*This article is based on reliable statistical data and legal reform information as of December 2025.

1. The shock of the 9 million household era: Statistics reveal "market failure"

First, we need to look squarely at the current situation in Japan from objective data. The 2023 edition of the Housing and Land Statistics Survey, conducted every five years by the Statistics Bureau of the Ministry of Internal Affairs and Communications, is a report card that harshly shows that Japan's housing policy to date has reached its limits.

Accelerating stock accumulation and international heterogeneity

As of October 1, 2023, the number of vacant houses in Japan will be 9,002,000 households This is an increase of more than 510,000 houses compared to the previous survey (2018), meaning that over the past five years, the number of newly vacant houses equivalent to twice the total number of houses in Tottori Prefecture (approximately 260,000 houses) has become vacant. Despite the population entering a phase of decline, the pace of increase in vacant houses is accelerating rather than slowing down.

Even more serious is the "vacant house rate." The percentage of vacant houses in the total number of houses is 13.8% This is the highest figure ever recorded. This is an abnormal situation in which approximately one in seven homes in Japan is vacant. While this may not be readily apparent in urban areas, in rural areas, particularly in parts of Shikoku and Chugoku, it is not uncommon for vacant home rates to exceed 20%, and even the sustainability of communities is in jeopardy.

3.85 million homes isolated from the market: a "black box"

What is more important than the total number of vacant homes is the breakdown of their quality. Statistically, vacant homes are broadly classified into four categories: "homes for rent," "homes for sale," "secondary homes (vacant homes, second homes, etc.)," and "other homes."

Vacant houses for rent or sale are circulating in the market but have an aspect of being "inventory" that happens to have no tenants or buyers. If the price mechanism works, this may eventually be resolved. However, the core of the problem is that they are completely left behind by the market mechanism."Other housing"is located.

Shockingly, approximately 3.85 million homes have not even entered the market. This is an increase of approximately 370,000 homes since 2018. Many of these properties are left abandoned because their owners are aging and their judgment skills are declining, or because inheritances have occurred but negotiations for the division of the estate have not been concluded. In particular, linked to the issue of unowned land, there is an increasing number of properties where it is unclear who is responsible.

In other words, the "void" in the owner's life is directly reflected as a "void" in the urban space. This is a classic example of what economics calls "market failure," and if left to its own devices (market principles), the situation will only get worse.

2. The fate of an earthquake-prone country: the "invisible wall" of earthquake resistance standards

Why are Japanese homes not accumulated as "assets" like in the West, but instead "consumed" in a short space of time? Behind the commonly-cited Japanese psychological bias of "faith in new construction," there is an unavoidable physical and legal reason for Japan being one of the world's most earthquake-prone countries. This is the issue of "earthquake resistance standards."

The older a building is, the more valuable it becomes as a "vintage" building - and this is the crucial reason why such Western values are difficult to apply in Japan.

The watershed moment of 1981: the fatal risks posed by "old earthquake resistance"

In Japan's used housing market, the most important dividing line that determines the value and safety of a property is June 1, 1981 (Showa 56). Learning from the devastating damage caused by the 1978 Miyagi Prefecture offshore earthquake, the Building Standards Act was drastically revised and earthquake resistance standards were significantly strengthened.

There is a huge difference in structural safety between houses built under the "old earthquake resistance standards" that were established before this, and houses built under the "new earthquake resistance standards" that were established after this. Specifically, the old standards aimed to "not collapse in an earthquake of magnitude 5 or higher," while the new standards aim to "not collapse in an earthquake of magnitude 6 or higher to 7 or higher."

This difference is brutally proven by actual disaster data. Data from the 1995 Great Hanshin-Awaji Earthquake shows that of all wooden houses that suffered severe damage or worse, more than 90% were built to the old earthquake resistance standards. Also, in the 2016 Kumamoto earthquake, the collapse rate of wooden houses built to the new earthquake resistance standards (especially the current standards that were further strengthened in 2000) was extremely low, while buildings built to the old earthquake resistance standards had a high probability of collapsing.

Cost barriers that prevent renovation

In Europe and the US, particularly in the UK where the risk of earthquakes is low, brick houses over 100 years old are passed down through generations with frequent maintenance. However, in Japan, wooden houses over 40 years old that are no longer earthquake-resistant are not only attractive, but also pose a high physical risk to life.

To eliminate this risk and make the house safe to live in, large-scale earthquake-resistant renovation work is essential, including reinforcing the foundation, adding braces, expanding walls, and lightening the roof. However, even here, financial obstacles stand in the way.

In other words, Japan's "scrap and build" policy is not simply the result of consumer culture and corporate profit-seeking; it cannot be denied that it is also an attempt to update safety standards to protect the lives of the people. This issue of earthquake resistance is the highest and thickest barrier to distribution, unique to Japan and not found in other countries.

3. Structural flaws in the real estate business: "Economic rationality" keeps businesses from taking action

Even if the owner of a vacant house decides to sell and consults with a local real estate company, many of them have been reluctant to help. This is not due to negligence on the part of the company, but rather the result of extremely rational economic behavior stemming from the profit structure of the real estate distribution business itself.

The limit of "3% + 60,000 yen": A vacant house transaction that is sure to result in a loss

The "brokerage fee (remuneration)," which is the main source of revenue for real estate agents, is strictly capped by law (the Real Estate Transaction Business Act). For a long time, the calculation formula for this fee was, in principle, as follows, depending on the purchase price (a simplified calculation formula that is widely known is "purchase price x 3% + 60,000 yen + consumption tax").

• ・Parts under 2 million yen: 5%
• ・Over 2 million to 4 million yen: 4%
• ・Over 4 million yen: 3%

For example, let's say you've managed to sell an old, vacant house in a rural area for 1 million yen after much effort. In this case, the maximum commission the real estate agent can receive from the seller is 1 million yen x 5% = 50,000 yen (excluding tax). Even if you find a buyer and the transaction becomes a double-dealer deal, the total will be 100,000 yen.

However, the practical costs of real estate transactions are not proportional to the property price. The time and effort required for a series of tasks, such as on-site property surveys, legal investigations at government offices, confirmation of rights, and preparation of contracts and important information documents, is not significantly different whether it's a 100 million yen apartment or a 1 million yen vacant house. In fact, the older the vacant house, the more complex the rights, with unclear boundaries and owners listed on the land registry still born in the Meiji era, and the more time and effort required for investigations.

"The more seriously we try, the more we lose money." This was the structural reason why real estate agents on the ground shied away from cheap vacant house deals and were forced to gently decline over the phone.

Major changes to compensation rules in July 2024: Will this be the trigger that moves the market?

In order to resolve this bottleneck in the business structure, the Ministry of Land, Infrastructure, Transport and Tourism finally took the plunge and made major revisions to its compensation regulations. The new regulations, which came into effect on July 1, 2024, include the following:"Affordable vacant houses, etc."The special provisions for brokerage fees for the sale and purchase of real estate have been significantly expanded.

This amendment is a measure that officially recognizes the benefits of dealing in vacant houses as a business. The target property has been expanded to 8 million yen, and it is now possible to receive up to 300,000 yen (plus tax) from both the seller and the buyer, dramatically increasing the possibility of running a business even for inexpensive properties in rural areas.

This could change the way real estate agents think, even if they previously thought, "A vacant house worth 1 million yen is just too much work to handle," and think, "If I can make a total of 600,000 yen in commission from the sale, I might be able to make a business out of it if I combine it with renovation proposals." This could be a major turning point that fundamentally reconsiders the "incentive design" that is the lifeblood of the market.

4. Tax Paradox and Changing the "Carrot and Stick" Approach

Even if real estate agents start to take action, the market will not move unless the owners themselves want to sell. However, the biggest motivation for owners to "abandon" vacant homes is a distorted paradox created by Japan's tax system.

As is well known, there is a powerful preferential treatment for land property tax called the "Residential Land Special Exemption," which reduces the taxable amount by up to one-sixth as long as a "house" for people to live on the land. This was originally a measure to protect the people's right to residence and promote home ownership policies.

However, in an era of declining population, this system has become a breeding ground for abandoned vacant houses. The moment a house is demolished and the land cleared at a cost of several million yen, the special exemption is removed and land taxes jump up to six times. Given this, it was only natural that people would decide that it was more rational in terms of cash flow to keep the house in its original form and continue to pay low taxes, no matter how dilapidated it was and how much of a nuisance it caused to neighbors.

The risk of new construction of "poorly maintained vacant houses" and tax increases becomes a reality

In order to put an end to this "paradise of neglect," the government has taken a major institutional axe. The revised "Act on Special Measures Concerning the Promotion of Measures for Vacant Houses, etc." came into effect in December 2023.

Previously, the government could intervene and lift the tax exemption only if the property was certified as a "specific vacant house" that was in imminent danger of collapse. The hurdle for certification was extremely high, and the cases in which it was actually applied were limited. However, the revised law introduces a new step before that."Poorly maintained vacant house"A division was established.

This is a powerful "whip" for owners, as leaving their property unattended directly leads to the risk of a tax increase. The option of "leaving it for now" has now been transformed into an economically risky action. This legal revision is beginning to function as a trigger to forcefully shift owners' mindset from "leaving it unattended" to "managing, utilizing, and disposing of it."

5. Case Study of a Heavy Snow Region: The Challenge of Toyako Town, Hokkaido

So far we have looked at institutional issues at the national level, but the problem of vacant houses is also closely related to the climate, environment, and social conditions of each region.Finally, we will look at the reality and measures specific to local areas, using the example of Toyako Town in Hokkaido, which has tourist resources but faces the harsh conditions of depopulation and heavy snowfall.

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