When you look for a high yield investment property, or an affordable property in Japan, you may find the word ” SAIKENCHIKU HUKA “.
This means you can not rebuild new building on the site.
Even if there is a property on the site, after you demolish the current building, you cannot build new building on the site.
Building standard law stipulates that in the case a person builds a house on the site, the lot should be connected with statutory road. ( Building standard law Article 42. 43. )
Because, when a house does not connect with wide road and in the case a fire breaks out, fire truck can not go to the house and the fire will spread out.
But when you look for property for investment, such property may be beneficial for you.
Even if the house is very old, you can maintain the house and sustain it for a long years.
If repairs on wall, roof, foundation are required, you can fix it and rent it out.
And even if a house does not connect with statutory road, in the case a person obtain permit from authority to rebuild a new house on the site, she can still rebuild on the site.
Merit of property of impossible to rebuild.
１ You can purchase this kind of property much cheaper than normal property.
In general, the market price of this kind of property will be 70% of normal property.
So, if you think of investment, yield on investment will be higher than normal property.
２ Assessed value of these properties are cheap compared to normal property.
It will reduce the amount of property tax, acquisition tax, registration tax.
Even if a real estate is SAIKENCHIKU HUKA BUKKEN, the value of building does not decrease, however value of lot will decrease.
And it will lead to the situation that purchase price for building / Purchase price for building and lot will increase.
Demerit of property of impossible to rebuild
Basically, you can not use the real estate as collateral when you purchase other real estate.
When you sell the real estate, next owner can not use loan to purchase it.
So, you need to find buyer who has enough cash.
BUILDING AREA TO LAND AREA RATIO