Kyoto's Vacant House Tax and Its National Ripple Effect — Can Tax Policy Reduce Empty Homes?
Kyoto City will introduce Japan's first vacant house tax (Non-Resident Housing Utilization Promotion Tax) starting FY2030. The residential land tax exemption has incentivized vacancy retention for 30 years. This column compares the Kyoto model with the 2023 Special Measures Act amendment, the UK's progressive Council Tax Premium, and France's TLV to structurally analyze the potential and limits of tax-based approaches to the vacancy crisis.
TL;DR
- Kyoto's 'Non-Resident Housing Utilization Promotion Tax' is set to begin in FY2030, the first statutory extra-legal tax directly targeting vacant houses in Japan
- The residential land tax exemption creates a perverse 'demolition penalty' that has structurally sustained the growth of 9 million vacant houses for 30 years
- Compared to the UK's progressive premium (up to 400%) and France's TLV (mandatory across 3,697 municipalities), Japan's tax-based intervention remains limited in scope
What Is Happening
Kyoto introduces Japan's first vacant house tax starting FY2030, the first attempt to tackle the structural tax exemption problem through direct taxation
Japan's vacant houses reached 9 million units, a vacancy rate of 13.8%, both all-time highs. Of these, 'other vacant houses' with no plans for rental or sale — effectively abandoned properties — number 3.85 million. According to Nomura Research Institute projections, even with current measures, the vacancy rate will reach approximately 18.3% by 2033 and roughly 25% by 2043. A future where one in four homes sits empty is no longer hypothetical.
Why do vacant houses keep multiplying? The structural cause, detailed in "The Structure of 9 Million Vacant Houses", lies in the residential land tax exemption, which creates a perverse incentive to leave houses standing. Property tax on land with a residential building is reduced by up to one-sixth, but demolishing the building removes this exemption, causing tax bills to jump by up to roughly six times. Even for a dilapidated, uninhabited house, keeping the structure is the rational economic choice.
One municipality has now taken aim at this structure through taxation. Kyoto City's "Non-Resident Housing Utilization Promotion Tax" is the first statutory extra-legal tax in Japan to directly tax vacant houses. The ordinance was passed in March 2022, and the Minister of Internal Affairs granted consent in March 2023. Originally scheduled to begin in FY2026, the start date was postponed due to system development and is now set for FY2030.
Tax-based approaches to vacant houses are not unique to Kyoto. At the national level, the 2023 amendment to the Vacant Houses Special Measures Act enabled exemption removal for management-deficient vacant houses. Internationally, the UK and France have accumulated decades of experience with vacant property taxation. This column analyzes the Kyoto model's design, international precedents, and the prospects and limits of national diffusion through the lens of tax-based approaches.
Background and Context
The exemption trap, the Special Measures Act's reach, and UK/France precedents reveal the diversity of tax-based approaches
The Exemption Trap
Understanding the structural cause of vacancy growth requires a precise grasp of the residential land tax exemption mechanism.
For small-scale residential land (200 square meters or less), the property tax base is reduced to one-sixth of the assessed value. Land exceeding 200 square meters still receives a one-third reduction. Because this exemption applies to "land with a residential building," it remains in effect even when no one lives there, as long as the structure stands. Demolishing the building removes the exemption, causing the tax burden to spike.
Demolition costs for wooden houses run between 1 million and 1.5 million yen, with steel-frame and reinforced concrete structures costing even more. For owners, demolition means both higher taxes and demolition expenses — a double penalty. The result: "doing nothing" becomes the most rational choice, and this structure has promoted the accumulation of vacant houses for 30 years.
Chie Nozawa, author of 『老いる家崩れる街 : 住宅過剰社会の末路』(Aging Houses, Crumbling Cities: The Fate of a Housing-Surplus Society), points out the structural paradox of a "housing surplus society" where roughly 800,000 new homes are built annually despite population decline. The residential land tax exemption, originally designed to promote habitation, has become a perverse incentive for vacancy retention in a shrinking population.
The Kyoto Model in Detail
Kyoto's Non-Resident Housing Utilization Promotion Tax targets "non-resident housing" (dwellings where no one has registered residence) within the city's urbanization promotion area. Taxation follows a dual structure covering both buildings and land.
| Tax Base | Rate |
|---|---|
| Building (building value component) | Assessed value × 0.7% |
| Land (land value component) | Assessed value × 0.15–0.6% (3 tiers by location) |
The building tax is designed to approximate half of the standard property tax (assessed value × 1.4%). During the first five years, buildings with assessed values below 1 million yen are exempt as a transitional measure (the permanent threshold is 200,000 yen). Properties used for business purposes and designated landscape buildings are also excluded.
An estimated 15,000 dwellings are potentially subject to taxation, of which approximately 2,200 are vacation homes or second residences. Kyoto's vacancy count stands at roughly 110,000 units with a vacancy rate of 14.1%, exceeding the national average. Height restrictions (maximum 31 meters) make high-rise condominium development difficult, and the average price of new condominiums in Kyoto Prefecture rose 30.6% year-on-year in 2024, topping the Kinki region. Against the structural problem of younger and child-rearing generations leaving the city, the tax aims to channel vacant houses into market circulation.
However, since taxation does not begin until FY2030, no post-implementation quantitative data exists. While inquiries about selling or renting vacant properties reportedly increased after the ordinance was passed, many owners report that "even with the intention to utilize, finding buyers or tenants is difficult." Whether taxation alone will drive market circulation awaits post-implementation evidence.
The Reach of the 2023 Special Measures Act Amendment
At the national level, institutional responses are advancing in parallel. The 2023 amendment to the Vacant Houses Special Measures Act, which took effect in December 2023, established a new category of management-deficient vacant houses as a precursor to specified vacant houses.
The core of the amendment is that a recommendation issued to a management-deficient vacant house now triggers removal of the residential land tax exemption. Previously, exemption removal was limited to specified vacant houses posing risks of collapse or sanitation hazards. The scope has now expanded to houses with inadequate maintenance such as broken windows or walls. Land under houses receiving recommendations loses the residential land tax exemption from January 1 of the following year. The resulting property tax increase can be up to roughly threefold.
Yet this system faces an enforcement capacity wall. Addressing 3.85 million abandoned properties nationwide through individual municipal recognition of management-deficient status and graduated measures requires enormous manpower. The institutional framework is being developed, but the limitations of a "one house at a time" approach are clear.
Precedents in the UK and France
Tax-based approaches to vacant houses are more advanced in the UK and France than in Japan.
The UK's Council Tax Premium adopts a progressive structure where the surcharge rises with vacancy duration: 200% of normal (100% premium) for 1–5 years, 300% for 5–10 years, and 400% for over 10 years. From April 2025, English local councils can also levy up to a 100% premium (200% of normal) on second homes. Because the premium is immediately removed upon re-occupation, the system explicitly designs in the "cost of holding" a vacant property.
France's TLV (Taxe sur les Logements Vacants) is a national law that mandates taxation on unfurnished dwellings vacant for over one year in housing-stressed zones (zones tendues) with populations exceeding 50,000. The rate starts at 17% of the rental assessed value in the first year. In 2024, the number of municipalities subject to TLV was dramatically expanded from 1,100 to 3,697. Starting in 2027, TLV and the optional local THLV will be unified into a new tax called TVLH. TLV revenue is channeled to the national housing agency (Anah), serving as a funding source for housing supply.
Compared with Japan's current state, three structural differences emerge. First, the presence of progressivity: both the UK and France have mechanisms where rates vary according to vacancy duration or regional housing demand, while the Kyoto model uses a flat rate. Second, the breadth of coverage: the Kyoto model is confined to a single municipality, whereas the UK framework is available to all councils and France's applies by national law across housing-stressed areas. Third, institutional history: the UK has operated vacant property taxation since the 1990s and France since 1999, accumulating decades of refinement and impact evaluation. Japan's tax-based approach has barely begun.
Reading the Structure
The Kyoto model's diffusion potential and limits, and the connection to inheritance and unknown-owner problems that taxation alone cannot solve
Three structural themes emerge from this analysis.
Can Taxation Change Behavior?
The Kyoto model's greatest significance is that it adds a "costly to keep" incentive on top of the existing "costly to demolish" structure created by the residential land tax exemption. While previous vacancy measures centered on subsidies and administrative guidance to "promote utilization," the Kyoto approach differs qualitatively by using taxation — a certain cost burden — to drive behavioral change among owners.
Yet taxation has limits. Among the roughly 15,000 taxable properties, some owners who wish to sell or rent simply cannot find buyers or tenants. Properties in poor locations, those with unresolved boundary issues or incomplete inheritance registration, are difficult to circulate regardless of tax pressure. Taxation effectively makes the "cost of holding" visible, but it cannot function without parallel efforts to create the conditions for market circulation.
From 'One at a Time' to 'Area-Wide'
The shared limitation of both the Special Measures Act amendment and the Kyoto model is that intervention in the vacancy problem remains at the level of individual properties. The Act amendment delegates management-deficient designations and graduated measures to each municipality, an approach that does not scale across 3.85 million abandoned houses. Kyoto's tax covers only about 15,000 units.
What the UK and French models suggest is the importance of area-wide institutional design. France's TLV designates housing-stressed zones nationally and applies uniformly across 3,697 municipalities. The UK's Council Tax Premium is established as a framework available to all local councils. Neither requires identifying individual vacant houses; instead, they impose an institutional cost on the state of "being vacant," reducing dependence on administrative manpower.
Achieving a similar area-wide approach in Japan may require revising the property tax system itself, rather than relying on extra-legal taxes. Possibilities include automatically restricting the residential land tax exemption after a set period of non-residence, or combining such measures with new-construction controls in high-vacancy areas.
Problems Beyond the Reach of Taxation
The domains where tax approaches are effective and where they are not must be clearly distinguished.
Taxation works when owners can "make behavioral choices based on rational economic calculation." For owners who can weigh the cost of holding against the returns from selling or renting, tax is a powerful motivator.
However, structural problems exist that taxation cannot address. Properties where inheritance registration remains incomplete and owners cannot be identified; properties with dozens of heirs making consensus impossible; properties where inheritance has been renounced yet management obligations remain. These are difficult even to designate as tax targets.
The number of inheritance renunciations reached 260,497 in 2022, an all-time high, and the trend continues upward. Mandatory inheritance registration took effect in April 2024 (non-compliance incurs a fine of up to 100,000 yen), but for properties that have gone unregistered across multiple generations, the mandate alone cannot resolve the problem. Unknown-owner land is projected to reach approximately 7.2 million hectares by 2040, with cumulative economic losses estimated at 6 trillion yen. For scale, Hokkaido's main island covers roughly 7.8 million hectares.
Tomohiro Makino, author of 『新・空き家問題 2030年に向けての大変化』(The New Vacant House Problem: Major Changes Toward 2030), warns that after 2030, even the greater Tokyo area will enter a phase of rapidly increasing vacancies. What has been perceived as a rural problem will become an urban one. Without advancing tax-based approaches and reforms to inheritance and property-ownership systems in parallel, the upward trajectory of vacancy cannot be reversed.
The vacant house problem is simultaneously a housing policy issue and a question of institutional design around "what ownership means." The Kyoto model is the first concrete answer to that question. After taxation begins in FY2030, every municipality in Japan will be watching to see what effect it produces.
Related Guide
Related Column
References
Kyoto City Non-Resident Housing Utilization Promotion Tax Overview (2025)
Overview of Kyoto City's Statutory Extra-Legal Tax (Non-Resident Housing Utilization Promotion Tax) (2023)
Amendment to the Act on Special Measures Concerning Promotion of Measures Against Vacant Houses (2023)
Results Summary: 2023 Housing and Land Survey (2024)
Why Am I Paying an Empty Homes Premium on My Council Tax? (2024)
Taxe sur les logements vacants (TLV) (2024)
Projections of Vacant House Numbers and Rates in Japan for 2033 (2024)
