The Merits Of Japanese Zoning System

Almost everywhere in the developed as well as the developing countries, property prices have risen in the past few decades. For instance, as Indian cities have grown in population, housing prices have risen since Independence, too.  But, Japanese cities are an exception.

Tokyo, for example, which has over 13 million people now, a population that has grown significantly in the past 20 years, the housing prices have not risen. This is proof enough that rising population does not necessarily lead to rising housing prices. This applies to some Chinese cities like Shanghai, too, where the population has grown much in the past 30 years, but housing consumption has risen, too.  This is because the government largely lets people take a decision when it comes to real estate development.

Unlike in India, the right to property in Japan is protected by the Constitution. In India, the right to property is not a fundamental right. Under certain circumstances, the government can deprive people of their property. Moreover, property rights are often not clear or secure. Constitutional protection of property rights play a large role in making housing affordable. But this does not fully explain why housing remains affordable in Japan.

There was a property boom in Japan from 1986 to 1991, but while dealing with the aftermaths of the boom, the government made the regulatory framework more favourable to developers and homebuyers. Regulations were weakened and it became easier to get building permits and other approvals from the government. It also became easier to rezone land. For example, it became easier to build houses on land zoned for building office buildings. Such flexibility is very important in making housing cheaper.

In Japan, the national government creates zoning laws. So long as property owners abide by zoning regulations, their right to property is protected. Unlike in India, private real estate developers or local, state or national governments cannot forcefully buy or seize privately-owned land.

Cities are allowed to implement these laws and take many independent decisions, but cities are still expected to follow the zoning code made by the national government. This, of course, has limitations. This impedes innovation on a local level. In many situations, it is better to leave local problems to local governments. But unfortunately, local governments rarely have the expertise to devise zoning codes. So, the national government is in a better position to formulate zoning laws which are more efficient, and conducive to affordability of housing.

In Japan, a city is not divided into too many zones, as it is done in United States and many other countries. Moreover, zoning regulations are weaker, and more efficient. For example, in a light industrial zone, houses can still be built.  But, building a factory in a residential zone is not allowed. This depends on how much of a negative impact a certain form of construction can have in a particular zone. So, zoning laws are very flexible, unlike in India and many developed countries.

Similarly, limits on building heights are not arbitrary, as it is in India. There are limits on how tall developers can build, but such rules are more sensible. For example, one good argument against building tall is that tall buildings can block sunlight. But even two-storey buildings can block sunlight if buildings are situated very close to each other. Building height regulations in Japan take such facts into account and do not impose regulation just for the sake of restricting the legitimate choices of people.