The Kyoto municipal government plans to impose a tax on vacant homes to prevent young people from fleeing the city due to skyrocketing apartment prices. Demand for Kyoto properties continues to soar both in Japan and overseas, and industry experts say apartment prices are going beyond the reach of average households. Some apartments are gobbled up for investment purposes and often left unused. Others are bought as second homes for the wealthy.
The scarcity of available housing has exacerbated the woes of ordinary denizens who want to buy homes and live permanently in Kyoto. Fearing a decline in tax revenue from a possible exodus of younger people seeking more affordable living environments, the cash-strapped city government plans to introduce a “tax to promote the use of uninhabited residences” in fiscal 2026.
The levy will be imposed on unoccupied homes, including those owned for investment purposes, to promote the circulation of real estate properties. An ordinance for the tax was approved by the city assembly in March.
“By taxing apartments and other homes that are not actually inhabited, we hope to prompt their owners to sell off or rent out those properties and block the exit of residents, particularly those raising small children,” a city official said.
Some overseas buyers are snapping up entire apartment houses in downtown Kyoto for hundreds of millions of yen (millions of dollars). Liu Cheng, President of Rentong Corp., a real estate agency in Kyoto, said he receives four or five inquiries a day from clients in China, Hong Kong, and elsewhere about buying an apartment building in such areas as outside Kyoto Station and the busy Shijo district.
Kyoto was hugely popular among Chinese even before the pandemic. Many want to own properties for temporary stays or for investment purposes after learning about the city’s history and culture through sightseeing.
The supply has been limited partly because high-rise apartment complexes cannot be erected. Under a landscape policy introduced by the city government in 2007, all new buildings must be shorter than 31 mt in height.
According to the city government, about 5,200 more people moved out of Kyoto than those who moved in over the year through March. “We are taking (the depopulation trend) seriously,” Kyoto Mayor Daisaku Kadokawa said. “We plan to step up measures to allow young people to continue living, working, and raising children in Kyoto.”
The planned new tax will target unoccupied homes appraised at one mn yen or more for the fixed asset tax. The threshold will be lowered to 200,000 yen five years after the tax is introduced.
The city government will study whether a residence is actually inhabited, irrespective of the presence or absence of an official resident register. An empty 100-sq mt unit in a high-rise apartment building in downtown Kyoto is expected to cost the property owner about 940,000 yen a year in additional taxes.
Exemptions will be made for traditional ‘Kyo-machiya’ wooden townhouses as well as homes used for business purposes, such as shops. The municipal government expects 15,000 properties will be covered by the new tax and anticipates tax revenues of about 860 mn yen during the first fiscal year of introduction.
Although the city government of Atami, Shizuoka Prefecture, has been taxing villa residences, Kyoto will be the first municipality in Japan to impose a broad tax on uninhabited or empty homes, Kyoto city officials said.
