In this article, Professor Hiroko Saito explains the management system of Japanese apartment ‘mansions’, examines the acute problem of rebuilding blocks of flats in a country torn by earthquakes, and considers the key differences between the UK and Japan regarding flat management
In Japan, blocks of residential apartments are classified into two types. One type is owned by an individual. The other type is owned by the community of homeowners – just like a condominium in the USA, or a commonhold in the UK. In Japan, the term for the latter used is a “Mansion”.
The tenure of a Japanese mansion is the same as a condominium: each homeowner’s unit is freehold, owned by the homeowner. Common parts are freehold and are owned by the mansion’s homeowners. The tenure is different from the commonhold system in the UK, because the common parts are owned by a commonhold association.
Japanese mansions were first built in the 1950’s, luxurious apartments principally for the upper classes. Hence the grandiose title, “Mansions”. Today, however, Japanese mansions are far from grandiose and tend to be predominantly occupied by the middle class; mansions are one of the most popular and common types of housing in the cities. 10% of Japan’s entire population lives in mansions; in the cities, this proportion rises to about 20%.
The management of Japanese mansions
Laws and bylaws
Japan has “The Units Ownership Act” that regulates the management of Japanese mansions. It was established in 1962 and amended in 1983 and 2002. The law refers to units within buildings owned by individuals. Usually, homeowners establish bylaws which must be followed, similar to a covenant or commonhold community statement, but they are not registered. The Government has made three types of model bylaws, which are for single residential-only buildings, estates with more than one building, and mixed-use buildings. Most bylaws are similar to the model bylaws.
Homeowners’ association
By law all homeowners have to belong to the homeowners association, however, homeowners and developers don’t need to register the association. By law the association should automatically be created when the building is owned by individuals. The association is usually not a legal entity, but if 75% of homeowners agree the association can become a legal corporation. In the case of a homeowners association which is a legal corporation, the association needs to be registered. About 5% of homeowners associations are legal entities.
General meeting
By law all important matters have to be decided by all homeowners at the general meeting of the homeowners association. Usually, the weight of voting right depends on the floor size of unit.
Board of directors
Homeowners usually choose the directors from amongst themselves, however, the directors and the board of directors are not required by law nor does the board have the power to make decisions. The directors decide how to manage and maintain the common parts. Anybody can be a director: usually the directors are homeowners who live in the mansion.
Administrators and Auditors
Homeowners appoint an administrator - usually the chief director, one of the homeowners and not a specialist of flat management. The administrator works on behalf of the homeowners; the role is usually unremunerated. According to the law, anybody can be an administrator. Once again, it is not legally required that homeowner associations have an administrator.
Usually the auditors are selected from among the homeowners. They are not professional and are not paid fees. As with administrators, auditors are not legally required.
Managing agents
Homeowners associations usually hire managing agents, who generally have four main tasks:
1. Providing the homeowners’ association with professional support (accounting and the management of the common parts and facilities) 2. choosing on-site managers and training them 3. Providing for cleaning the common parts 4. Maintaining the building’s facilities
There are three management levels depending on which tasks the association entrusts to a managing agent. The first category is a full management service that includes all of the above tasks. The second category is where a homeowners association entrusts between one and three of the these tasks to an agent. The third category is self-management. The first type is the most common, chosen by about 70% of homeowners associations. Around 20% of homeowners associations opt for level two, while self-management makes up about 10%.
The Government has created a model contract between homeowners associations and managing agents to encourage a fair contract.
Issues in flat management
and dealing with them
By far the most urgent and enduring problem faced by Japanese mansions is rebuilding. Most mansions are constructed from reinforced concrete, rather than steel, giving them a lifespan of about thirty to forty years. One major factor limiting the lifespan of concrete framed buildings is Japan’s ubiquitous earthquake problem. In a very large earthquake in 1995, 6000 people died, 88% killed when their houses collapsed. Many blocks of flats have collapsed that were built according to old building regulations, unable to withstand a big earthquake.
Another reason is that Japan does not have enough knowledge and skill in maintaining and renovating blocks of flats. The cost of repair is sometimes higher than the rebuild cost and consequently people choose to rebuild rather than maintain.
Many Japanese mansions were built in the early 1960’s and so now the issue of rebuilding is very pressing indeed. The homeowners in a mansion have to decide together the future fate of their block – do they completely rebuild or not? A choice made even more complex by the fact that getting agreement to rebuild is extremely difficult. Some people opt to rebuild because their flats are too small or the facilities poor (for example, there may be no lift, not enough parking spaces or no meeting room). On the other hand, some people don’t want to rebuild because they are too old or because of financial constraints. There are some cases which took 20 years to reach a final decision and during this period the building was not maintained!
Therefore the government changed certain articles regarding rebuilding in “The Units’ Ownership Act”, 2002. Under the new law if 80% of homeowners agree to rebuild, then rebuilding can proceed. The government established a further law, “The Mansion Rebuilding Act” in 2002. Before reaching agreement on rebuilding, the government gives homeowners advice about mortgages and how to reach agreement on rebuilding. After a decision to rebuild, the local authority will provide support: they provide social housing to people who move out and do not wish to go back to the new mansion and they give homeowners advice on how to successfully manage the rebuilding project.
However, it is still difficult to reach an agreement on such a major decision. This is an urgent issue in Japan, which requires innovative property management or a new system of tenure.
Block management: key
differences between the UK and Japan
There are many differences between the UK and Japan regarding the tenure system of blocks of flats, the management system and the supporting system for homeowners.
Firstly, in Japan, there is no long leasehold system as in the UK. I personally find this very interesting because when the buildings become old, the freeholder can decide to rebuild without consulting other homeowners. My initial impression was that the leasehold system was better than commonhold. However, I have found many problems regarding long leasehold. According to my research, the cases in which Residents’ Management Companies own and manage the common parts appear to be the most democratic. Arguably, the commonhold system in the UK is more efficient than the Japanese mansion system, because the commonhold association which owns and manages common parts is a legal corporation, which can systematically manage its blocks of flats as a corporation.
In Japan there is support provided to homeowners associations. It is very difficult for the occupants to run these alone, so they usually appoint managing agents. However, some agents are unprofessional and act unfairly. It has become necessary in Japan to improve the quality of managing agents’ services and support and advice is needed for homeowners on how to run homeowners associations economically, democratically and fairly. To this end, the new law of enhancement of flat management was established in 2000. The law requires that all managing agents must be registered with the government and both national and local government must support homeowners in running their associations. They hold free seminars for homeowners to give advice and to give free pamphlets about how to run homeowners associations. Some local governments give grants for repairing common parts, surveying buildings for earthquake protection and hiring architects, surveyors and solicitors. This is all good news for apartment residents and homeowners associations in Japan. In the UK, registration of managing agents and government responsibility for supporting RMC’s are not required by law.
Regardless of the differences of tenure, the management system and the supporting system, Japan does have similar problems with its residential apartment blocks as the UK, and the rest of the world for that matter. Parking, pets and noise are constant issues. There is a chronic shortage of association directors: many are not interested in contributing to the running of their block and do not have enough knowledge of property management. Japan also experiences disputes between managing agents and homeowners associations.
I believe that we can solve these problems by adopting the best bits of each other’s systems and experiences so as to create a better flat management and tenure system.
Hiroko Saito PhD is Professor of the Faculty of Real Estate Sciences, Meikai University, Japan and Visiting Scholar, Department of Land Economy, University of Cambridge.
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