JAPAN Law and Practice Contributed by: Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada
1.3 Proposals for Reform In 2024, amendments to the Construction Business Act were passed by the National Diet. These revisions aim to secure a stable workforce in the construction industry by introducing measures to: • secure wage resources for the improvement of the treatment of workers in the construction industry and their dissemination to subcontractors; • reduce the burden of labour costs on contractors by facilitating the transfer of increases in the price of materials to contract prices; and • promote work style reforms and productivity improvements. These amendments include provisions prohibiting contractors from entering into construction contracts that fall below cost unless there are justifiable reasons and obligations regarding the adjustment of contract prices due to price fluctuations. These amendments can affect practices related to claims for increased contract prices due to materials and labour cost increases, which have been significant issues in recent negotiations and have caused disputes between own - ers and contractors. In 2024, draft revisions to the Act on Building Unit Ownership, etc, were under discussion. The pro - posed revisions included the relaxation of the major - ity requirement for resolutions on reconstruction from four-fifths to three-fourths. If the revised bill is submit - ted and passed, it is expected that the reconstruction of deteriorated condominiums will progress. Moreover, the government seems to be moving towards tightening regulations on real estate crowd - funding, a business model that offers the public subdi - vided interests in real estate investment funds through online platforms. These funds are typically structured as a specified joint real estate venture regulated under the Act on Specified Joint Real Estate Ventures. How - ever, there is concern that licensed operators may engage in improper offerings or management of real estate investment funds, potentially harming individ - ual investors. The Ministry of Land, Infrastructure, Transport and Tourism established an expert study group to review
the existing regulations. On 1 August 2025, the study group published an interim report which recommend - ed: • enhancing information disclosure for general inves - tors; • ensuring fairness in the sale price and other terms of the underlying real estate; • strengthening the supervisory functions of adminis - trative authorities; and • considering self-regulatory rules in collaboration with industry associations. In the Japanese market, the most common subject properties or interests for investment purposes are currently: • ownership (equivalent of fee simple absolute) of the land or the building, or both; • a combination of the right to use the land (lease - hold interest or superficies) and fee simple owner - ship of the building; • co-ownership (kyo-yu) of the land or the building, or both; and • a combination of co-ownership of the land and unit ownership of private units in a multi-unit building. Co-ownership refers to a type of ownership where one person owns a certain percentage interest in the entire property and other owners own the remaining percentage interests. 2. Sale and Purchase 2.1 Categories of Property Rights Unit ownership is a form of ownership recognised for multi-unit buildings under the Law on Unit Ownership of Buildings. A unit owner is entitled to: • own exclusive private units in the building; and • own and use common areas (such as the entrance hall to the building) jointly with other unit owners and to use the underlying land in the form of co- ownership, leasehold interests or superficies. In addition, many real estate properties are held under trust arrangements, meaning the investor will
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