - Wikipedia
but i don't know what happened to that once fukuda was out of power.

Building in Japan
 

I everyone,
My Japanese wife and I have purchased land and will be looking at building in the next year or so. Any hints, tips and advice for us would be greatly appreciated.:)
Colby