In mid-April, the land ministry announced the results of a study it had carried out with regards to condominium shuzenhi tsumitate-kin (reserve funds for repair costs). The ministry had never researched the matter before and found that throughout Japan money collected from condo owners by housing management companies for repairs is grossly insufficient, and called on developers to be more honest with potential buyers of new condos by outlining the true cost of potential repairs and setting fees accordingly.

When you buy a condo in Japan you take on the burden of certain running costs related to maintaining the building as a whole. This fee, called kanrihi, goes toward things like elevator maintenance and custodial staff. It can run anywhere from several thousand yen a month to almost ¥40,000 a month, depending on the building’s size, location, and amenities. However, there is another burden that owners must assume. Shuzenhi is money that goes into a savings account for future work on the building as a whole, such as exterior painting, structural repairs and replacing superannuated equipment. The land ministry found that in the majority of the 84 cases it studied the reserve fund was not enough to cover this anticipated work. The reason for this insufficiency is that developers set the monthly contribution way too low in order to sell units more easily. Because kanrihi is basically set by management companies contracted to take care of the building, the developers have little control over it. First-time homeowners may be discouraged to find that, in addition to their monthly mortgage payments, they have to cover these non-negotiable charges. Consequently, developers and realtors try to keep the shuzenhi low — ¥10,000 a month seems to be the psychological upper limit. The land ministry, however, is recommending that shuzenhi be doubled in most cases, a suggestion that, if carried out, could put a damper on the already beleaguered new condominium market.

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