Some municipalities carry out the housing projects where they rent vacant private houses from homeowners, renovate them and sublease to migrating people as a part of policies for promoting the migration. While families migrating into rural areas usually want to rent a house rather than purchase, private rental housing stock and realtors are usually not available sufficiently there. With intent to supply new housing, some municipalities started such a sublease project rather than developing new public housing by investing lots of money.
In this paper, the authors explore cases of the housing projects utilizing private vacant houses implemented by the three towns; Iinan town, Yusuhara town (as cases of sublease projects) and Okuizumo town (as a case of project buying and leasing vacant houses) to clarify characteristics and challenges of the sublease projects.
In spite of low or no rent paid by the municipalities, the homeowners are content in a renovation conducted at municipalities’ expense. Many of the leased houses are aged over 40 years and were renovated with the renewal of household equipment, repair interior finishing, and, in some cases, seismic and insulation reinforcement. Basically, the renovation works cost from 5 million to 8 million yen and cannot be put into practice without the subsidy from the national government and the prefectures.
Nevertheless, as sublessors, the municipalities had to make a long-term contract of ten years to recover their investments with low rent difference. Meanwhile, they promise homeowners to return their houses on termination of contracts by a fixed-term lease contract, which builds a sense of ease for them.
Analyzing contractual descriptions of the lease agreements in the projects, there are the provisions to preserve the municipalities’ claim of penalty for mediate cancellation and to exempt the obligation for restoration to the original state. They are the provisions very characteristic to the project scheme where renovation is conducted at the expense of a municipality as sublessor. However, there were no clear provisions concerning the responsibilities of repair or maintenance in the master lease arrangements of the two towns. In the first place, rent paid to homeowners was very low or free, and, presumably, the municipality thought it was difficult for homeowners to bear costs for repairs. Thus, municipalities bear all the repairs due to leaks, damages and malfunctions of equipment. In fact, the increase in cost for repairs has become a big issue for Iinan town. It regards over-concentrated responsibility for repairs and maintenance as high risk and has no idea to recontract with the homeowners and continue the project, developing new public housing instead.
The sublease partnership utilizing vacant houses is found to be beneficial to not only a migrant (tenant) but also a homeowner (lessor) and a municipality (sublessor). Particularly, in the rural areas where rental housing stock and realtors are not available sufficiently, it is a more economically efficient approach compared to new construction of public housing and project buying and leasing vacant houses. However, a municipality bears the responsibilities of repairing and maintaining houses excessively in addition to renovation cost and vacancy risks. To make the partnership more sustainable, it is important to consider dispersing the risks among the parties and to select a house in better condition.