Learn about the characteristics of properties that cannot be rebuilt

Here, we will explain the characteristics of properties that cannot be rebuilt and why it is not possible to do so.

Characteristics of properties that cannot be rebuilt

Properties that cannot be rebuilt means land that cannot be built on, even if the current building is demolished and the land becomes vacant.
In other words, "land that cannot be rebuilt."
Is there demand for such land that cannot be built after demolition?
It may seem surprising, but many people actually consider purchasing such land.

What are the reasons for not being able to rebuild?

The reason why such land cannot be rebuilt upon is due to road provisions under the Building Standards Act.
For new buildings constructed in an Urban Planning Area, there is a provision that requires that the site must have at least 2 meters of access to a 4-meter-wide road under the Building Standards Law.
In addition, the specified administrative agency treats areas with a width of 6m or more as roads.
For example, if you want to sell one piece of land by dividing it into sections, you need to extend a part of the land away from the road and sell it with 2m of road.
This means that you cannot build a building on land that does not have at least 2 meters of frontage.
Nevertheless, caution is required because even if the property has a 2 meter frontage on the road, it may not be possible to rebuild if the fence is shared.
The reason for such provisions is to have enough space for emergency vehicles such as firetrucks and ambulances so that fire-fighting and rescue activities can be carried out smoothly.
In other words, legislation is required to prevent a house from being built on land where emergency vehicles cannot go into.
However, why are there properties that cannot be rebuilt despite the fact that road access is required by law?
The reason for this was the enactment of the Building Standards Law in 1950 and the City Planning Law in 1968.
In other words, some houses built on land before 1950 or those built before they were designated as urban planning areas are buildings that do not have an obligation of access roads.

Can renovations be done?

Once buildings have been demolished, the house cannot be rebuilt again, but it is possible to renovate and continue to live in it.
However, it is limited to renovations that do not require a building application.
If the renovation of a wooden building meets the following conditions, no building application is required.

●2-story or less
●Floor space 500 m2 or less
●Height 13m or less
●Eaves height of 9m or less

What are the merits of properties that cannot be rebuilt

Next, we will introduce some of the benefits of purchasing buildings on land that cannot be rebuilt.

The price is low

The biggest advantage of properties that cannot be rebuilt is that their prices are cheap.
Land that cannot be rebuilt and cannot accommodate cars will lose its use and asset value.
It is possible to buy it for 10% to 50% less than the market price.

Taxes are low

Since the real estate value of properties that cannot be rebuilt declines, it is also an advantage that fixed property taxes and city planning taxes are cheaper.

Useful for inheritance tax planning

The purchase of properties that cannot be rebuilt has merits as an inheritance tax countermeasure.
For example, when comparing the case where you own 15 million yen in cash with the case where you have income from a real estate purchased at 15 million yen, the inheritance tax is lower for the real estate purchased at 15 million yen.
If you own it in cash, the inheritance tax will be calculated at ¥15 million as it is.
However, inheritance tax for properties that cannot be rebuilt is calculated based on the assessed value of property taxes, so it is thought that inheritance tax will be even cheaper than ordinary land.

You like old buildings

Propeties that cannot be rebuilt were built prior to 1968, when the City Planning Law was enacted.
That would mean buildings that are more than 50 years old.
If you want to live in an old-fashioned house or a retro-style house, you can buy it at a cheap price.
In addition, since there are many properties in the vicinity of properties that cannot be rebuilt with the same conditions, so there is little worry that a large building will be erected in the vicinity, ruining the view or sunlight.

Land in the vicinity may be put up for sale

When a nearby property that cannot be rebuilt is sold, it is highly likely that the land will be redeveloped and built into a single site.
However, we cannot be certain if the surrounding land will be sold.
When purchasing properties that cannot be rebuilt, it is important to check the status of the surrounding land, etc.

Have a good yield when leased

There are also advantages to buying a property that cannot be rebuilt and renting it out as a rental unit.
The yields on these properties are good due to the low acquisition costs.
In addition, there are surprisingly many people who want to live in an old-style house, and there is demand even if they recruit by leasing.
If you meet the requirements, you can renovate the building, so it will be even easier to recruit tenants if you improve its appearance.

Can be used as a material storage area or parking lot

You can demolish the building and rent it as a material storage area or parking lot.
If there are factories or commercial facilities in the vicinity, you can use it as a material storage area, and if there are many rental houses in the area, you can rent it out as a parking lot.

Can be used as private accommodation

Properties that cannot be rebuilt can also be used as private accommodations if conditions are met.
The hurdle is low for private accommodations because they do not need to obtain approval under the Hotel Business Act.
If the number of inbound tourists increases post-Covid, demand for private accommodations will also increase.

What are the disadvantages of properties that cannot be rebuilt

Finally, we will introduce the disadvantages of purchasing properties that cannot be rebuilt.

Cannot rebuild

If you live in the building you purchased as is, or after a renovation, there is no problem because there is no need to rebuild it.
However, if the house collapses due to a disaster, it cannot be rebuilt again.
Having a risk at the time of a disaster is a disadvantage.

The roads to the house are narrow and inconvenient

The road leading to the house has a narrow frontage of less than 2 meters, so even a private car may not be able to pass through.
In some cases, you have to pass through other people's land to get to your house, which is a disadvantage because many lands are not user-friendly and have some problems.

Difficult to obtain financing

Properties that cannot be rebuilt have low asset values, and therefore their value as collateral is also low.
As a result, it is difficult to get loans from banks, and it has the disadvantage of making it difficult to obtain housing loans.
It is difficult to get a renovation loan, and the interest rate is high, which makes the conditions worse.

Difficult to sell

Another major disadvantage is that it is difficult to sell properties that cannot be rebuilt.
When selling the land, you will need to renovate it to make it look nicer or appeal to people who can make effective use of it.
The timing of the sale will be important, as you may be able to buy it at a lower price and sell it at a higher price as one piece of land at the same time that surrounding land is being sold.

In Conclusion

In this article, we talked about the characteristics of properties that cannot be rebuilt and the advantages and disadvantages of purchasing them.
Properties that cannot be rebuilt my seem to have no use or value, but depending on how they are utilized, there are many advantages to their purchase.
Please take into account both the advantages and disadvantages, and use them effectively after purchasing.