As an apartment building ages, attracting tenants becomes more difficult and the risk of vacancies rises. Renovation is an effective way to maintain asset value and address vacancies, but the cost burden is a challenge.
In this article, we explain in detail the advantages and disadvantages of apartment renovation, typical costs, renovation work that is likely to qualify for subsidies, and subsidy programs you can use. We also introduce practical ways to reduce costs and available tax incentives, so we hope you will find it useful.
What are the benefits of renovating an apartment building?
The greatest benefits of apartment renovation are that it can reduce vacancy risk and improve property value at a lower cost than rebuilding.
Easier to avoid vacancy risk
Properties with an attractive exterior and interior and well-equipped facilities can lead to an increase in prospective tenants. As occupancy rises, income becomes more stable, making it possible to recover renovation costs.
Costs can be kept lower than rebuilding
While rebuilding can cost tens of millions of yen, renovation may sometimes be handled for around 1 million yen. If there are no structural problems with the building, renovation may provide sufficient improvement.
What are the disadvantages of apartment renovation?
Renovation offers benefits, but there are also points to keep in mind, such as reduced income during the construction period and limited growth in asset value.
Income stops during construction
During the renovation period, tenants cannot continue living in the unit, so income declines accordingly. It can also be effective to renovate while keeping some rentable space available.
Increases in asset value are limited
Even if you spend 1 million yen on renovation, that does not mean the asset value will rise by 1 million yen. Keep the scope to the minimum necessary and carefully assess cost-effectiveness before proceeding.
What is the typical cost of apartment renovation?
Renovation costs vary significantly depending on the scope of work. Below is a summary of typical price ranges by major type of work.
Exterior walls
- Exterior wall painting: 1.2 million to 3 million yen
- Balcony waterproof coating: 2,750 to 7,000 yen per square meter
Exterior renovation also contributes to greater building durability and creates a positive impression for tenants.
Interior
- Wallpaper replacement: 1,000 to 1,500 yen per square meter
- Japanese-style room to Western-style room (6 to 8 tatami mats): 500,000 to 1 million yen
- Tatami to flooring (6 to 8 tatami mats): 150,000 to 600,000 yen
- Layout change (approx. 33 square meters): 800,000 to 1.6 million yen
Even simply installing new wallpaper can significantly improve the impression. Converting to flooring is also a renovation with strong demand.
Water-related areas
- System kitchen replacement: 400,000 to 800,000 yen
- Toilet replacement: 150,000 to 500,000 yen
- Unit bath replacement: 500,000 to 1 million yen
- Washstand replacement: 100,000 to 200,000 yen
What types of renovation work are likely to qualify for subsidies?
To reduce the financial burden of apartment renovation, it is important to understand the types of work that are likely to qualify for subsidies.
Eco-friendly renovation
This generally includes renovations related to energy saving and energy creation, such as insulation upgrades and the installation of solar power systems. In addition to national programs, some municipalities also offer their own subsidies.
Seismic diagnosis and seismic retrofitting
Properties that received building confirmation under the old seismic standards before May 1981 are eligible. An increasing number of municipalities also subsidize the cost of removing concrete block walls.
Barrier-free renovation
This covers improvements that create a living environment that is easier for older residents to use, such as installing handrails and eliminating level differences. The maximum grant amount is 200,000 yen.
Improving telework environments
Renovations that support telework, such as securing workspace and carrying out soundproofing work, also tend to be more likely to receive subsidies.
What are the main subsidy programs available?
Below are some of the representative subsidy programs available for apartment renovation.
Long-Life Quality Housing Renovation Promotion Project
This program supports energy-efficiency improvements and renovation work for households with children.
- Subsidy rate: 1/3 of construction costs
- Maximum amount: 1 million to 2.5 million yen per unit (depending on certification category)
- An inspection (property survey) is required
Insulation Renovation Support Program for Homes Using High-Performance Building Materials
This is a Ministry of the Environment program that subsidizes insulation renovation work using high-performance building materials.
- Subsidy rate: 1/3 of construction costs
- Maximum for apartment buildings: 150,000 yen per unit
Insulation Renovation Support Program for Existing Homes
There are two types: whole-home insulation and living-room-only insulation. For apartment buildings, the maximum is 150,000 yen per unit.
Nursing Care and Barrier-Free Renovation Subsidy
This is for people certified as requiring support or nursing care, and the maximum benefit is 90% of the standard limit amount of 200,000 yen (180,000 yen).
Demonstration Support Project for Next-Generation Energy-Saving Building Materials
For apartment buildings, you can receive a subsidy of up to 1.25 million yen per unit. The subsidy covers up to one-half of eligible costs, with a minimum subsidy amount of 200,000 yen.
What kinds of municipality-specific subsidy programs are available?
In addition to national programs, local governments also implement their own apartment renovation subsidy programs.
Tokyo: Energy-Efficiency Renovation Promotion Project
For upgrades to high-insulation windows and doors, you can receive a subsidy rate of 1/3, with a maximum of 1 million yen for windows and 160,000 yen for doors.
Tokyo: Tokyo Zero Emission Points
When replacing appliances with highly energy-efficient models, points are granted that can be exchanged for products.
Yokohama, Kanagawa Prefecture: Barrier-Free Improvement Support Project
For eliminating level differences in common areas and installing handrails, there is a subsidy of up to 300,000 yen.
What is the Housing Safety Net System?
The Housing Safety Net System is a program that uses privately owned vacant houses and vacant units to provide housing for people who need special consideration in securing housing, such as older adults, people with disabilities, and households with children.
- Subsidy amount: up to 1 million yen per unit
- Eligible work: barrier-free renovation, seismic retrofitting, layout renovation, and similar work
- Point to note: there is a management obligation of 10 years or longer
What are practical ways to keep renovation costs as low as possible?
To keep renovation costs under control, the basics are comparing estimates from multiple contractors and placing work orders together.
Request estimates from multiple contractors
Even for the same work, costs can vary significantly depending on the contractor. To avoid unscrupulous operators as well, be sure to obtain estimates from multiple companies.
Consolidate the work with one contractor
If you request multiple areas of work together, you may be able to reduce costs through package pricing. The quality of the finished work is also more likely to be consistent.
Also make use of tax incentive and financing programs
- Barrier-free work: income tax deduction up to 600,000 yen, 1/3 reduction in fixed asset tax
- Energy-saving renovation: income tax deduction up to 625,000 yen
- Financing programs: Flat 35 Renovation, Japan Housing Finance Agency renovation loans, and others
Related reading
Frequently Asked Questions (FAQ)
Q. Are there subsidies available for apartment renovation?
Yes. There are several programs, including the Long-Life Quality Housing Renovation Promotion Project (up to 2.5 million yen per unit), insulation renovation support programs (up to 150,000 yen per unit), and barrier-free subsidies (up to 180,000 yen).
Q. What is the typical cost range for apartment renovation?
Costs vary considerably depending on the work involved, such as 1.2 million to 3 million yen for exterior wall painting, 1,000 to 1,500 yen per square meter for wallpaper replacement, and 500,000 to 1 million yen for unit bath replacement.
Q. How can I keep renovation costs down?
Effective measures include comparing estimates from multiple contractors, using package pricing through consolidated orders, and making use of subsidy and tax incentive programs.
Q. What is the Housing Safety Net System?
It is a system under which you register a property for people who need special consideration in securing housing and can receive up to 1 million yen per unit in subsidies for necessary renovation work. However, there is a management obligation of 10 years or longer.
