Japan’s Hidden Land Crisis
Owners Abandon Real Estate with High Maintenance Costs and No Market Value

Yoshihara Shōko [Profile]

[2018.01.12] Read in: 日本語 | FRANÇAIS | ESPAÑOL | العربية | Русский |

Japan is seeing a steady uptick in abandoned real estate, weighed down by falling land prices, back taxes, and swelling maintenance fees. Such financial burdens are leading more owners to abandon their land claims. Incomplete or outdated ownership titles have also become a serious issue affecting land use, and more properties are becoming stuck in legal limbo when owners die or move away. As Japan’s population ages and declines, there is a growing need to consider new approaches to address this emerging crisis.

Amid falling land prices and property tax burdens, greater numbers of landowners in depopulated areas of Japan are choosing to abandon their real estate. According to an October 2017 report by a private research group headed by former Minister of Internal Affairs and Communications Masuda Hiroya, there will be 7.2 million hectares of unclaimed land in Japan by 2040, robbing the economy of a staggering ¥6 trillion. Effective policies are urgently needed to deal with the mounting crisis, which can seriously impede the progress of post-disaster redevelopment.

A Worsening Rural Emergency

People are just beginning to take notice of this problem, although it is a crisis that has long been in the making. In the early 1990s the forestry industry, faced with a land vacancy rate of more than 20%, raised alarm bells about the threat posed by unsettled landownership issues caused by depopulation and the increasing number of heirs with land title claims. In agriculture as well, the growing frequency with which the registered landowner remains unchanged even after his or her death is severely hampering efforts to consolidate farmland, promote new uses, and acquire plots for public projects.

Authorities heading reconstruction efforts in disaster-stricken regions, for example, have struggled to procure land for housing and other purposes. Cities as well are seeing a surge in abandoned homes and are working to introduce new measures to quell the problem.

Inadequate Records

Japan, while strongly protective of property rights, does not have a comprehensive system for organizing and updating land records. Information on properties is loosely organized across an array of different ledgers, including those for commercial real estate, property taxes, and farmland. Although Japan conducted its first national land survey in 1951, only 52% of such cadastral information as land area, boundaries, and ownership has been logged to date.

Local real estate registers are the best sources for information on land titles. However, their primary function is to verify property right claims and facilitate sales and other transactions. In addition, records are not always current, as landowners are not legally required to update title information if they move. These factors limit the usefulness of the ledgers for regional authorities looking to clear up questions of landownership.

The voluntary aspect of land title registration is particularly problematic and has made it easy for landowners to forego transferring titles and avoid passing financial burdens, such as property taxes, on to heirs. Judicial scriveners, legal go-betweens who draw up and file documents for clients, have noted a trend in people filing ownership records for private homes but declining to do so for forest and agricultural properties.

From the perspective of effective land stewardship, allowing private property owners to opt out of updating information in land registries robs authorities of the basic information needed to enact effective land management policies. It is a major issue that has been too long ignored.

A European Comparison

French and German law has had a strong influence in shaping Japan’s civil code and the real property registration act, which were first drafted during the Meiji era (1868–1912). To understand the Japanese system, it is helpful to look at the differing approaches to land registration of the two European models. In France, the transfer of ownership of a real property by sale or other means is completed exclusively through a contract between the owner and buyer, and registration only serves to assert ownership and other rights to third parties. In Germany, on the other hand, land titles must be registered for real property to change hands.

Although the French and Japanese systems are most similar, they differ in one significant way. The French government, recognizing that landowners might neglect to pass land titles on to heirs, strengthened the role of notaire, or notary, when it reformed registration laws in 1955. The changes obliged notaire, who specialize in real property law, to inform clients during inheritance procedures of the need to transfer ownership titles, thereby helping ensure property records are kept up to date.

Taking the Necessary Steps

Going forward, Japan must enact measures on three main fronts.

First, the government must heed the mounting calls to address the worsening issue of incorrect and outdated ownership titles. There is a need to steadily work to reevaluate inheritance procedures for real property, but of more importance is ensuring that heirs transfer land titles when the owner dies. Measures should compensate for the voluntary nature of registration, such as by simplifying filing procedures or bolstering the role of legal experts specializing in real property. Authorities should also remove legal barriers hampering municipal governments from making use of vacant land.

Second, the government must create a support structure for managing the nation’s growing tracts of vacant land due to population decline. I conducted a survey among local governments that showed municipalities largely used land acquired from private citizens for public work projects, such as building or expanding roads. However, properties not fitting this category were more often than not left to overgrow. From a land stewardship standpoint, Japan needs a system that enlists nonprofit organizations and other groups as intermediaries to resolve issues of outdated land registries before they become bureaucratic nightmares and assure that land remains productive.

Finally, the system of keeping and organizing land records must be completely revamped. As long as land title registration is left to the discretion of owners, real estate ledgers will remain incomplete sources of property information. To overcome this central issue, authorities must create a comprehensive database combining information gathered from different property registers. Such a system must provide basic information like addresses, names, and birthdates of property owners, be compatible across different platforms, and include clear guidelines on how information can be used.

Japan over the years has revised and bolstered its property laws to fit the needs of the time, such as during the rapid modernization of the Meiji era, recovery from World War II, and the long period of postwar economic growth. However, while real property law is concerned with preventing risks like surging land prices and unregulated development, it lacks provision to address the myriad dangers presented by Japan’s declining population. Abandoned land is a complex problem, and finding a solution will require measures that address both the legal and social aspects of the issue.

The government’s latest economic reform package, approved by the cabinet in June 2017, calls for the Diet during the next legislative session to discuss bills promoting efficient use of abandoned land. This news could not come at a better time as declining land prices continue to make property ownership less appealing. National and local governments as well as private citizens must recognize the seriousness of the problem and take prompt action to preserve Japan’s land resources for future generations.

(Originally published in Japanese on November 6, 2017. Banner photo: An old, abandoned building. Such properties are becoming frequent sights in Japan. © Aflo.)

  • [2018.01.12]

Research fellow at the Tokyo Foundation. Graduated from the Tokyo University of Foreign Studies. Has studied abroad in Thailand and the United States. Joined the Tokyo Foundation in 1998, where she is currently the leader of the project on the conservation of land resources. Is the author of Jinkōgenshō jidai no tochimondai: Shoyūsha fumeika to sōzoku, akiya, seido no yukue (Land Issues in the Era of Depopulation: Policy Considerations for Missing Owners, Inheritance, and Abandoned Homes), published in 2017.

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