Vacant houses in Japan enjoy a new breath of life

September 5, 2022

TOKYO – In recent years, an increasing number of vacant homes have remained unoccupied, even in good locations in urban areas. Today, however, landlords are taking advantage of rental services that renovate these homes and sublet them as residences or shops.

Companies make a profit by rehabilitating properties and turning them into income-generating assets on behalf of owners, who often lack the expertise to use their properties effectively.

Central and local governments are now tightening measures on vacant houses due to possible problems following a natural disaster, and hope that the growth of these services will help reduce the number of empty houses.

Empty for 7 years
A popular ice cream shop in Osaka’s Nishinari district has moved into an empty property. Although the building was in a convenient location near Tengachaya Station on the Nankai Electric Railway Line, it had stood unoccupied for seven years.

The shop opens late, at 8 p.m., but the neon-lit building, which is over 50 years old, is known for its Instagram-friendly appearance. The building originally leaked and had uneven floors, but was revitalized last fall by a vacant house utilization service operated by Tokyo-based real estate company Ject One.

The service, called “Akisapo”, is structured so that Ject One or a partner company can rent, renovate and sublet vacant properties. The service, which started in 2016, has already been used to revamp around 50 properties across the country. Old houses and other properties in Tondabayashi and Kishiwada in Osaka Prefecture are among Ject One’s ongoing projects.

The owners bear no financial burden. On the contrary, Ject One pays part of the rent during a house lease. The company uses rental income to cover renovation costs and takes a share of the rent as profit. Once all of the company’s renovation costs are recovered, the landlord is free to rent the property and receive 100% of the revenue.

The ice cream shop was opened by an Osaka-based yakiniku barbecue restaurant operator. Rent was set at an affordable ¥70,000 per month, motivating the restaurant to try running a different kind of business, according to the outlet.

The owner of the building, an Osaka resident in her 60s, said the building was previously used by her father as an office. “My father passed away and I had no choice but to leave him empty,” the woman said. “I’m happy to see it being put to good use.

Involvement of the transport company
Osaka Metro Co. got involved in the housing market in December 2019. The company is leasing vacant buildings around three Midosuji line metro stations – Nishitanabe, Nagai and Abiko – and subletting them after renovations . The company has so far completed work on five such homes, and plans to increase that number to around 100.

“We want to create a lively atmosphere along our subway line and increase the number of users,” an Osaka subway official said.

In the past, it was difficult to obtain information on vacant units, which suggested that these premises would probably not bring a profit. Nevertheless, central and local governments have begun to act on the problem of empty houses, fearing that buildings will collapse or catch fire if left unchecked. This encouraged the spread of private businesses and other services.

Good vital location
According to government statistics, in 2018 there were 8.48 million vacant homes across the country, with that figure more than doubling over the past 30 years. In 2015, the government enforced the Special Measures Against Vacant Dwellings Act and also opened “Vacant Dwelling Banks”, which facilitate online searches for information on vacant dwellings. Currently, some 5,600 houses in approximately 640 municipalities are registered.

The Kobe city government recently launched a project to subsidize up to 5 million yen for renovation work on empty houses in cases where architects are involved. Twenty homes will be revitalized into shared housing, artist activity centers and other facilities to enhance the community’s appeal.

However, observers say it is difficult to take advantage of vacant homes unless they are well located. Currently, there are only limited examples of homes that have benefited from the renovation service.