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I lived in rural Japan for two years, and there were a number of akiya in my town and this was 20 years ago. I wasn't aware property taxes are higher on vacant

I lived in rural Japan for two years, and there were a number of akiya in my town and this was 20 years ago. I wasn't aware property taxes are higher on vacant lots but that explains things. The akiya I saw were 100% beyond repair, they looked like something out of a dystopian movie. I don't know the motive behind that tax law, but if they reversed it I bet a lot of those eyesores would be torn down and replaced with a little much needed green space. In my wife's neighborhood in suburban Tokyo there were several lots used as mini farms or fruit tree orchards. An infinitely better use of the space IMO.

Klonoar 2y ago
> I wasn't aware property taxes are higher on vacant lots but that explains things. If you look around Tokyo and see the dumbest set up parking lot possible, it's often a land owner who's just gotta put something there.
underlipton 2y ago
>I don't know the motive behind that tax law My guess: tearing all those buildings down and dealing with the trash and demolished materials takes a lot of labor and possibly a "supply chain" (since you're presumably centralizing it for dumping/incineration). But the circumstances that got you into the situation are 1) shrinking population (small labor force) and 2) too much space in the countryside that people already consider low-value. Essentially, you don't want to incentivize a demolition industry expansion to clear land no one wants anyway; there are more important things to be doing.
- freetime2 2y ago
  Japan is pretty good at demolishing homes. Two homes in my neighborhood were demolished in the past month - and it took a small team of maybe 4-5 workers a couple days for each home. It also looks like a lot of materials were separated out to be salvaged/recycled, too, although presumably a lot of it gets incinerated or becomes landfill. The cost varies, but according to this article [1] it is about about ¥1.2M-¥1.5M ($7.7K to $9.6K USD) on average to demolish a wooden house, although I suspect in rural areas it could be done for quite a bit less due to lower labor costs and not needing to worry as much about neighboring properties, directing traffic, etc. This reddit post from 5 years ago [2] says they were able to demolish an abandoned home and dispose of all the crap inside for ¥800,000 ($5.1K USD). So not exactly cheap, but not prohibitively expensive either I think if the government could provide the right incentives (e.g. combination of eliminating the tax reduction for abandoned home, and also maybe offer some subsidy). It definitely makes sense to prioritize homes where there is some demand for the land, though. There's a home in my neighborhood that has been vacant for 5+ years. And if they were to demolish the home and put the lot up for sale I feel they could sell it fairly quickly (less than 1 year) and easily recouperate the demolition costs and get ¥4M+ for the land. [1] https://www.arrowsrealty.com/column/how-much-is-the-cost-of-dismantling-a-detached-house https://www.arrowsrealty.com/column/how-much-is-the-cost-of-... [2] https://www.reddit.com/r/japanlife/comments/9inwp1/demolition_costs/ https://www.reddit.com/r/japanlife/comments/9inwp1/demolitio...
  - underlipton 2y ago
    That it's economical at market rates is kind of the point, though, right? Without the disadvantageous tax treatment of cleared land, you'd see demand increase, which means either price increases or labor being pulled from other areas.
    - freetime2 2y ago
      I disagree with the premise that the tax reduction for land with homes built on it exists to de-incentivize people from tearing down abandoned homes. Much the opposite - the purpose of the law is to encourage the efficient use of land. There are similar tax breaks on agricultural land - where unused agricultural land is taxed at a significantly higher rate than land that is being farmed. I think they probably just didn't foresee a massive population decline coming when the law was originally enacted, and this was just an unintended side effect. Now the government views the huge number of abandoned homes as a social issue that needs to be addressed. And, as I mentioned in another comment up above, the law was already amended in 2023 to exclude abandoned homes from preferential tax treatment. I do agree with your point that increased demand for demolition services will increase prices and probably divert labor from other industries. But I don't see this as a huge problem. The supply chains/expertise already exist due to Japan's historical preference for demolishing and building new, and it requires mostly unskilled labor (except for the guy operating heavy machinery), so it should be fairly straightforward to ramp up.
      - underlipton 2y ago
        >I disagree with the premise that the tax reduction for land with homes built on it exists to de-incentivize people from tearing down abandoned homes. Okay. You'd have to explain why. >Much the opposite - the purpose of the law is to encourage the efficient use of land. That's not the opposite of my argument. It's not even mutually exclusive with it. >I think they probably just didn't foresee a massive population decline coming when the law was originally enacted Since that would be 1950, that's plausible. But I think that actually also bolsters my case. 5 years post-war, the last thing the government would have wanted is labor going towards demolishing homes that didn't need to be, just because it would be tax-advantaged; the focus would have been rebuilding. Again, I think that it's plausible that this effect was the intention. However, what's changed are the circumstances, as you said. The law didn't keep up with them until the act passed in 2014.
freetime2 2y ago
Apparently the law was amended in 2023 to exclude abandoned homes from this tax deduction, as well as giving local governments more power to step in and take action on abandoned homes that present a risk to public safety. [1] Probably still too early to say whether the change is having an impact, or how broadly it is being enforced. [1] https://www.loc.gov/item/global-legal-monitor/2023-07-02/japan-abandoned-houses-to-be-excluded-from-reduced-taxes/ https://www.loc.gov/item/global-legal-monitor/2023-07-02/jap...
wodenokoto 2y ago
To push landowners to use their property for something productive. Obviously it backfired.

Klonoar 2y ago

> I wasn't aware property taxes are higher on vacant lots but that explains things. If you look around Tokyo and see the dumbest set up parking lot possible, it's often a land owner who's just gotta put something there.

underlipton 2y ago

>I don't know the motive behind that tax law My guess: tearing all those buildings down and dealing with the trash and demolished materials takes a lot of labor and possibly a "supply chain" (since you're presumably centralizing it for dumping/incineration). But the circumstances that got you into the situation are 1) shrinking population (small labor force) and 2) too much space in the countryside that people already consider low-value. Essentially, you don't want to incentivize a demolition industry expansion to clear land no one wants anyway; there are more important things to be doing.

freetime2 2y ago
Japan is pretty good at demolishing homes. Two homes in my neighborhood were demolished in the past month - and it took a small team of maybe 4-5 workers a couple days for each home. It also looks like a lot of materials were separated out to be salvaged/recycled, too, although presumably a lot of it gets incinerated or becomes landfill. The cost varies, but according to this article [1] it is about about ¥1.2M-¥1.5M ($7.7K to $9.6K USD) on average to demolish a wooden house, although I suspect in rural areas it could be done for quite a bit less due to lower labor costs and not needing to worry as much about neighboring properties, directing traffic, etc. This reddit post from 5 years ago [2] says they were able to demolish an abandoned home and dispose of all the crap inside for ¥800,000 ($5.1K USD). So not exactly cheap, but not prohibitively expensive either I think if the government could provide the right incentives (e.g. combination of eliminating the tax reduction for abandoned home, and also maybe offer some subsidy). It definitely makes sense to prioritize homes where there is some demand for the land, though. There's a home in my neighborhood that has been vacant for 5+ years. And if they were to demolish the home and put the lot up for sale I feel they could sell it fairly quickly (less than 1 year) and easily recouperate the demolition costs and get ¥4M+ for the land. [1] https://www.arrowsrealty.com/column/how-much-is-the-cost-of-dismantling-a-detached-house https://www.arrowsrealty.com/column/how-much-is-the-cost-of-... [2] https://www.reddit.com/r/japanlife/comments/9inwp1/demolition_costs/ https://www.reddit.com/r/japanlife/comments/9inwp1/demolitio...
- underlipton 2y ago
  That it's economical at market rates is kind of the point, though, right? Without the disadvantageous tax treatment of cleared land, you'd see demand increase, which means either price increases or labor being pulled from other areas.
  - freetime2 2y ago
    I disagree with the premise that the tax reduction for land with homes built on it exists to de-incentivize people from tearing down abandoned homes. Much the opposite - the purpose of the law is to encourage the efficient use of land. There are similar tax breaks on agricultural land - where unused agricultural land is taxed at a significantly higher rate than land that is being farmed. I think they probably just didn't foresee a massive population decline coming when the law was originally enacted, and this was just an unintended side effect. Now the government views the huge number of abandoned homes as a social issue that needs to be addressed. And, as I mentioned in another comment up above, the law was already amended in 2023 to exclude abandoned homes from preferential tax treatment. I do agree with your point that increased demand for demolition services will increase prices and probably divert labor from other industries. But I don't see this as a huge problem. The supply chains/expertise already exist due to Japan's historical preference for demolishing and building new, and it requires mostly unskilled labor (except for the guy operating heavy machinery), so it should be fairly straightforward to ramp up.
    - underlipton 2y ago
      >I disagree with the premise that the tax reduction for land with homes built on it exists to de-incentivize people from tearing down abandoned homes. Okay. You'd have to explain why. >Much the opposite - the purpose of the law is to encourage the efficient use of land. That's not the opposite of my argument. It's not even mutually exclusive with it. >I think they probably just didn't foresee a massive population decline coming when the law was originally enacted Since that would be 1950, that's plausible. But I think that actually also bolsters my case. 5 years post-war, the last thing the government would have wanted is labor going towards demolishing homes that didn't need to be, just because it would be tax-advantaged; the focus would have been rebuilding. Again, I think that it's plausible that this effect was the intention. However, what's changed are the circumstances, as you said. The law didn't keep up with them until the act passed in 2014.

freetime2 2y ago

Apparently the law was amended in 2023 to exclude abandoned homes from this tax deduction, as well as giving local governments more power to step in and take action on abandoned homes that present a risk to public safety. [1] Probably still too early to say whether the change is having an impact, or how broadly it is being enforced. [1] https://www.loc.gov/item/global-legal-monitor/2023-07-02/japan-abandoned-houses-to-be-excluded-from-reduced-taxes/ https://www.loc.gov/item/global-legal-monitor/2023-07-02/jap...

wodenokoto 2y ago

To push landowners to use their property for something productive. Obviously it backfired.