Japan’s national land disappears…a startling hole that can be bought “without contact information. Serious limitations that even the Takaichi administration’s “tighter regulations” cannot prevent.

Even Nationality Reporting Cannot Prevent “Holes in the System

Foreign capital is accelerating its purchase of Japanese real estate. On the other hand, some are concerned about cases in which Japanese land purchased by foreigners is resold overseas and eventually becomes “land with unknown owners.

In December 2013, the government announced a series of policies to tighten regulations on the acquisition of land, buildings, and other real estate.

The Ministry of Finance has revised a ministerial ordinance under the Foreign Exchange and Foreign Trade Law (Foreign Exchange and Foreign Trade Law) to impose reporting requirements on foreigners who acquire Japanese real estate for the purpose of “residence. Previously, reporting was required only for “investment” purposes.

The Ministry of Justice will require “individuals” to provide information on their nationality when registering real estate such as land and buildings, and will require submission of official certificates such as passports and resident certificates (with nationality listed). The Cabinet Office, Ministry of Land, Infrastructure, Transport, and Tourism, and Ministry of Agriculture, Forestry, and Fisheries each announced that they would require “foreign corporations” to notify the nationality of their representatives when they purchase “important land” such as around defense-related facilities and remote border islands, as well as large-scale land and forests.

In February, the government established a study group and an expert panel to discuss strengthening regulations on land acquisition by foreigners, and will compile the framework of the bill by the first half of this year.

Not a few foreign countries have restricted or prohibited real estate transactions and purchases by foreigners, citing security threats and soaring housing prices as reasons. Although Japan has prohibited in principle foreigners with short-term residency status from acquiring farmland since April ’25, there is basically no law directly restricting the acquisition of real estate by foreigners.

How effective will the tighter regulations proposed by the Takaichi administration be as a measure against “ownerless land” involving foreigners? Are Japan’s regulations on land acquisition by foreigners sufficient as they are? We asked Kiyoto Adachi, a professor at Hokusei Gakuen University and an expert on land laws.

Professor Adachi said that he began researching the issue of unclaimed land more than ten years ago because he was concerned that the acquisition of real estate by foreigners might become a cause of unclaimed land in the future.

The government is trying to develop an infrastructure to accurately ascertain the actual status of real estate holdings by foreigners. Looking at the contents of the ministerial ordinance revisions announced by the various ministries this time, my impression is that there is a trend toward stricter regulations.”

However, will requiring foreign individuals and corporations to report their nationality when acquiring real estate be enough to solve the problem of unclaimed land? It has been pointed out that if a foreigner resells Japanese land overseas to another foreigner, it will be difficult to ascertain and trace the actual situation.

When land is transferred from one foreigner to another, there are certainly cases in which the owner cannot be identified.

Real Estate Registration Law However, it is not mandatory to register the transfer of ownership through the sale and purchase of land.

In Japan’s real estate transaction system, registration is not a requirement for the conclusion of a sales contract, and a contract is legally concluded when there is an agreement between the seller and the buyer. If registration were to become mandatory for land transfers and sales, it would require discussion from the very foundation of Japan’s real estate transaction legislation.

However, the revised Real Property Registration Law stipulates that when an individual or corporation residing abroad is the registered owner of the property, the contact information in Japan must be registered. At the current stage, if there is no domestic contact information, it is only necessary to submit a written request stating “no contact information,” but this may eventually become mandatory. I think this could have the effect of preventing the occurrence of land with unknown owners.”

China bans it, why can’t Japan?

Professor Adachi, who studies land transactions by foreigners from a legal perspective, is actually opposed to uniform restrictions on land acquisition by foreigners.

He says, ” With the current globalization of the economy, over-restricting the acquisition of land by foreign capital will hurt the Japanese economy. There is also a fear that the acquisition of overseas real estate by Japanese nationals will be restricted, which will affect their economic activities. That is why we do not favor blanket restrictions.”

China, for example, prohibits foreigners from purchasing and owning land in principle. But Japanese land is being bought by Chinese capital.

But in Japan, it is only from an economic point of view. In Japan, it is difficult to restrict the acquisition of real estate by foreigners, not only from an economic standpoint, but also due to international rules and various other factors.

However, I also believe that Japan’s real estate legal system itself has its own problems.

In Japan, land and buildings are treated as “separate real estate,” and a wide variety of laws have been established in a complex manner. Furthermore, the ministries in charge of “registration,” “transactions,” and “utilization (planning)” of land and buildings are different from each other. Professor Adachi points out that this “stove-piped” structure is one of the problems of the real estate legal system.

The Ministry of Justice has its own laws, while the Ministry of Land, Infrastructure, Transport, and Tourism has its own laws, and there is no horizontal coordination between these laws. The government and we, as researchers, should organically link laws that span multiple ministries and are under the jurisdiction of multiple ministries in regard to real estate legislation.

On the other hand, I appreciate the Basic Land Law that was revised in 2008. The revised law stipulates the responsibility of landowners to properly use, manage, and trade land, and emphasizes consideration of regional characteristics. I believe it is possible to create a legal system that would realize this philosophy, even with the current land legislation.”

Niseko’s Disastrous Situation…Is “Municipalities” the Only Reliance?

Professor Adachi says that while he is “not in favor of total restrictions” on land acquisition by foreigners, “there should be partial restrictions.

For example, in the town of Kutchan in Niseko, Hokkaido, land prices have skyrocketed due to foreign investment and development. The number of foreign workers has increased and the market price of rental properties has risen, making it difficult for people working in the area to secure housing. The current situation is that the wellbeing of local residents is being undermined by foreign investment in real estate.

In Japan, the “principle of freedom of construction” allows buildings to be constructed as long as they meet the standards of the Building Standards Law and the Urban Planning Law. However, land and buildings are, so to speak, the foundation of life, the economy, survival, and the environment. Local governments should consider the wellbeing of their residents and establish some regulations for their utilization.

What kind of regulations, if any, could local governments establish on their own?

First, prefectures and municipalities can formulate urban plans based on the City Planning Law. Once an urban planning area or quasi-urban planning area is designated, various restrictions can be imposed on land use and construction.

However, some municipalities do not formulate urban plans. The town of Kutchan, mentioned earlier, has designated an urban planning area and a quasi urban planning area, and the neighboring town of Niseko has designated a quasi urban planning area, but the surrounding municipalities of the two towns have not designated any. This means that construction and development could take place freely.

We may consider creating a broad-based city plan that would include all the towns and villages in a certain area.

Speaking of Kutchan Town, illegal development was discovered last June when a Chinese-affiliated business operator cleared approximately 3.9 hectares of forest without permission from the Hokkaido government. The operator had proceeded to build two residential buildings without permission, but construction has been halted since June after the Hokkaido government recommended that the project be stopped.

In addition, mini-developments are taking place in wooded areas in the towns of Kutchan and Niseko, some of which were intended to be hotels but didn’t work out, and some plots have been left unattended. To prevent such mini-developments, stricter regulations under the City Planning Law and other laws may be necessary.

In addition, one measure would be to introduce a development tax, a vacation home tax, or a vacant house tax. It would also be effective to collect the cost of future demolition as a local tax in advance.

In order to realize a sustainable local community, it is important for local governments to work hard to create a system, ” he said.

However, some people point out that local governments are short of manpower.

This may be true for small municipalities, ” he said. But if the national government imposes uniform restrictions, it will be impossible to establish regulations that suit local conditions. As for specific land use regulations, we believe that each municipality should formulate its own regulations.

To give an example, both Kutchan Town and Niseko Town have enacted landscape ordinances, and have a rule that requires developers of land development and construction to attend a briefing session with local residents prior to the project. Through these briefings, the developer, local government, and residents work together to consider the community development of the entire area. Through this, both the local government and local residents are empowered. I think it is also important to create such a mechanism by formulating community development ordinances and landscape ordinances.

The acquisition of real estate by foreigners and the resulting problems of owner-less land and mismanaged buildings cannot be solved by the government.

Both local governments and residents must become empowered and think about how to shape their own communities and the nation. Otherwise, Japan itself will not be able to survive.

The national government should give more authority to local governments. We , the citizens of Japan, also need to acquire the ability to discern the flood of information and to have sound insight.

Kiyoto Adachi is a professor of economics and law at Hokusei Gakuen University. He graduated from Meiji Gakuin University School of Law in 1993 and completed his graduate studies at Waseda University Graduate School of Law in 2003. He specializes in civil law in general.