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Japan’s public housing system has a shelf life

by and

One of the most desirable properties in Tokyo is Chateau Mita, located in Minato Ward within walking distance of several embassies and Tokyo Tower and less than 10 minutes from four subway stations. The apartment building was constructed in 1964 and by 2000 there were persistent problems with plumbing and wiring, so the resident-owners decided to rebuild the eight-story structure in 2010.

Because of the choice location, two major real estate developers became involved and when work was finished last year, the building, now dubbed The Residence Mita, had added 16 stories and 175 units. Those units were sold to offset the renovation cost for existing residents, not to mention make money for the developers. They sold out immediately at an average price of more than ¥100 million, and the highest at ¥270 million.

Two blocks away is another residential building, the Toyo Mita Itchome Apartments, which contains about the same number of units as Chateau Mita originally did and was built in 1991. Location-wise, it’s better than Chateau Mita, only a minute from Akabanebashi Station. But the units are rentals, and residents on average pay ¥50,000 a month. How is that possible for housing situated on some of the most expensive real estate in the world?

Toyo Mita Itchome Apartments is run by Tokyo Prefecture as kōei jūtaku, or public housing. Unlike kōdan jūtaku, housing run by the semi-public entity UR, kōei jūtaku is not open to everyone. It is meant for low-income people. Anyone who applies must meet certain financial conditions before they can be considered. What makes kōei jūtaku different from low-income housing programs in other countries is that the buildings can be found everywhere, even in the priciest neighborhoods. There are 17 other public apartment buildings in Minato Ward, eight in Chuo Ward and three in Chiyoda Ward — one is just a stone’s throw from the Imperial Palace. In total there are more than 200 kōei jūtaku in Tokyo’s 23 wards, and that doesn’t count kuei jūtaku, public housing run by individual wards.

Every level of local government in Japan operates public housing in its bailiwick. According to the Public Housing Law, these entities receive subsidies from the central government to build public housing. Traditionally, units are limited to couples and families, though in recent years some municipalities have allowed single persons to move in, especially if they are disabled. The rent that a household pays is determined by the combined income of all its members, which means one family may pay less rent than another for the same size apartment in the same building. Rents are subject to change if household income changes.

In principle, public housing is not meant to be permanent, and aligns with the government’s housing policy since the end of World War II, which envisions a natural progression that should result in the purchase of a home. Employers have also provided housing systems so that their workers can save money to that end, though this practice isn’t as common as it used to be. Public housing is designed to give low-income families the chance to save money, and tenants are not expected to settle in for their whole lives. It is naturally assumed that a household’s income will rise over time and the family will then move out.

However, that has never really been the case, and not just because the employment environment has become more competitive in recent decades. It is human nature to want to remain in a place you call “home,” especially if it is inexpensive and it happens to be located in the center of one of the most vibrant cities in the world. Some local governments limit residents to 10 years’ maximum in a public housing unit, but it’s difficult to kick someone out of a residence in Japan, even when the tenant has violated the rules of his contract.

In Tokyo, a family must leave a public housing unit if it has have lived there more than five years and the total annual household income has exceeded ¥397,000 two years running. But there are many cases of families remaining in their apartments for years after their incomes have broken this ceiling. The most famous example is a company executive in his 50s who had been paying ¥90,000 a month for a three-bedroom public housing unit in western Tokyo for 22 years and who in 2010 made ¥24.5 million after taxes. That same year the prefecture managed to evict only 23 families due to high incomes.

Naturally, it’s not easy getting into such a system. All public housing programs allocate by a lottery that privileges certain types of applicants depending on their circumstances. Welfare recipients do have an advantage, but it should be noted that applicants’ assets are not screened, only their incomes. Applications are accepted two or three times a year at local government offices and, according to the land ministry (not the welfare ministry, as some might expect), which oversees public housing, there is on average eight to nine applications per unit of available housing. This ratio increases substantially the closer you get to city centers. For greater Tokyo it’s 20:1, but in the Kanda area it’s almost 200:1.

Even if you “win” the lottery, it doesn’t mean you can move in right away. In many cases, local governments approve a certain number of applications based on how many vacancies they project, and winners usually have to wait between five months and a year before a unit is empty. Also, you have to take what the housing authority gives you, so if you have your eye on a certain building or apartment and are offered something different, you can turn it down but then you have have to reapply and go through the whole process again. Last November, among a Tokyo public housing stock of about 200,000 units there were 2,315 vacancies.

And the ratios are becoming larger. The pace of construction for new units has slowed since 2005. Before leaving office, former Tokyo Gov. Shintaro Ishihara issued a moratorium on new public housing with the aim of selling off some land to private developers. As of 2011, there were 2.17 million public housing units in Japan. About 1,800 new units were built in 2012, which was 3,000 less than the number built in 2002. Also, fewer units are being renovated every year, despite the fact that 57 percent of all public housing in Japan is more than 30 years old,

All this is significant given the income instability that Japan has experienced in the past few decades. It means it’s probably going to be even more difficult to get current public housing residents to move.

Philip Brasor and Masako Tsubuku blog about Japanese housing at www.catforehead.wordpress.com.