Your Key To Passive Real Estate Income

How To Get A Free House In Japan

broker overseas home house

Recently, articles have been going viral from well-known news sources about free houses being given away in Japan. Most such houses are classified as ”Akiya” (空き家, literally “empty house”), and according to the well-known news stories, they can be had for a song if one is intrepid enough to live out in the Japanese inaka. It just seems too good to be true—how can a house be free in Japan, with a population density nine times higher than the US, where the average house costs $226,800?

Imagine…

Perhaps the beginning of the movie “Totoro” starts to play in your head. For ¥0, moving out to the countryside to leave the rat race of the city behind. Arriving at a venerable koka (古家, old house) next to a corn field. Dusting off the surfaces and refurbishing the house with your own two hands, makkuro kurosuke (“soot sprites”) wandering away to make room for a new owner. Is it a fantasy or potential reality?

Is It A Scam?

These free houses are not some scam, although the prudence of acquiring one is another matter that depends on the individual. In Japan, there are over 60 million homes, and in 2013, a study revealed that ~8 million of them are unoccupied; this number is growing due to decreasing population in rural areas of Japan. Although Tokyo continues to increase in size due to both rural-to-urban migration and a growing international community, suburban and rural areas are depopulating (both due to the low birthrate and people moving to urban areas), and with depopulation comes an increased supply of homes for a decreasing population. It’s a simple question of supply and demand.

The Tale of the Thief and the Empty Houses

To illustrate just how many Akiya exist here, a top news item in 2018 was a manhunt when a thief escaped from a minimum security prison in Ehime and swam to Mukaishima Island, where he found that there were approximately 1,000 empty houses in which he could hide on an island of only 20,000 people. It took three weeks and 15,500 personnel to catch him; getting a warrant to search each empty house took ages, because the island had so many (much like the rest of suburban and rural Japan).

Who Are The People Who Give Up Their Homes For Free?

It is very common for 40s/50s Japanese to inherit homes. Often, they were already homeowners. Although the inherited house may contain many fond memories, for various reasons (property taxes, maintenance costs, inconvenient location), it might not make much sense to keep the inherited house, and this leads to an oversupply, including free houses.

 

How To Get Free Real Estate In Japan

real estate investment
First of all, it is assumed that you have the legal means (e.g. the proper visa) in Japan either to live in the house or receive rental income from tenants. Simply buying a property will not automatically bestow this upon you. Make sure to do your due diligence regarding that, first.


Akiya Databases

There’s more than one way to get a free house in Japan. Akiya databases, also known as an “Akiya banks,” or through an auction (not technically “free,” but “practically free”). Some of these properties are given away by the owner; others by the municipal government, as long as the prospective owner pays the transaction costs, taxes, and whatever else is stipulated in the agreement (such as refurbishing it to a certain level).

Rent-to-Own

Another possibility is that when a town wants to revitalize itself and increase its population, it will have houses (possibly even newly-constructed houses) that it rents out for a low price (for example, ¥35,000 or ¥50,000 per month). After a certain number of years (usually 20+), the tenants become the official owners. If one considers that the family otherwise might have rented an apartment or house for the same price without being given it at the end, this is arguably a type of “free house,” as well. For these types of deals, there are often requirements about the tenants, though, such as being a young couple (under 43) and having young children. Discounts, e.g. ¥5,000 per month per child, may be available.

Brokers, and How Brokers Can Help Non-Residents

There are also brokers who can help you find an Akiya. This is especially helpful for a non-resident, who normally might not be able to obtain an Akiya (many Akiya have requirements stating that the owner must live there for a certain period of time), but can obtain one successfully by giving his or her broker power of attorney and paying a fee.

 

Why Do People Give Away Houses In Japan?


Property Taxes

Property taxes in Japan are not especially high. They are lower than for New York (State) or Texas, for example. Still, many would prefer to pay them only if living in the property or using it or renting it out.

They Don’t Want to Maintain Them

The forces of nature will gradually try to reclaim the home: earthquakes, weather (e.g. typhoons), termites, etc. Owning a home comes with maintenance costs. Some consider these burdensome, especially if no longer living there.

They Don’t Want to Live in Them

Imagine this scenario: A salaryman, Mr. Satō, is living in a house that he owns outright in Okutama, Tokyo, at the foot of the majestic peak of Mt. Kumotori, and near Lake Okutama, renowned for its cherry blossoms. One day, he decides to get rid of the home, and not even ask for any money. What could possibly possess him to do such a thing?

Well, Mr. Satō just secured employment as a seishain (permanent employee) at a large company in Shinjuku. Sure, Okutama and Shinjuku are both “Tokyo,” but remember, Tokyo is quite wide; it will take him 1 hour and 27 minutes on the train to get to work in the mornings; he will be commuting approximately three hours per day and he’ll still pay over ¥300,000 per year for transportation. Could he do it, in theory? Sure he could. However, he’s far more likely to want to move closer to his source of secure employment.

Furthermore, Mr. Satō has two children in junior high school. Currently, there is no high school in Okutama.

He probably wants to sell the house initially, but doesn’t find any buyers. Finally, he decides to give it away, either for free to someone else, or to the municipal government.

 

The Bottom Line On Free Real Estate Assets

Is it worth it? That depends. If you’ve been longing for the inaka life, relish the idea of restoring a storied old farmhouse, or want to be part of a quiet community close to nature, then Akiya can make sense. It would probably be difficult to rent one out and make passive income, however, and with properties as inexpensive as $20,000 on the Chūō Line, less than 50 minutes away from Shinjuku and the rest of downtown Tokyo, is the juice worth the squeeze to own one of these “free” houses? The answer will depend on the individual.

Should I Invest In Real Estate For Retirement?

Buying Old Vs. New Property

Other Than Tokyo, Where Should I Invest In Japan?

How Much Of My Portfolio Should Be In Real Estate?

How Do I Set Up Life Insurance For My Mortgage?

Does Japanese Real Estate Decrease In Value?

Should I Buy Or Rent In Japan?

How To Buy A Home In Japan

How Long Do Japanese Buildings Last?

How To Reduce Your Health Insurance Or Pension Premiums In Japan (Part 2)

Get In Touch

Share This