Owning a Condo Unit in Japan. Repair Reserve Fee Guide

We have already got familiar with some peculiarities of the Japanese homeowning, especially considering condo unit ownership, so you may remember such terms as management fee and repair reserve fee. Let's get more fluent about the latter one!

Management fee us a monthly fee charged by your management company which is used for keeping the building common area clean and all of the systems and services working without failures. As you may understand, that means your management fee covers cleaning, elevator and emergency equipment inspections and sometimes weed control expenses if you have a small green area around your property. But what about the repair reserve fee? We'll try to explain the whole system, so prepare for a detailed guide.

Any condo unit owner is monthly charged with a repair reserve fee which goes to the repair reserve fund serving some sort of piggybank for future building maintenance and major repair works. Namely, exterior repair works, rooftop and leakages repairs, earthquake retrofitting system update, plumbing system repairs, parking lot repair or expansion works and even post natural disaster damage repair works. So, as you may see, this fee is important for keeping your investment property in a good state.

If you look through the repair reserve fee estimates for different condo buildings in Japan, the prices vary extremely from almost zero-yen fee to quite a serious sum. The amount is being calculated according with the building's long-term repair plan initially set by the condominium sales company at the time of unit sales start. Sometimes it isn't a surprise when with the flow of time the monthly repair reserve fee rises dramatically. On the average, the fee tends to rise by about 2% each year.

According to the Ministry of Land 2018 year survey, the average monthly repair reserve fee is around 12 000 yen (approximately $ 85) while the average monthly management fee is around 10 000 yen (approximately $ 70) so the condo unit owner is expected to be charged with around $ 150 each month. The positive point here is that renting out your property means that the management fee may be covered by your tenants.

The 2021 year guidelines set by the Ministry of Land recommend to set an average fee around 300 yen (around $ 2) per square meter. According to these guidelines, the sum may also vary depending on the building age, number of floors etc. Another detail which may change the monthly repair reserve fee is a parking lot settings such as car elevator implementation and parking lot floor number. So, if you own a condo unit with a parking lot, be ready to be charged with 16 000 ~ 20 000 (approximately $ 114 ~ 142) yen monthly.

You may wonder why the fee rises if there is a set long-term management plan for each building and even a formula recommended by the authorities. There were no legal regulations to guide the building management long-term repair plans making up until 2008. When the first Ministry of Land official guidelines were issued, many construction management associations taking care of the condominium buildings decided to revied the already set long-term repair plans to fit the new recommendations. At that point a really big issue appeared as many of those companies underestimated the yearly sum to be collected for the repair reserve fund.

Next question is how do you pay all of those fees. If you have a bank account in a local bank, you may request an monthly automatical deduction. But what should you do if you a foreign resident unable to open a bank account in Japan? There are several options. First, your management and repair reserve fees may be deducted from your rental income. Second, you may request an alternative payment method such as international transfer. Be aware that in this case you will be charged with extra foreign bank transfer fee. Third option is having the payments settled with the assistance of a Japanese real estate company. We are offering such services too so feel free to contact us.