Earlier this week we posted a blog regarding the need to understanding the requirements and procedures when brokering a sale of a home which is certified as an “excellent long-term home.”
Today we would like to write about the advantages and disadvantages when purchasing a home which is certified as “excellent long-term housing.”
Long-term quality housing is “housing with the performance for long-lasting residence
Long-term excellent housing refers to “high performance housing with measures taken to ensure that it can be lived in for a long time in good condition,” and is certified in accordance with the Law Concerning the Promotion of Long-term Excellent Housing.
Long-term excellent housing is applicable to newly built houses or extensions and renovations of existing houses, and as of the end of March 2023, a cumulative total of more than 1.44 million homes have been certified.
The general criteria for certification of excellent long-term housing are as follows:
- The structure and facilities are designed for long-term use.
- The area of the dwelling unit is above a certain size.
- Consideration is given to the living environment.
- Consideration is given to natural disasters.
- The period and method of maintenance and preservation are specified.
Let’s take a closer look at specific certification criteria in the next section.
【Newly built houses】8 criteria for certification of excellent long-term housing
Let’s take a look at the detailed criteria for certification as a superior long-term housing in a newly built detached house.
1. One’s Living Environment
Consideration must be given to maintaining and improving the good landscape of the residence and the residential environment in other areas.
In the case that the project is located within the area of a landscape plan, district plan, building agreement, landscape agreement, or townscape plan by ordinance, the project must be in harmony with the contents of these plans.
2. Living Space (Housing unit area)
In order to ensure a good standard of living, long-term quality housing is required to have certain floor area. The standard for detached houses are 75 square meters or more, and at least 40 square meters of floor space is required for the first floor, excluding the staircase area.
3. Energy-Efficient
The following standards must be met for energy conservation performance to improve the heat insulation performance, etc. of the home and reduce the heating and cooling load.
Heat insulation performance grade “grade 5” and primary energy consumption grade “grade 6.”
4. Anti-Deterioration Measures
The house must fall under the “grade 3” deterioration prevention grade (structural frame) and must also meet the standards for wooden, steel-framed, and reinforced concrete construction. In addition, the house must be able to be inhabited for several generations.
5. Seismic Resistance
In the event of earthquakes, the level of damage must be reduced so that the house can be easily repaired for continued use.
The house must be a seismically isolated building as defined by the Housing Quality Assurance Promotion Act (Quality Assurance Act), or must fall under seismic resistance class 1 to 3 (prevention of collapse) depending on the structure of the house and other factors.
6. Ease of Maintenance and Renewal
Necessary measures must be taken to facilitate maintenance and periodic inspections on plumbing fixtures with a short service life. The standard for newly built detached houses is “grade 3” for maintenance and management measures (dedicated pipes).
7. Maintenance and Preservation Plan
In order to prolong the life of a house, it is necessary to plan for periodic inspections and repairs in the following three areas.
- Major structural components of the house
- Water supply and drainage facilities installed in the house
- Parts of the house that prevent rainwater infiltration
8. Disaster Prevention Measures
In areas where there is a risk of disasters occurring, measures specified by the competent administrative agency must be taken according to the level of risk. Please check with the administrative agency that has jurisdiction over your application for Long-Term Quality Housing regarding the measures to be taken in consideration of disasters.
Five Advantages of Long-Term Quality Housing
The following is an explanation of the five advantages of long-term quality housing.
1. Safe and Comfortable Living for the Long Term
Long-term quality housing provides safe and comfortable living for a long period of time, and can also be lived in for several generations.
This is because of the anti-degradation and anti-disaster measures taken, as well as the high earthquake resistance and energy-saving performance.
Because excellent long-term housing is built to be lived in for a long time, its asset value is less likely to decline, and when it is sold, it is more likely to fetch a higher price than ordinary housing.
2. Special Tax Measures are Available.
Special tax measures for long-term quality housing are as follows;
If occupied by December 31, 2023
If you move into a long-term quality residence by December 31, 2023, you will be eligible for an income tax break.
| Mortgage Tax Reduction | ・Deductible limit of 50 million yen (increased from 30 million yen) ・Deduction rate of 0.7%, maximum deduction period of 13 years, maximum deduction amount of 4.55 million yen |
| Investment Tax Credit | ・10% of the amount equivalent to standard performance enhancement costs (up to 6.5 million yen) is deducted from income tax |
Please note that the mortgage tax credit and the investment-type tax credit cannot be used together.
New construction by March 31, 2024
Special tax measures for new construction of excellent long-term housing by March 31, 2024 are as follows;
| Registration Tax | Reduction in tax rates | ・Preservation of registration 0.1% (would have been 0.15%) ・Registration of transfer Household 0.2％ ・Condominiums 0.1% (originally 0.3%) |
| Property Tax | Extension of applicable period for tax reduction (1/2 reduction) | ・Detached 1-5 years (originally 1-3 years) ・Condominiums 1-7 years (originally 1-5 years) |
| Real Estate Acquisition Tax | Increased deductions from the tax base | ・Deduction 13 million yen (originally 12 million yen) |
3. Mortgage Interest Rates are Reduced
There are two special measures for mortgages due to the acquisition of long-term quality housing as follows;
| Flat 35S (Interest Rate A Plan) and Maintenance and Preservation Type | ・Initial 5 years: 0.75% annual reduction |
| Flat 50 | ・Available for acquisition of long-term quality housing ・Full term fixed rate loan for up to 50 years ・Possible to sell the house with the mortgage ・Interest rate can be transferred to the buyer when the house is sold |
4. Discount on Earthquake Insurance Premiums
If you qualify for either the earthquake resistance rating discount or the seismic isolation building discount, you will receive a discount on earthquake insurance premiums.
| Discount on earthquake resistance grade | ・Earthquake resistance grade 2: 30% discount ・Earthquake resistance grade 3: 50% discount |
| Discounts for seismically isolated buildings | ・50% discount |
5. Subsidies for the “Regional Housing Greenification Project” are Available
Subsidies are available for the construction of long-term quality wooden houses to be built by local small and medium-sized construction companies which belong to a group that has been selected for the Regional Housing Greenification Project.
The subsidy is a maximum of 1.4 million yen per house.
Three Disadvantages of Long-Term Quality Housing
When purchasing a long-term quality home, be sure to fully consider the disadvantages.
1. Time and Fees are Required to Obtain Long-term Quality Housing Certification.
An application for Long-Term Quality Housing must be filed before construction begins. Note that the application process is time-consuming because of the prescribed steps that must be taken.
In addition, the application will incur fees that vary depending on the administrative agency with jurisdiction over the application and the circumstances.
2. Construction Costs May be Higher than that for an Ordinary Home
In order to be certified as excellent long-term housing, it must have high seismic performance, enhanced energy conservation performance, and measures to prevent deterioration.
Construction costs may be higher than for ordinary housing due to the design suitable for long-term quality housing and the use of high-quality materials.
3. Periodic Inspections and Maintenance Required even after Moving-In
In order to complete the construction of a long-term excellent housing and continue to receive certification after occupancy, periodic inspections and maintenance according to a maintenance and preservation plan are required.
Periodic inspections according to the maintenance and preservation plan stipulate that the period during which maintenance and preservation of the house is required is 30 years or more, that the intervals between inspections are 10 years or less, and so on.
Failure to maintain and maintain the house or violation of an improvement order may result in revocation of the certification as a Long-term Quality Housing or a request for refund of subsidies or preferential tax payments.
Procedures for Certification of Excellent Long-term Housing
The certification procedure for Long-term Quality Housing is carried out before the start of construction, with the builder or division of labor being the applicant.
Let’s take a look at the flow of the certification procedure for excellent long-term housing.
1. Undergo Technical Review by a Registered Housing Performance Evaluation Agency
To confirm that the house to be built meets the certification criteria for excellent long-term housing, it undergoes a technical review by a registered housing performance evaluation agency.
An application for confirmation or a design home performance evaluation and accompanying documents (design description, various drawings, calculations, etc.) must be submitted to the registered housing performance evaluation agency.
2. Receive Written Confirmation from the Registered Housing Performance Evaluation Agency
If the technical assessment by a registered housing performance evaluation agency determines that the house meets the criteria for excellent long-term housing, a certificate of confirmation, a certificate of confirmation or a housing performance evaluation certificate (which includes the results of confirmation of the house’s long-term use structure) will be issued.
3. Receive a Conformity Assessment by the Competent Administrative Agency
Submit an application for certification and attached documents (confirmation documents, various drawings/blueprints, and documents deemed necessary by the competent administrative agency to the competent administrative agency for a conformity assessment.
4. Receive a Certification Notice from the Competent Administrative Agency
Construction of a Long-term Quality Housing can start after the conformity assessment by the competent administrative agency is passed and a certification notice is issued.
If an application for an excellent long-term housing is submitted prior to the start of construction, it is possible to receive certification after the start of construction, even if construction has begun before the notification of certification is issued by the competent administrative agency.
What are the Key Points when considering Long-Term Excellent Housing
Long-term excellent housing may be more expensive to build than ordinary housing, and may require more effort for maintenance after occupancy, which may result in regrets due to lack of cost-effectiveness.
Therefore, certification of excellent long-term housing must be decided after careful consideration of future living as well.
In addition, it is important to select a construction company or housing company with a proven track record in the certification of excellent long-term housing.
If the company has a track record of excellent long-term housing, you can expect a high level of technical expertise in construction and a wealth of knowledge about the procedures for excellent long-term housing.
For additional information or any questions please contact us here
Email: info@remax-apex.com