Japan’s condo repair-reserve problem is no longer just a future worry. More owner associations are already borrowing money to get major repair work done.
In FY2025, loans through the Japan Housing Finance Agency’s Mansion Sumai-ru Loan, reached about ¥40.6 billion on an accepted-application basis. That was a record high, up 58% from the previous fiscal year. Compared with 10 years earlier, the amount has grown to nearly four times the level, while accepted cases rose to 936, about 2.4 times higher than a decade ago.
A Tokyo condominium with around 50 units shows how quickly the numbers can get ugly. The building had about ¥40 million saved in repair reserves, but serious exterior wall problems pushed the repair cost to around ¥120 million. The owners’ association borrowed roughly ¥80 million in 2025. Some of that was later repaid early after compensation from the construction company, but several tens of millions of yen in debt remained, and the building is now raising repair reserve fees to pay it back.
That is the uncomfortable part of condo ownership people do not always think about. Large-scale repairs eventually arrive. Exterior walls, waterproofing, shared pipes, and other common areas all need work at some point. If the money was not saved in advance, the building still has to find it somewhere.
The cost side is where the pressure really starts. Large-scale repair costs in the Tokyo metropolitan area rose by just under 20% over the four years through 2025. A national FY2023 survey found that 36.6% of condominiums already had repair reserve funds below the amount assumed in their repair plans. Since costs have continued rising since then, plenty of buildings are probably under more pressure now than their current documents make obvious at first glance.
The timing has been rough too. Materials remain expensive, and some supply issues and price pressure tied to the Middle East situation have not fully disappeared. Even if those factors fade, labor shortages are still a structural problem. Owners hoping repair costs will simply drop back down may be waiting for something that never really comes.
COVID seems to have widened the gap as well. Many condominiums now raise repair reserve fees gradually every five years or so, but from around 2020 to 2022, some owners’ association activity slowed because of infection concerns. Fee increases were often delayed. Then costs kept rising anyway.
New condos are not immune either. Developers naturally want the monthly costs to look manageable, especially when new condo prices are already high and mortgage rates are rising. So repair reserve fees are often set lower at first, with the expectation that they will be raised later.
That sounds fine until the building is actually full of owners who have to vote on the increase. Once people are already paying their mortgage, management fee, repair reserve fee, taxes, insurance, and everything else, raising monthly costs can become a very hard sell. Some buildings manage it. Others do not.
So a low repair reserve fee is not always the bargain it appears to be. Sometimes it means the building is efficient and well planned. Other times, it means future owners are being handed a bill that has not arrived yet.
There are also situations where borrowing is the responsible choice. If exterior walls are deteriorating, ignoring the problem can create safety risks for residents and people walking nearby. A building that delays necessary repairs can also become much harder to sell in the resale market, hurting the value of individual units.
The problem is that borrowing is becoming more painful as interest rates rise. Some buildings may end up stuck between repair work they cannot avoid, reserve funds that are too low, and repayment terms that are hard to carry. If enough buildings fall into that situation, this becomes more than a private problem for condo owners. It becomes a neighborhood problem too.
The repair market itself is not exactly reassuring right now either. Many construction companies are expected to receive cease-and-desist orders from the Japan Fair Trade Commission over alleged Antimonopoly Act violations in large-scale condominium repair work. If inflated costs or improper margins have been added to repair projects, that only makes the reserve shortage problem worse. Unfortunately, it is hard to assume the market will clean itself up overnight.
Buildings that are not borrowing yet do not get to ignore this. Japan’s existing guideline has generally suggested reviewing the long-term repair plan and repair reserve fund around every five years, but costs are moving quickly. A five-year rhythm can feel a lot slower when repair estimates keep climbing. Management associations may need to ask their management company or outside specialists whether the current plan still works under today’s costs, not the costs assumed several years ago.
Some buildings may need to trim or adjust the repair plan, especially if taking out a loan. But this is not something to guess at in a meeting because everyone wants the number to be lower. Cutting the wrong work can create a more expensive problem later, so any reduction needs to be based on a proper specialist inspection.
One longer-term idea is to stretch the repair cycle itself. Instead of doing major repairs roughly every 12 years, some buildings are looking at something closer to 18 years. Over a 60-year period, that could mean around three major repair cycles instead of five, with savings that can reach hundreds of millions of yen in some cases. The catch is obvious enough: longer cycles require higher-durability materials, proper expert review, and more planning in advance. The long-term total may fall, but each individual repair project can cost more.
This matters a lot for anyone buying a used condo in Japan. The room, view, station distance, and monthly fees are only part of the picture. Before buying, the repair history, current reserve fund, long-term repair plan, and any owners’ association debt all need to be checked. A unit can look cheap for a reason, and sometimes that reason is hiding in the building’s finances.
For new condos, the initial repair reserve fee deserves a closer look too. If it is far below national guideline levels, the question is not only whether the payment is affordable now. The question is whether it will still be affordable after future increases, especially if mortgage rates and other ownership costs are rising at the same time.
Nobody falls in love with a repair reserve fund. But in Japan’s aging condominium market, the building’s finances can affect your real cost of ownership just as much as the purchase price. And if you happen to be looking for advice on what sort of mansion (or house!) is right for you, Dovetail would be happy to help.
Source: https://www.nikkei.com/article/DGXZQOUB199EE0Z10C26A6000000/?n_cid=SNSTW001&n_tw=1783133542