The General Election and Real Estate

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There is certainly a lot of talk about the General Elections going round. Who are you backing? The incumbent LDP with Asso (drop the "o" for effect) or the DPJ who are promising cash for everyone?

Well from a Real Estate perspective, there are alot of agents out there that going to be voting for Asso to get back in. Yes, anyone involved in buy and sell is probably sensible to vote LDP.

Why? Well, the good old DPJ, in an addendum to their "manifest", are claiming to "clean up" the real estate industry by making it illegal to take commissions from both the buyer and the seller in a real estate transaction. Under the current Japanese law, real estate agents in a buy/sell transaction are able to take 3% + 60,000 yen from each of the buyer and the seller in a transaction. The DPJ have probably read an article on how things are done in the US, and are claiming to put a stop to this, and only allowing a qualified real estate agent to work one side of the transaction.

This is wonderful news for agents involved in buy / sell transactions that make up about 90% of all transactions in Real Estate in Japan. Not only are agents struggling to get by in the current economy where currently there are very few transactions as banks are not willing to finance anyone, but now the DPJ is taking away potentially half of their revenue in a transaction......Even when the property market does begin to recover, what does this do for the Real Estate industry of Japan? Pretty much nothing....... It doesn't create any benefit to anyone, as the pie remains the same. It just increases the hands in the pie, which we all know creates nothing but inefficiency (and already there are enough hands in the pie in Japan!).

What will happen if such a new law is passed? Well every real estate company is going to run around and set up an additional dummy company to get around the law. More companies...... less profits in each, less tax collected from the Real Estate industry.....Does the end user or buyer win? No, they still pay the same fees. Does the seller win? No, they still pay the same fees..... Sounds like an incredibly good idea from the DPJ! Certainly not a win, win, win situation!

From what I understand from the information available, this law won't effect us in the rental sector. However, if the DPJ ideas extend to residential property and commercial office rental and Japanese Real Estate Law is policed more strictly so that payments can only be received on one side of the transaction, we are going to see significant movement and changes in the market for real estate agents from each end of the spectrum. Significant negative movement, which will result in further unemployment.

Are the DPJ really thinking of the future of the Japanese economy? I would question any party that makes increasing "domestic demand" a priority, when the population of Japan, working population in Japan, birth rates, and the number of households (will decrease last) are all falling or will fall considerably in the near future. What possibility is there of raising "domestic demand" in Japan under these circumstances? Surely, Japan is better to look to the rest of the world, and how they can use their technology and R&D to meet demand in developing countries through exports and producing product in those countries. Sorry, but the DPJ is dreaming and Japan is in danger of further digging a hole for themselves by voting for this party. I just don't feel good about any of Japanese politics!