In recent homebuilding, "Long-Term Quality Housing" has become the mainstream. While benefits such as tax incentives and lower mortgage interest rates attract attention,disadvantages that are easy to overlook, such as costs, application burdens, and construction quality risksalso exist. This article explains the certification standards, advantages, and disadvantages of Long-Term Quality Housing from practical and investment decision-making perspectives.
What Is Long-Term Quality Housing? An Overview of the Certification Standards
Long-Term Quality Housing refers to housing certified under the Act on the Promotion of Dissemination of Long-Term Quality Housing established by the Japanese government.a legal certification system recognizing that a home has the performance and management framework needed to remain in good condition over the long termand it must satisfy the following four basic requirements.
- Having structures and equipment suitable for long-term use
- Giving consideration to the living environment
- Having a unit floor area above a specified minimum
- Having defined periods and methods for maintenance and preservation
Seven Evaluation Items and Specific Certification Standards
To obtain certification, the following seven evaluation items must be satisfied.
| Structural stability | Seismic grade 2 or higher (grade 1 is also acceptable under certain conditions) |
| Thermal environment | Insulation performance grade 4 or higher |
| Deterioration countermeasures | Deterioration countermeasure grade 3 or higher |
| Ease of maintenance and renewal | Maintenance management countermeasure grade 2 or higher |
| Consideration for elderly people, etc. | Elderly consideration countermeasure grade 3 or higher |
| Energy efficiency | Insulation performance grade 4 or higher |
| Living environment | Conforms to district plans, etc. |
What Tax Incentives and Subsidies Are Available for Long-Term Quality Housing?
By obtaining certification as Long-Term Quality Housing,asset-building strategyalso becomes more advantageous from a tax perspective.
Main Tax Incentives
- Mortgage tax deduction: higher eligible borrowing limit than standard housing
- Real estate acquisition tax deduction: more favorable deduction amount than standard housing
- Registration and license tax: reduced tax rate
- Fixed asset tax: tax reduction period is twice that of standard housing (detached houses: 5 years→7 years, condominiums: 7 years→10 years)
Lower Mortgage Interest Rates
フラット35S becomes available,reducing the borrowing interest rate by 0.25% for the first 10 years. With long-term loans, this creates a significant difference in total repayments.
Subsidy Program
Subsidies under the "地域型住宅グリーン化事業" (up to JPY 1.1 million) are also available. Because eligibility depends on contributing to regional economies and reducing environmental impact, the conditions should be confirmed in advance.
What Are the Disadvantages of Long-Term Quality Housing? Three Risks That Are Easy to Miss
Long-Term Quality Housing offers many advantages, but you should also consider the following disadvantages when making investment or purchase decisions.
1. Time and Cost of Application Procedures
Preparing application documents and obtaining certification require considerable time and effort. You can ask a homebuilder to handle the application on your behalf, but additional fees will apply.the application must be submitted before construction beginsand schedule management that accounts for the time required to obtain certification is essential. There is also a reporting obligation to the competent administrative authority after construction is completed.
2. Higher Construction Costs
To satisfy the certification standards, it is necessary to improve the performance of structures and equipment,making construction costs higher than for standard housing. It is important to quantify the balance between tax incentives and reduced running costs on one hand and the increase in initial investment on the other.
3. No Inspection Framework During Construction
Certification for Long-Term Quality Housing is completed through an application at the design stage.there is no third-party inspection during construction, so there is a risk that construction defects may only be discovered after certification has been obtained. In a construction industry where labor shortages have become routine, buyers themselves need to consciously verify construction quality.
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- Asset Strategy in a "World with Interest Rates" | Which Assets to Buy and Sell in the Era of a Shrinking Yield Gap
- Why Is Real Estate Investment Difficult? Explaining the Three Barriers of Tax, Legal, and Construction Expertise
FAQ: Frequently Asked Questions About Long-Term Quality Housing
Q. Where do you apply for certification for Long-Term Quality Housing?
You need to apply to the competent administrative authority (prefecture or some municipalities). You can also ask a homebuilder or contractor to handle the procedure, but filing before construction starts is a mandatory requirement.
Q. How much lower is the fixed asset tax if the home is certified?
For detached houses, the fixed asset tax reduction period is extended from 5 years to 7 years, and for condominiums from 7 years to 10 years. The amount of the tax reduction depends on the assessed value for fixed asset tax purposes.
Q. Is Long-Term Quality Housing advantageous when selling an existing home?
The fact that certification was obtained has value as proof of the property's quality. However, maintenance records must be preserved even after certification, and the condition of management affects asset value.
Q. What happens if construction defects are discovered?
The main remedy is to pursue defect warranty liability and contractual nonconformity claims against the contractor. Because there is also a risk that Long-Term Quality Housing certification may be revoked, we recommend actively checking the site during construction.
Q. Can an existing home (used home) also receive certification as Long-Term Quality Housing?
Even an existing home can be certified if it meets certain standards under a dedicated system (existing-home version). However, because the application requirements are more complex than for new construction, consultation with a professional is necessary.
