From 2025 to 2026, a series of major legislative reforms affecting the real estate industry are coming into effect. These include the mandatory compliance with energy efficiency standards under the Building Standards Act revision, and the revision of the real estate registration system requiring mandatory inheritance registration and address change registration.
As someone managing a real estate business, I view these reforms not as "tightening regulations" but as a turning point toward improving the overall trustworthiness of the industry. This article organizes the key points for those working in real estate practice.
Key Points of the Building Standards Act Revision (Effective April 2025)
Mandatory Compliance with Energy Efficiency Standards for All New Buildings
From April 2025, compliance with energy efficiency standards has been made mandatory in principle for all newly built residential and non-residential buildings. Previously, only buildings above a certain scale were subject to this requirement, but the major change is that it has been made comprehensive, including small-scale housing.
The background to this is the reality that CO2 emissions from the building sector account for approximately one-third of Japan's total emissions. The government has set a target of reducing CO2 emissions from the building sector by 58% compared to FY2013 levels by FY2030, with a policy of achieving 100% ZEH/ZEB-compliant buildings among new constructions by FY2030.
The Difference Between Extensions/Renovations and Repairs/Remodeling
While mandatory compliance with energy efficiency standards also applies to extensions and renovations, an important point is that repairs and alterations (so-called remodeling) are not subject to this requirement. In the case of extensions and renovations, the parts being extended or renovated must comply with energy efficiency standards, but only those parts are subject, not the entire building.
In real estate transaction practice, the distinction between whether a property has been remodeled or has undergone extensions/renovations becomes important. If it is an extension or renovation, confirmation of energy efficiency standard compliance is necessary, but if it is remodeling, it is not subject. It is necessary to accurately understand this difference.
Reduction of the "No. 4 Special Exemption"
Previously, two-story wooden buildings and the like were exempt from structural regulation review during building confirmation (the so-called "No. 4 special exemption"). This revision reduces this special exemption, with the scope of examination exemption substantially revised.
As a result, structural safety and energy efficiency performance reviews will be required even for small-scale wooden buildings, and the procedures for building confirmation applications have also changed. It is important to understand this change in coordination with construction companies and design firms.
Revision of the Real Estate Registration System (Effective 2024-2026)
Why Is the Registration System Changing?
Japan has a serious problem of "land with unknown owners" — land where the owner cannot be identified from the real estate registry, or where the owner can be identified but cannot be contacted because their whereabouts are unknown.
The main reasons why inheritance registrations were not made are clear: applications were not mandatory; there was no incentive to spend money when the inherited land had little value; and interest in land declined as the population moved to urban areas. These three factors combined to cause land with unknown owners to expand nationwide.
Mandatory Inheritance Registration (Effective April 1, 2024)
From April 1, 2024, heirs who acquire real estate through inheritance are required to apply for inheritance registration within three years from the date they become aware that succession has commenced for their benefit and that they have acquired ownership of the real estate.
Those who fail to apply without justifiable reason may be subject to a fine of up to 100,000 yen. This mandatory requirement also applies to real estate for which inheritance commenced before the effective date, with registration applications required by March 31, 2027.
Mandatory Address and Name Change Registration (Effective April 2026)
From April 2026, when a real estate owner changes their address or name, they will be required to apply for the change registration within two years of the change date. Those who fail to apply without justifiable reason will be subject to a fine of up to 50,000 yen.
Among real estate owners, not a few have failed to update their registration when they moved or changed their name due to marriage or divorce. For the April 2026 enforcement, it will be necessary to provide information to managed property owners.
Land Transfer to National Ownership System
A system has also been established (effective April 2023) that allows ownership of land acquired through inheritance to be transferred to national ownership with the approval of the Minister of Justice. While certain conditions must be met, the legal establishment of the option to relinquish low-value land is an important step toward resolving land issues.
Impact on the Real Estate Industry
Looking at these legal reforms from a broad perspective, one clear direction emerges: "transparency" and "clarification of responsibility."
The mandatory energy efficiency standards make the quality of buildings visible. The mandatory inheritance registration clarifies ownership. And the revision of the Condominium Building Act ensures management transparency.
Frequently Asked Questions (FAQ)
Q. Does the mandatory energy efficiency standard compliance also apply to remodeling?
Repairs and alterations (remodeling) are not subject to mandatory energy efficiency standard compliance. However, if the work falls under extension/renovation, compliance is required for that part. It is important to determine whether the work is remodeling or extension/renovation, so we recommend confirming with the designer.
Q. What happens if I neglect inheritance registration?
If you fail to apply within three years without justifiable reason, you may be subject to a fine of up to 100,000 yen. Additionally, if registration remains incomplete for a long period, inheritance relationships become complicated, creating a risk that future sale or utilization becomes extremely difficult. We recommend prompt action.
Q. How should real estate owners prepare for these legal reforms?
First, check whether your property's registration information is up to date. If there have been address changes or inheritances, proceeding with the procedures before the April 2026 mandatory enforcement would be advisable. Regarding energy efficiency standards, as they may affect future sales or renovation, it is useful to understand the energy efficiency performance of your property.
