HOUSING WARRANTY SCHEME INJAPANNOVEMBER 2023

The Foundation for Housing Warranty

Housing Warranty Scheme in Japan
The purpose of this series of notes is to help people who are interested in the Housing Warranty System inJapan. We hope this will contribute to a mutual understanding of the housing warranty system and housing
policies with people outside of Japan. The information described in this booklet is as of September 30, 2023.

Fiscal Year : One year from April to March
Housing business providers include home builders, suppliers or licensed real estate agents

Abbreviation

AEDWL
CHORD
HQAA
HQAS
JPA
LSCF
MC
MLIT
OWH
SDS

Act for Execution of Defect Warranty Liability under HQAAThe Center for Housing Renovation and Dispute Settlement Support
Housing Quality Assurance Act
Housing Quality Assurance System
Japan Prefabricated Construction Suppliers and Manufacturers Association
Large-scale Loss Compensation Fund
Ministry of Construction
Ministry Infrastructure, Land and Transportation
Organization of Housing Warranty
Security Deposit Scheme
2

Contents
1.

Background of the Housing Warranty System -----------------------------------------------------

P4

2.

Housing Quality Assurance System (“HQAS”) ------------------------------------------------------

P7

3.

Housing Quality Assurance Act (“HQAA”) -----------------------------------------------------------

P10

4.

Act for Execution of Defect Warranty Liability under HQAA (“AEDWL”) ---------------------

P11

5.

Securing Financial Resources under AEDWL --------------------------------------------------------

P12

6.

Defects Parts for which 10 years liability is mandatory ------------------------------------------

P18

7.

Inspection ---------------------------------------------------------------------------------------------------

P19

8.

Defects Liability Insurance Products ------------------------------------------------------------------

P20

9.

Completion Warranty Program ------------------------------------------------------------------------

P26

10.

Statistics of Defect Liability Insurance Products --------------------------------------------------

P27

11.

Safety Net of Housing Defect Liability Insurance --------------------------------------------------

P30

12.

Transactions of houses and defects liabilities ------------------------------------------------------

P33

13.

Housing Dispute Resolution System, Consultation and Advice --------------------------------

P34

14.

Link ------------------------------------------------------------------------------------------------------------

P39

15.

Reference ----------------------------------------------------------------------------------------------------

P403

1-1. Background of the Housing Warranty System••••

During 1955 to 1973, investments in the housing sector increased more than five times, and its shareagainst GDP stayed in the range of 6 - 9% (vs 3 - 4% at present).
Same time, housing demand showed an increase due to a shortage of housing, and many companies
launched prefabricated housing market.
In 1975, the housing bureau of the Ministry of Construction (“MC”), Ex-entity of Ministry of Land,
Infrastructure and Transportation (MLIT), formed the Study Committee of the Housing Warranty System.
At that time, the housing sector experienced an incremental housing defects due to short supply of
construction materials, lower quality of materials and works after the 1st Oil Crisis.

Diagram1 Housing Investment and its share against GDP• In 1976, MC provided a guidance of two-year warranty
system to the prefabricated housing industry considering
following situation:(1) Significant increase of population in cities(2) Rapid expansion of the residential areas surroundinglarge cities(3) Structural changes of housing industry

Structural changes:• In the past, housing supply was supported by mediumand small-sized companies in respective area, which
normally constructed five houses per year.
• During rapid economic growing era, people, who moved
to urban areas, faced with the difficulty to find qualified
builders as well as houses with reasonable price.
To meet growing demand, large companies supplying
prefabricated houses expanded their business rapidly.
41-2. Background of the Housing Warranty System••••

MC introduced the Housing Quality Assurance System (“HQAS”) in 1980 to Improve housing performance,
consumer protections, and sustain qualified housing suppliers.
The Registration Organization for Warranted Houses (ROWH), the sole operator, was established in 1982
ROWH was renamed to the Organization of Housing Warranty (OWH) in 1999.
HQAS was mainly used by medium- and small-sized builders.

Background of warranty system run by private companies:• The Japan Prefabricated Construction Suppliers and Manufacturers Association (“JPA”) was formed by several
prefabricated housing companies in 1963.
• JPA set up their own customer service code including warranty system as following: 10-year warranty for structural parts and water ingress,
 2-year warranty for equipment and finishing 5-year warranty for termite damage.
•
•
•
•
•

JPA members also have set up their own customer service code. Thereafter, large-sized builders and contractors
introduced their own after-sale services, including warranties.
The above activities attributed to establish the Security Deposit Scheme (SDS) based on the Act for Execution of
Defects Warranty Liability under HQAA (“AEDWL”) in 2007.
AEDWL was fully enforced in October 2008
HQAS ceased accepting new contracts in June 2008, then was subsequently succeeded by Defect Liability
Insurance(“DLI”).
Currently, the percentage of newly-built houses covered by SDS and DLI are around 50%. However, only 1% of
contractors has been using SDS.
5

1-3. Background of the Housing Warranty System
The diagram below shows that newly-built houses are covered by HQAS and a financial securing scheme basedon AEDWL.
Diagram2 Changes in the Housing Warranty System
HQAS

By newly built units
Companies' own warranty(90%)

Insurance and Security Deposit
In terms of units
Security Deposit
Scheme (SDS) (48%)

In terms of builders
SDS (1%)

Defects Liability
Insurance (99%)

Covered by HQAS(10%)

Source: Organization of Housing Warranty: Databook 2008•••

Since 2006, the National Plan on Housing has been working to develop good-quality residential stock insteadof increasing the number of houses under an aging society.
Residential stock has reached a sufficient level of supply, several area such as earthquake resistance,
insulation, and energy efficiency need to be improved.
Regenerating stock toward higher-quality and longer-life houses requires proper maintenance work,
remodeling, rebuilding, and an efficient distribution system.

Major challenges of housing industries under Basic Plan for Housing effective during fiscal year 2021 ~ 2030
1. Constructing housing circulation systems,
2. Procuration of high-quality housing stock,
3. Management, and the elimination and utilization of vacant houses.
4. Increase of the trading volume of existing houses.
5. Dissemination of defect liability insurance products for existing houses and a housing inspection scheme forexisting houses*1.
*1 Licensed architects who completed the required training course determined by MLIT, conduct inspections to find cracks,
deterioration and defects in the area of major structural parts (foundation, and walls) and water ingress.
62-1. Housing Quality Assurance Scheme (“HQAS”)
HQAS was voluntary scheme;• 99% of registered house builders were medium- and small-sized companies (i.e. their paid-up capital is less thanYen 300mil, or their number of regular employees is less than 300.)• House builders, suppliers and housing sale companies could participate in the scheme• Eligible houses were newly-built detached house, non-detached houses, non-detached houses for lease• Warranty covered area was major structural parts and water ingress• 10 years from the commencement date of the scheme
Diagram3-1 Housing Quality Assurance Scheme

Clients・Homebuyers(Homeowners)

6. Issuing of warranty certificate
3. Construction of houses

7. Delivery

Houses

5. Completionof work

4. On-site inspection<Housing Business Providers>House Builders)
Sellers (Licensed Real Estate Agents)
1. Registration of houses
2. Registration of housing business providers
5. Applying for insurance warranty

Organization of Housing Warranty (OWH)
Re-insurance
Casualty Insurance companies
Flow of HQAS
1. Registration of housing business providers
2. Registration of houses to HQAS
3. Construction of houses
4. On-site inspection
5. Completion of construction work・Applying for issuance of warranty
6. Issuing of warranty certificate
7. Delivery of houses

Source: Organization of Housing Warranty: Outlineof Housing Quality Assurance Scheme

Fee
Registration fee for housing businessproviders:
About yen 30,000 per year
Warrantee premium：Detached house - Yen 70,000 ~ 80,000
Non-detached houses: depending on the size
and the structure7

2-2. Housing Quality Assurance Scheme (“HQAS”)
Diagram3-2 Housing Quality Assurance Scheme

Clients・Homebuyers(Homeowners)＊ Direct claim
at the timeof bankruptcy
of housingbusiness
providers① Notifying defects② On-site check③ Repair work
Houses④ Claim

Organization of Housing Warranty (OWH)＊ Claim＊ Direct Insurance Payment<Housing Business Providers>House Builders)
Sellers (Licensed Real Estate Agents)

Casualty Insurancecompanies⑤ Insurance
payments④ ClaimSource: Organization of Housing Warranty: Outline of Housing Quality Assurance Scheme

Flow of events ensured occurred① Homeowner notifies housing business providers of defects② Registered housing business providers conduct an on-site check, then submit the report to OWH.
③ Registered housing business providers conduct repair works④ Registered housing business providers claim insurance payments to OWH⑤ OWH and Casualty insurance companies make the insurance payment upon notice of completion of repair work.
＊80% of the payments is paid by Casualty insurance companies, and 20% is paid by registered entities
Clients and Homebuyers’ Direct claim and payments:
In the event that housing business providers filed for bankruptcy and failed to complete repair work, clients or Homebuyers can directly
claim payments to OWH.

8

2-3. Housing Quality Assurance Scheme (“HQAS”)
Diagram 4

HQAS –by housing units & registered housing business providers

Table 1

Defects reported during 1986 ～2007 based on HQAS

Type

Structure

Water ingress
Total

Building Parts

Numberreported(%)

Foundation

523

15.6%

Column・Beam

171

5.1%

Floors

110

3.3%

Walls

123

3.7%

Roofs

12

0.4%

Water ingress (wall)

2,013

60.0%

Water ingress (roofs)

401

12.0%

Total

3,353

100.0%

Source: Organization of Housing Warranty: Databook 2008•

No. of defects reported during 1986 ~2007
was about 3,300. 72% was related towater ingress.

Source: Organization of Housing Warranty: Databook 2008••

Although there were less than 5,000 registered housing business providers before 1993, the number ofregistrations gradually increased as highly durable housing became popular, after the Hanshin-Awaji Earthquake
Disaster.
At its peak, the number of registered housing providers reached 44,000. 140,000 units or 12% of total new
housing starts were covered by the scheme in 2000.
9

3．The Housing Quality Assurance Act (“HQAA”)•

The Housing Quality Assurance Act (“HQAA”) was approved in 1999 and became effective in April 2000.
Major points are :(1) Establishment of the Housing Performance Indication System (Voluntary)
This System allows a private organization to conduct an evaluation through document review and on-site
investigation, and to indicate the performance of newly-built housing and existing housing including quake
resistance and energy efficiency.
(2) Establishment of Designated Housing Dispute Resolution Bodies.
The Center for Housing Renovation and Dispute Settlement Support (CHORD) became a designateddispute resolution body with the aim of providing a range of support for housing related problems
regarding contracts, and the construction of houses with Performance Evaluation Reports after theCompletion of Construction between the housing company and clients.
(3) Introduction of the mandatory 10- year defect guarantee liability for the fundamental structure andprevention of water ingress.

•

Enhancement of HQAA
Two funds were set up with government financial assistance.
① Defect Warranty Financial Assistance Fund :This fund enables small- and medium-sized companies (paid-up capital is less than Yen 300million, or thenumber of full-time employees is less than 300) or individuals to utilize HQAA with a 15% discount off
registration fees.
② Completion Warranty Fund since 1999:
This program enables consumers to complete the house with a limited amount of expense when small- andmedium-sized companies fall into bankruptcy or other.
The fund was used for 1,500 cases during 2000 to 2007.

10

4. Act for Execution of Defects Warranty Liability under HQAA (“AEDWL”)
Background of enactment of AEDWL:• In November 2005, the case in which an architect made fake building structure statements was disclosed.
A Japanese first-class architect was convicted for falsifying data regarding earthquake resistance for 71 buildings(including some residential ones) out of the 208 he designed. This resulted in rebuilding and large-scale
rehabilitation work on apartments (“fraudulent acts”).
• In this kind of situation, the sales company which sold the apartments are responsible for warranty liability
based on HQAA.
• As a sizable number of apartment units were affected by this incident, the sales company filed for bankruptcy.
Consequently, the owners of these apartments had to take out additional loans to buy a new unit on top of having
already bought the one which was built based on the fake structure statement.
Lesson of the fraudulent acts
Even though sale companies have an obligation to cover defect warranties, consumers are not protected without
the appropriate financial resources.
The Act for Execution of Defect Warranty Liability under HQAA was approved in December 2007 and became
effective as of October 1, 2009.
The Act’s pain points are;(1) Securing financial resources :The Act obligates housing business providers (home builders, suppliers, or licensed real estate agents) toparticipate in deposit schemes or 10-year defect liability insurance (including the right of purchasers and otherparties to demand repairs).
(2) Appointment of Insurance Corporations: Insurance corporations who underwrite new house defect liability
insurance must be appointed by MLIT.
(3) Reinforcement of Dispute Resolution System: MLIT appointed The Center for Housing Renovation and Dispute
Settlement Support (CHORD) as its specified Dispute Resolution Body. CHORD also provide an assistance for solvingof disputes between homebuyers or clients and sellers or house builders, etc., through the Review Board of Housing
dispute.
11

5-1. Securing financial resources under AEDWL
AEDWL obligates housing business providers to set aside funds for fulfilling 10 years of defect warranty
liability (including the right of purchasers and other parties to demand repairs). To ensure that funding is available,
housing business providers are obliged to participate in deposit schemes or defect liability insurance. AEDWL
requires any housing business providers who have delivered or sold newly built houses over the past 10 years to
submit their status of securing funding resources (Deposit system and Housing Defects Liability Insurance) as ofMarch 31 every year to MLIT.
Housing business providers who are obliged to secure financial resources based on AEDWL are as follows:(i)Builders: builders having licenses from the Minister of MLIT or a prefectural governor based on the Construction
Business Act.
(ii) Licensed Real Estate Agents: agents having licenses from the Minister of MLIT or a prefectural governor basedon the Construction Business Act.
Based on these schemes, the buyer of a new house can claim reimbursement of repair costs and other necessary
expenses through Deposit System or Housing Defect Liability Insurance Scheme if the home builder, supplier or
licensed real estate agent goes bankrupt, or for other reasons.
(1)．Security Deposit system• Housing business providers who have delivered or sold newly built houses must place deposits or designatedtypes of securities to a Depository such as a Local Legal Affair Bureau.
• The amount of the deposit is determined based on the number of units delivered or sold over the past 10 years
on the calculation date (March 31 of each year). If deposits are put in the Depository, such deposits cannot be
refunded for 10 years.
(2). Housing Defect Liability Insurance Scheme• House builders, suppliers, and sellers who are licensed real estate agents provide the buyer of houses with themeans to claim the reimbursement of repair costs and other necessary expenses through insurance contracts.
• The buyer of houses can make a direct claim for insurance money from the insurance corporation if the homebuilder, the supplier, or real estate agent goes bankrupt, or for other reasons.
• There are five insurance corporations that provide Defect Liability Insurance at present.
125-2. Securing financial resources under AEDWL① New Housing Defect Liability Insurance (Type I) - Mandatory
If the buyer of a newly built house is an individual or a corporation which does not have a real estate agency
license, the seller must take out Type I insurance.
Newly built houses based on AEDWL are defined as follows:
・The date of sale of the newly built house should be within one year from the completion date, and the house has
never been used for residential purposes.
・Both newly built detached houses and non-detached houses (apartments, residence for lease) are eligible.
② New Housing Defect Liability Insurance (Type II) - Voluntary
If the buyer is a licensed real estate agent (regardless of whether they are an individual or a corporation), the seller
can take out insurance voluntarily.
Type II, newly built houses are defined as follows:(a) The date of sale of the newly built house should be within two years from the completion date.
(b) Even if the house qualifies as a “newly built house” (the date of sale of the newly built house is within one year
from the date of completion) under AEDWL, if the buyer or seller’s situation falls into the following category, bothparties can take out Type II insurance.
• The house was built by a house builder who does not have a construction business license#2• The house was sold by an individual who does not have a real estate agency license• The house builder obtained building work from a licensed real estate agent• A licensed real estate agent has sold the newly built house to another licensed real estate agent

13

5-3. Securing financial resources under AEDWL
Table 2 New House Defect Liability Insurance Mandatory vs. Voluntary

Contract

Building
contracts

SellerBuyer

Construction
Company(Licensed)

Individual or Corporations(no real estate agency
license)Individual or Corporations(with real estate agency
license)Construction
company #2 orindividual

Purchaseand saleagreements

Licensed realestate agents

Construction
company #2 orindividual

License is not relevant
Individual or Corporations(no real estate agency
license)Individual or Corporations(with real estate agency
license)License is not relevant

Securing
Financial Mandatoryor
Resources
required? Voluntary(Y/N)

Insurance

Relevant Clause

Yes

Mandatory

New Housing Defects
Liability Insurance (Type I)

Art 19-1 of
SEDWL

No

Voluntary

New Housing Defects
Liability Insurance (Type II)

Art 19-1 of
SEDWL

No

Voluntary

New Housing Defects
Liability Insurance (Type II)

Art 19-1 of
SEDWL

Yes

Mandatory

New Housing Defects
Liability Insurance (Type I)

Art 19-1 of
SEDWL

No

Voluntary

New Housing Defects
Liability Insurance (Type II)

Art 19-1 of
SEDWL

No

Voluntary

New Housing Defects
Liability Insurance (Type II)

Art 19-1 of
SEDWL#2 Construction companies which only undertake simple construction work do not require a business license as stipulated in
Article 3 of Construction Business Act. “Simple construction work” is defined as follows:
1. Contract amount per work is less than yen 15million, or
2. The building is a wooden house with a total floor space less than 150 ㎡
Source: MLIT: 10 years of implementation regarding Defects Liability Insurance (Japanese Only)
14

5-4. Securing financial resources under AEDWL
Diagram 5 Security Deposit Scheme
Table 3

3 -2

Houseowner
Buyer or Client

Warranty amount = A x B +C (Note 1 & 2)
Amount to be
Number of newly built
Addition
multipliedhouses per year (1,000) - A(Yen, 1,000) - C(Yen, 1,000) - B
Less than 1
20000
0

4 -2

2

4

3

Housing businessproviders
including House Builders,
Suppliers, Vendors andSellers (Real Estate
Agents)12
3
4Given that the court
concludes the default uponbankruptcy of the housingbusiness providers.

Security Deposit Calculation

Depository
Legal Affair
Bureau1

Places security deposit to Depository
Building contracts /Sale and purchase agreements
Requests repairs / 3-2 Conducts repair work
Requests Refund/4 -2 Refund

1< units ≦10

2000

18000

10＜units≦50

8500

30000

500＜units ≦1,000

600

40000

100

90000

1,000＜units≦5,000

80

1000001,000＜units≦5,000

401400005,000＜units≦10,000

2024000019250000182700001730000050,000＜units ≦100,000

1634000015390000100,000＜units≦200,000

14

49000013

69000012

990000100＜units ≦500

10,000＜units ≦20,000
20,000＜units ≦30,000
30,000＜units ≦40,000
40,000＜units ≦50,000

200,000＜units ≦300,000
units ＜300,000

Note related to Table 1(Note 1): A security deposit is required for all newly built houses except houses covered by New House Defect Liability Insurance (Type I) or newly
built houses which were delivered to clients before October 1, 2009.
(Note 2 ): In the event that the calculated amount exceeds Yen 12billion, the security deposit is limited at Yen 12billion.
Source: MLIT: 10 years of implementation regarding Defects Liability Insurance (Japanese Only)15

5-5. Securing financial resources under AEDWL
Diagram 6-1

New Housing Defect Liability Insurance (Type I) Scheme

Clients,
Homebuyers

Construction Contract / Saleand purchase agreement② Application to relevant
regional construction office③ Design of houses④ Construction Permission⑥ Construction⑧ Completion of
construction work
⑩ Delivery of residence⑦ Inspection⑨ Issuance of
insurance
certificate

Contractors, Sellers (Licensed
Real Estate Agents, etc.),“Home Business Providers”

Insurance
Premium① Registration⑤ Applying for
Insurance

Flow of New House Defects Liabilities
Insurance① Housing business providers’registration to Insurance Corporation② Housing business providers’application to relevant regional
construction office③ Design of houses④ Construction permission⑤ Applying for insurance⑥ Commencement of construction housing business providers must
follow the Unified Design and BuildingStandard prepared by insurance
corporations⑦ Onsite inspections⑧ Completion of construction work
⑨ Issuance of insurance certificate⑩ Delivery of residence

Insurance Corporation•••

Insurance premium varies by insurance corporation. Insurance premium includes pure premium, expense
loading, and inspection expense.
Total insurance payments per fiscal year to all housing business providers is capped at yen 12.5billion for both
detached houses and non-detached houses.
Total insurance payments of insurance contracts which were signed during the same fiscal year is capped at
12.5billion.

Source: MLIT: 10 years of implementation regarding Defects Liability Insurance (Japanese Only)
16

5-6. Securing financial resources under AEDWL
Diagram 6-2

New Housing Defect Liability Insurance (Type I) Scheme

Request Repair
Contractors, Sellers (Licensed
Real Estate Agents, etc.),“Home Business Providers”

Clients,
Homebuyers② Onsite
Inspection④ Notificationof loss
assessment*Direct
Insurance
Payment① Submission of incident and defect reports② Onsite inspection done by loss examiners(if necessary)

Repair*Direct
payment
in the eventof bankruptcyof the seller

Flow of insurance payment at the time of
events insured① Incident and defectreports③ Submission of repair
method/cost estimates⑤ Reporting completionof repair andsubmission of claim⑥ Insurance
payments

Insurance Corporation③ Submission of repair method as well as
cost estimates④ Notification of loss assessment⑤ Reporting completion of repair andsubmission of insurance claim⑥ Insurance payment (80% of losses arepaid by the insurance corporation andthe remaining 20%) should be borne by
the business entity.

*Direct claim from clients or buyer :In the event that sellers fall into bankruptcy or other situations, etc., clients and homebuyers
can make a claim to insurance corporations.

Source: MLIT: 10 years of implementation regarding Defects Liability Insurance (Japanese Only)
17

6.Defects Parts for which 10 years liability is mandatory
Diagram 7 -1
A detached house of wooden structure(post & beam traditional structure)

Diagram 7- 2
An apartment house of reinforced concrete structure(wall type structure)[Principal structural parts]
Foundations
Walls
Columns
Roof trusses
Sills[Principal structural parts [Parts to prevent rainwater leakage]

A
B
C
D
E

Roof Slabs
Horizontal Framing Members

F
G
H
I

Exterior Walls

K

Diagonal Members
Floor Slabs

A
B
C
D
E

Roofs
Exterior Walls
Openings
Drainage Pipes

F
G
H
I

[Parts to prevent rainwater leakage]
Roofs
Openings

J
L

Area of Inspection
OutsideGround [Structure]
Foundations [Structure]
External walls [Water Ingress]
Roofs [Water Ingress]
Balcony [Water Ingress]
InsideRoof Struss [Structure]
Load-bearing walls [Structure]
Columns/Horizontal Framing Members
Floor [Structure]
Sills/Floor framing [Structure]

Area of Inspection
Common Area
Piles/Ground [Structure]
Foundations [Structure]
External wall/ceiling [Water Ingress]
Roofs [Structure]
Flat roofs/Roof Balcony [Structure]
Concrete compressive strength・Bar
Exclusive elements
Walls [Structure]
Columns/Beams [Structure]
Floors [Structure]
Precasted [Structure]

Source: MLIT: 10 years of implementation regarding Defects Liability Insurance (Japanese Only)18

7. Inspection
Diagram 8 : Inspection at the timing of underwriting

Less than
3 stories（incl.
basements)

4 stories
and above(incl.
basements)

The 1st Inspection
Upon completion of thefoundation workThe
1st inspection
Upon completion of
the foundation work

The 2nd Inspection
Wooden structure: between completion of the roof work andcompletion of the work just before starting the interior workRC, etc.: upon completion of the foundation work
S Structure : Between completion of the roof work andcompletion of the work just before starting fireproof covering on
the steel framework.

The 2nd inspection *Wooden structure: between completion of the building
frame construction work and completion of the work justbefore starting waterproofing workRC, etc./S Structure: upon completion of the floor frame
construction of the intermediate floors (for RC structureand SRC structure, upon completion of the floor structureof intermediate floors)

The

3rd Inspection
Upon completion of
the roof sealing workor roof base sealing
work

Source: Study Committee of the Housing Defects Assurance Regulation: The Housing Quality Assurance Act Q&A, 2008, /HP of Insurance Corporations＊Depending on the number of floors, inspection may need to be conducted every 7 floors, such as the 10th floor and 17th floor.
＊RC, etc. in the above includes SC, SRC, and reinforced concrete block structures.

For houses less than three stories, onsite inspections are conducted twice.
For houses more than 4 stories, the number of inspections is determined based on the number of floors.

198-1. Defects Liability Insurance Products• Dissemination of Existing House Defect Liability Insurance products are expected.
• In 2015, Insurance Corporations started marketing the Extension of New House Defect Liability Insurance.
Three type of Existing House Sale Warranty Insurance products have been marketed: A Licensed Real Estate Agent (the seller) is the policy holder, A Real Estate Broker has become the policy holder due to trading between individuals,
 The Inspection Company become the policy holder due to trading between individuals.
•

Defects Liability Insurance related to large-scale repair work for common areas of apartments and Defects
Liability Insurance for remodeling has been marketed from 2009 and 2010.
a. Registration,

a’. Request for inspection & warranty

b. Applying for insurance incl. inspection

c. Inspection

d. Inspection resultse. Insurance contract

g. Direct payments in the event of bankruptcy of contractors

h. Maintenance work
Diagram 10 Existing House Sale Warranty Insurance for real estate agents

Diagram 9 Extension of New House Defects Warranty Insurance

Inspection contract,
maintenance work
agreement, etc.
Owner

g

Sale and purchaseagreemente/fb

Seller(Licensed Real
Estate Agent)House Buyer

Contractor

c/hf. Insurance paymentsaInsurance Corporation

g

c

e/f

b

a

Insurance Corporation

Source: MLIT: 10 years of implementation regarding Defects Liability Insurance (Japanese Only)20

8-2. Defects Liability Insurance Products
Diagram 11 Existing House Sale Warranty Insurance for transitions
between individuals (real estate broker (= the seller) type )Sale and purchaseagreement

House Buyer

AgencyDiagram 12 Existing House Sale Warranty Insurance for transactions
between individuals (Inspection Company type)

Seller(Other than Licensed
Real Estate Agent)Warrantye/fcWarrantygbe/fManagement
Corporation

Vendore/fbaDiagram 14 Large-scale Repair Work Liability Insurance

Remodeling work
agreementcdInsurance Corporation

Diagram 13 Remodeling Defect Liability Insurance

g

a’

c

Inspection Company (Insured)

Insurance Corporation

Owner(Client)

Seller(Other than Licensed
Real Estate Agent)House Buyer

Agencya’Real estate broker (Insured party)g

Sale and purchaseagreementbaInsurance Corporation
Source: MLIT: 10 years of implementation regarding Defects Liability Insurance (Japanese Only)g

Large-scale repair
work contract
Contractor, Vendor

c

e/f

b

a

Insurance Corporation

21

8-3. Defects Liability Insurance Products・Defect Liability Insurance for existing houses is voluntary. In order to be insured, an inspection is required
Table 4 Housing Defect Liability Insurance Products 1

Products approved by
MLIT
Mandatory (Y/N)
Policyholder / Insured
entities

New Housing Defects
Liability Insurance(Compulsory) "Type I"

New Housing Defects
Liability Insurance "Type II"

Extension of New Housing
Defects Warranty
Insurance

Remodeling Defects
Liability Insurance

Oct-09Oct-09Apr-15Mar-10Mandatory

Voluntary

Voluntary

Voluntary

Licensed Contractors,
Suppliers, Licensed Real
Estate AgentsContractor who does not
require license, individual
who sells newly built house

House Owners

Remodeling Contractors

Contract insured

Houses insured by New
Construction Contract, Sale Construction Contract, Sale Housing Defects Liability
and Purchase Agreement
and Purchase Agreement Insurance which is beyond
10 yearsRemodeling contracts

Insurable houses

Detached houses andindividual unit of nondetached houses

Detached houses andindividual unit of nondetached houses

New Houses, Apartments,
Residence for lease, Smallsized apartments(floor space less than 500㎡ with 3 floors low)

Detached houses andindividual unit of nondetached houses

Do contractors,
vendors, real estateagents need toregister?

Necessary

Necessary

Necessary

Necessary

Covered Area

Major Structural Elements& Parts Preventing
Water Ingress

Major Structural Elements& Parts Preventing
Water Ingress

Major Structural Elements
Remodeling parts /& Parts Preventing Water
Major Structural Elements /Ingress
Water Ingress(coverage can be extended(except defects related to
to facilities
facilities and equipment)
depending on contract)22

8-4. Defects Liability Insurance Products
Table 4 Housing Defect Liability Insurance Products 2

Insurance Coverage

New Housing Defects
Liability Insurance(Compulsory ) "Type I"

New Housing DefectLiability Insurance "Type II"

Repair cost,
Investigation fee,
Temporary accommodationand moving cost

Repair cost,
Investigation fee,
Temporaryaccommodation andmoving cost

Extension of New Housing
Defects Warranty
Insurance

Repair cost,
Repair cost,
Investigation fee,
Investigation fee,
Temporary accommodation Temporary accommodationand moving costand moving cost

Site Inspection

Required

Required

Condition is
implementation of
inspection and specified
maintenance work

Duration

10 years

10 years

5 years, 10 years

Compensation ratio

Insurance premium

Max amount insured

Rider
Deductible

Remodeling Defects
Liability Insurance

Required
1year ~10years (dependingon the type of conditions)

80% of insurance amount 80% of insurance amount 80% of insurance amount
80% of insurance amountper one contract,
per one contract,
per one contract,
per one contract, 100%
100% in the event of
100% in the event of
100% in the event ofin the event of bankruptcy
bankruptcy of contractors, bankruptcy of contractors, bankruptcy of contractors,of contractors
vendors and sellers.
vendors and sellers.
vendors and sellers.
Varies depending on
Insurance Corporation

Varies depending on
Insurance Corporation

Regulatory limit: Y20million Regulatory limit: Y20million/ varies depending on/ varies depending on
Insurance Corporation
Insurance Corporation
Transfer of contract (Note1)
Yen 100,000

Varies depending on
Insurance Corporation

Varies depending on
Insurance Corporation

1 million, 10 million, 20
millionYen 1million ~ Y20million(depending on contract
amounts)

Remodeling contract
Yen 100,000

Yen 100,000

Yen 100,000

At the time of events insured, the Insurance Corporation pays 80% of the insurance amount and the insured Housing Business
Providers need to pay the rest of 20%. In the event of bankruptcy of the Housing Business Providers, house owners can request
compensation directly from the Insurance Corporation.

Note 1:In the even the deed of transfer is attached to the New Housing Defects Liability Insurance(compulsory), when the house owner sells thehouse, the buyer of the house can succeed the insurance policy from the seller.

238-5. Defects Liability Insurance Products
Table 4 Housing Defect Liability Insurance Products 3

Existing Housing Sale Warranty Insurance
For real estate agent
For transactions between
For transactions between(Seller of the house is real estate
individuals (Real Estate
individuals
agent)
BrokerageType)(Inspection Company Type)MLIT

Large-scale repair work
liability insurance

Dec-09Apr-16Jun-10

Dec-09Mandatory (Y/N)

Voluntary

Voluntary

Voluntary

Voluntary

Policyholder / Insured entities

Licensed Real Estate Agent

Real Estate Broker

Inspection Company

Vendor or Contractor

Sale and Purchase Agreement(existing housing, seller is alicensed Real Estate Agent)

Sale and Purchase Agreement
between individuals

Sale and Purchase Agreement
between individuals

Repair Contract of common
area of apartments

Existing housing (detached
Existing housing (detachedhouses and individual unit of non- houses and individual unit ofdetached houses)
non-detached houses)

Existing housing (detachedhouses and individual unit ofnon-detached houses)

Apartment houses

Necessary

Necessary

Insurable houses

Do contractors, vendors, realestate agents need toregister?

Covered Area

Necessary

Necessary

Major Structural Elements &Major Structural Elements & Major Structural Elements &Major Structural Elements
Parts Preventing Water
Parts Preventing Water Ingress Parts Preventing Water Ingress& Parts Preventing Water Ingress
Ingress, water supply and(covered area can be expanded (covered area can be expanded(covered area can be expanded todrainage, electrical equipment,
to water supply and drainage to water supply and drainage
water supply and drainage lines)
steel parts such as railings, etc.
lines)
lines)(varies depending on product)24

8-6. Defects Liability Insurance Products
Table 4 Housing Defect Liability Insurance Products 4

Insurance Coverage

Inspection

Duration

Existing Housing Sale Warranty Insurance

For real estate agent (Seller ofthe house is real estate agent)

For transactions between
individuals(Real Estate BrokerageType)For transactions between
individuals(Inspection Company Type)

Large-scale repair work
liability insurance

Repair cost, Investigation fee,
Temporary accommodation andmoving cost

Repair cost, Investigation fee,
Temporary accommodationand moving cost

Repair cost, Investigation fee,
Temporary accommodationand moving cost

Repair cost, Investigation fee,
Temporary accommodationand moving cost

Required

Required

Required

Required

2years ~ 5 years (depending on 2years ~ 5 years (depending on 2years ~ 5 years (depending on 1year ~ 10years (depending on
the type of conditions)the type of conditions)the type of conditions)the type of conditions)Compensation ratio

80% of insurance amount per
one contract, 100% in the eventof bankruptcy of sellers

Insurance premium

Varies depending on Insurance
Corporation

Max amount insured

Yen 5 million or 10 million
per house or housing unit
(depending on conditions)

100%

100%

80% of insurance amount per
one contract, 100% in theevent of bankruptcy ofcontractors and vendors

Varies depending on Insurance Varies depending on Insurance Varies depending on Insurance
Corporation
Corporation
Corporation
Yen 5 million or 10 million
per house or housing unit
(depending on conditions)

Yen 5 million or 10 million
per house or housing unit
(depending on conditions)

Yen 10million ~ 500 million(depending on contract
amounts)

Yen 50,000

Yen 50,000

Yen 100,000

Rider
Deductible
Yen 100,000
Source: MLIT and HP from Insurance Corporations25

9. Completion Warranty Program
Completion Warranty Program:• Completion Warranty Programs is voluntary.
• At present, three Insurance Corporations provide a Completion Warranty Program.
• House builders or suppliers need to register at Insurance Corporations before receiving this program.
Diagram 15 Warranty under Completion Warranty Program

Incomplete parts
coveredby advance

Additional costs requested
by alternative contractor
who succeeds the original work

Additional Work
Advance
Payment

Commencement

Bankruptcy

Completion

Insured area and warranty amounts vary depending on the
Insurance Corporation.
Warranty:
1) The loss of advance payment: Advance payment
minus amount of construction work completed.
2) Additional cost done by alternative contractor tocomplete parts the original contractor did not complete.
3) Expenses related to the introduction of an alternative
contractor.
Limits:1) Advance payment: up to 30% of the contract amount oramount specified by the Insurance Corporation.
2) Additional cost: up to 10% of the contract amount oramount specified by the Insurance Corporation.

Source: HP from insurance corporations26

10-1. Statistics of Defect Liability Insurance
Diagram 16 Number of newly built houses with secured financial resources
for New Housing Defect Liability Insurance (Type I)

Diagram 17 Number of newly built insurance policies issued by type of house• The number of newly built houses are covered by the Security Deposit system and the Defect Liability Insurance System on anaround 50:50 basis.
•• Housing business providers who supply less than 1,000 units per year tend to choose Defect Liability Insurance instead of
Security Deposit system as a measure of securing financial resources.
Diagram 16 Source: MLIT: Number registered newly built houses on either Security Deposit System or Defects
Liability Insurance (Japanese Only)
Diagram 17 Source: CHORD Annual statistics regarding housing related issues 2023 (Japanese Only)27

10-2. Statistics of Defect Liability Insurance
Diagram 18 Number of insurance policies related to existing housing warranty program
Number
30,00025,00020,411
25,000

4,847
20,00015,0002,415

10,0000

1,7312009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Fiscal Year

1,522

A: Existing Housing Sale for Warranty Insurance for real estate agents
B: Remodeling Defects Liability Insurance
C: Existing Housing Sale Warranty Insurance for transactions between individuals
D: Extension of New Housing Defects Warranty Insurance
E: Large-scale repair work liability insurance
Source: MLIT: Recent Trends of Defects Liability Insurance Scheme July 2023 (Japanese Only)28

10-3. Statistics of Defect Liability Insurance
Diagram 19-1 Newly built housing defects insurance events insured (*1) during 2009 ~Sept 2021

Events insured
Water Ingress
Major Structural Elem
Other
Total

WoodenStructure

95.1%
4.5%
0.4%
100.0%

Events insured

RC
94.1%
5.0%
0.9%
100.0%

Water
Ingress

WoodenStructure

RC

Water ingress from outside wall

24.3%

47.2%

Water ingress from Opening
Water ingress from sloping roof /skyl
Water ingress from Balconies
Others
Total

27.9%
20.9%
10.8%
16.1%
100.0%

26.2%
4.2%
3.4%
19.0%
100.0%

Diagram 19-2 Newly built housing defects insurance events insured (*1) as of Nov 2022 - The timing of events occurred after completion# of years

0

1

2

3

4

5

6

%

13%

12%

11%

10%

11%

10%

10%

Diagram 20-1 Existing Housing Defects Warranty Insurance
Events insured(*1) during 2009~Sept 2021
Existing Housing Defects Warranty Scheme
Events insured
Remodeling
Large-scale
A
B
Major Structural Elements
1.1%
0.0%
1.9%
3.8%
Water Ingress
45.7%
76.9%
79.5%
78.8%
Electrical equipment, Water
0.0%
0.0%
18.3%
17.4%
supply and drainage
Remodeling related
29.9%
0.0%
0.2%
0.0%
Large-scale repair work
0.0%
11.5%
0.0%
0.0%
related
Others
23.3%
11.6%
0.1%
0.0%
Total
100.0%
100.0%
100.0%
100.0%

Diagram 20-2 Existing Housing Sale Defects Warranty Insurance(A+B of Diagram 20-1 ) Events insured(*1) by area as pf Nov 2022

Events insured by area
Roofs *2
Outside wall

Opening *3

Water supply and drainages
OthersTotalnumber of events
insured
495
370
291
259
73
1,488

%
33.3%
24.9%
19.6%
17.4%
4.9%
100.0%*1 Insurance claim which Insurance Corporations confirmed and made payments.
A: Existing House Sale Warranty Insurance for Real Estate Agent
B: Existing House Sale Warranty Insurance for transitions between individuals*2 includes sloping roof, flat roof, metal roof preventing snowfall, roof balconies*3 Including balconies but excludes roof balconies
Diagram 19 /20 Source: CHORD: The integration of information system regarding housing 2021 & 2022 (Japanese Only)29

11-1. Safety Net of Housing Defect Liability Insurance
１. Rules related to business of insurance corporations(1) The business of insurance corporations prescribed in AEDWL and the ordinance for enforcement of AEDWL.
・The Minister of MLIT must authorize the appointment of directors, dismissal of directors, business plans, andbudgets of every business year.
・The insurance corporation must submit business reports and income and expenditure statements for every
business year to the Minister of MLIT.
・The insurance corporation must establish the way of provision of valuation reserve, reserve for contingencies,
and the methodology of asset management as prescribed in ordinance for enforcement of AEDWL.
・ If the Minister of MLIT finds it to be necessary, the Minister of MLIT may issue supervision orders.
・The Minister of MLIT may have relevant officers enter the business office of insurance corporations and monitor
its business on a quarterly basis.
(2) In the event that the insurance corporation falls into bankruptcy, the following action should be taken:
・Upon submission of the application for discontinuation of business from the insurance corporation, the Ministerof MLIT may authorize the permission of discontinuation of the business based on the provision of Article 29.
・In the event that the minister of MLIT finds that the insurance corporation has not conducted business properly
and fairly, the Minister of MLIT may order the cancellation of an appointment, the transfer of all contracts orpart of a contract during the specified period of time based on the provision of Article 30.
・In the event that an insurance corporation's designation is revoked, the Minister of MLIT may authorize thetransfer of all contracts to a designated insurance corporation based on the provision of Article 31.
30

11-2. Safety Net of Housing Defect Liability Insurance

２．Housing Warranty Fund takes the role of safety net in the event of occurrence of the extraordinary risks:(1)Subsidy for small and medium-sized companies
Insurance premiums paid by small and medium-sized companies are set at a discounted level.
(2) Safety net regarding intention or gross negligence
Insurance corporations are exempted from insurance payments for losses arising from intention or gross negligencein order to protect from moral hazards:
・Housing business providers should be responsible for such losses. However, if insurance corporations are
exempted from insurance payments for this type of losses in the event that housing business providers fall into
bankruptcy or otherwise, etc., clients and homebuyers have no way of redress.
・In this type of situation (including the circumstance that housing business providers cannot implement repair
work for certain periods of time due to financial stress), insurance corporations enter into reinsurance
agreements with the Homebuyers’ Rescue Fund (“the Fund”) regarding intention or gross negligence.
・In the event that the Fund has insufficient levels of money and cannot make payments to the insurance
corporations, the Housing Guarantee Fund may make zero interest-bearing loans to the Fund.
(3) Safety net regarding excessive losses
・As for risks related to new house defect liability insurance (Type I), insurance corporations enter reinsurance
contracts with casualty insurance companies (except risks arising from intention or gross negligence).
・For excessive losses up to yen12.5billion, casualty insurance companies jointly set up financing pools for excessive
losses in order to manage risks. For losses exceeding yen12.5billion, casualty insurance companies havereinsurance contracts with the Large-scale Loss Compensation Fund (“LSCF”). In the event of losses exceeding yen
12.5billion, the Housing Guarantee Fund provides non-interest-bearing loans to the LSCF so that it can makereinsurance payments to casualty insurance companies.
(4) Support for new products
Regarding newly marketed insurance products for existing houses, events insured may occasionally occur at a higher
level than initially estimated. This type of extraordinary risk can be covered by the Housing Warranty Fund.

31

11-3. Safety Net of Housing Defect Liability Insurance
Diagram 21

Source: MLIT: 10 years of implementation regarding Defects Liability Insurance (Japanese Only)32

12. Transactions of houses and defects liabilities
Table 5 Provision for defects liability between construction contracts and sale and purchase agreements
Construction Contracts
Housing Quality
Civil Law
Assurance Scheme
Contractors of newly built
houses (regardless ofContractors, Vendors, and Sellers
Allwhether corporation orindividual)
Major structural parts of
Responsible areaAll
newly built houses

Defects
liability

Sale and Purchase Agreements
Housing Quality
Civil Law
Assurance Scheme
Contractors of newly built
houses (regardless ofAllwhether corporation orindividual)
All

Major structural parts of
newly built houses

Buyer's right to demand
cure

Civil Law Art 559

Same as Civil Law(Construction)

Civil Law Art 562

Same as Civil Law(Sale and Purchase)

Compensation for loss ordamage due to nonperformance

Civil Law Art 415

Same as Civil Law(Construction)

Civil Law Art 415

Same as Civil Law(Sale and Purchase)

Civil Law Art 559

Same as Civil Law(Construction)

Civil Law Art 563

Same as Civil Law(Sale and Purchase)

Civil Law Art 542、543

Same as Civil Law(Construction)

Civil Law Art 542、543

Same as Civil Law(Sale and Purchase)ー

10 years from the delivery
date (no reduction ofterm allowed)

ー

10 years from the delivery
date (no reduction ofterm allowed)

Notice of nonconformity to
the terms of the contract
within one year from thetime when the party
becomes aware of it. Civil
Law Art 637

Notice of defects within
one year from the time
when the party becomesaware of it (HQAA 94-3)

Notice of nonconformity to
the terms of the contract
Notice of defects within
within one year from theone year from the time
time when the party
when the party becomes
becomes aware of it. Civil
aware of it (HQAA 95-3)
Law Art 566

Clauses which impair theinterests of the client are
effective

Clauses which impair theinterests of the client are
void

Clauses which impair the Clauses which impair theinterests of the buyers are interests of the buyer are
effective
void

Buyer's right to demand
reduction of priceNon-performance due togrounds attributable toobligeeDuration

Special provision

Source: MLIT Housing Bureau Housing Production Department : The Housing Quality Assurance Act-revised version 202033

13-1. Housing Dispute Resolution System, Consultation and Advice
The Center for Housing Renovation and Dispute Settlement Support (CHORD) , established in 1984, commenced
the provision of dispute settlement support from 2000.
Business of CHORD are(1) Housing issues(2) Support for housing dispute resolution(3) Improvement of the business environment of remodeling,(4) Research(5) Development regarding dispute resolution for housing.
(1)Disputes between house owners and House builders, vendors, realtors
Types of assistance offered are as follows:(1) Free telephone consultation for housing issues(2) Consultation by industrial experts (architects and designated lawyers).
(3) Review board of housing disputes (RBHD): designated housing dispute resolution bodies, organized at local
bar associations in 52 prefectures based on the Housing Quality Assurance Promotion Act. The seller, the buyer,house builders, and owners of houses can apply to RBHD for an alternative dispute resolution (ADR) session.
97% of cases applied to RBHD have been solved through Arbitration.
For disputes related to insurance payments, Insurance Corporation can be involved in the dispute. Therefore, therelevant parties may solve the problem without pursuing a separate resolution process. Once the relevant parties
in the dispute agree on a settlement, the relevant Insurance Corporation respects and accepts the outcome.
In the event that the Insurance Corporation is involved in the dispute as a relevant party or disputant, the Insurance
Corporation usually accepts the offered settlement or arbitration proposal.
(2) MLIT’s Housing Production Department handles consultation and complaints related to Insurance Corporations
The Housing Production Department of MLIT handles consultations and complaints from consumers and other parties
regarding the operation of Insurance Corporations.
34

13-2. Housing Dispute Resolution System, Consultation and Advice
Diagram 22 Consultation and Dispute resolution system for houses and remodeled houses

Consultation & advice
Sellers or House builders, Venders, etc.,
Insurance
agreements

Sale andpurchaseagreements/
building
Contracts, etc.

Defects
Liabilities

Contribution

Participation
Application

DisputeArbitration,Mediation,
Recommendation

Homebuyers or Clients

Insurance
Corporations

Review Board of
housing dispute
resolution bodies(Bar associations at
52 prefectures）

Consultation & advice

Appointments /Supervision
Technical Standard

Financial Assistance& Support

The Center for Housing
Renovation and Dispute
Settlement Support(CHORD)
Telephone consultation
service“Smile Dial”

Appointments / Supervision
Providing Information
Ministry of Land,
Infrastructure,
Transport andTourism(MLIT)

Source: MLIT: 10 years of implementation regarding Defects Liability Insurance (Japanese Only)35

13-3. Housing Dispute Resolution System, Consultation and Advice
Table 6 Houses eligible for telephone consultation, consultation by Industrial Experts, and Review Board of Housing Disputes

Newly built houses*1with DefectLiability Ins.

Existing houses
Other than a&b

Remodelingwith DefectLiability Ins.

Other

Telephone consultation
Consultation by industry experts
Review Board of Housing Dispute(ADR)

Covered by CHORD

Not covered
Not covered

Covered by CHORD*3

Not covered*2
Not covered*2

Consultation, advice, handling complaints
regarding construction agreements and sale andpurchase agreements*1 Houses covered by the housing performance indication system*2 There are exceptional cases*3 Since October 2022, CHORD has been handling disputes arising from existing houses/remodeling works which are covered by the Housing
Defect Warranty Liability Insurance. Insurance Corporations pay fees to CHORD to support their operations.

Source: The Foundation for Housing Warranty updated table based on MLIT : 10 years of implementation regarding Defects Liability Insurance (Japanese Only).
36

13-4. Housing Dispute Resolution System, Consultation and Advice
Diagram 23 Number of Telephone Consultations in 2022 (new and existinghouses)“Consultations regarding defects of newly-built and existinghouses” includes consultations for disputes related
to contracts/agreements.
”Inquiries and Consultations regarding non-defectissues" includes houses for lease, trouble
with neighbors, inheritance, and inquiries for various housing
related government schemes.
Source of Diagram 23 & 24 : Annual statistics regarding housing related issues 2023

Diagram 24 Number of telephone consultations in 2022 (remodeling)“Consultations regarding defects of newly-built and existinghouses” includes consultations related to disputes arisingfrom contracts/agreements.
”Inquiries and Consultations regarding non-defect issues"
includes houses for lease, trouble with neighbors,inheritance, and inquiries for various housing related
government schemes.
3713-5. Housing Dispute Resolution System, Consultation and Advice
Table 7-1 Clients’ desired resolution in 2022 (new and existing houses)

Table 7-2 Clients’ desired resolution in 2022 (remodeling)

Newly Built and Existing Housing
Newly built
housing(No. of cases)

Remodelling

Existing
housing

(%)

(%)

Newly
built
houses(No. of cases)

6,376

57.4

577

52.8

RepairRepair and Compensation
for damages

798

7.2

70

6.4

Repair and Compensation
for damages

Compensation for damages

1,326

11.9

206

18.8

Cancellation of contract

713

6.4

63

5.8

Compensation fordamages
Cancellation of contract

Construction amounts, etc.

19

0.2

0

0.0

Construction amounts, etc.

1,873
11,105

16.9
100

177
1,093

16.2
100.0

Repair

Other
Total

Table 8-1 Consultation by area in 2022 (new and existing houses)

No. of cases
Exterior walls
Floor
Openings
Roofs, incl. attic
EquipmentInterior
Other
Total

1,449
1,308
1,185
767
898
767
5,410
11,784

(%)
12.3
11.1
10.1
6.5
7.6
6.5
45.9
100.0

Existing
106
186
125
82
176
98
588
1,361

Total

(%)

1,512

45.5

494

40.7

262

7.9

119

9.8

510

15.3

220

18.1

312

9.4

123

10.1

2

0.1

3

0.2

728
3,326

21.9
100

256
1,215

21.1
100.0

Table 8-2 Consultation by area in 2022 (remodeling)

Newly Built and Existing Housing
Newly built

Other

Existing
houses

(%)

(%)
7.8
13.7
9.2
6.0
12.9
7.2
43.2
100.0

CHORD :Annual statistics regarding housing related issues 2023

No. of cases
Exterior walls
Floor
Openings
Roofs, incl. attic
EquipmentInterior
Other
Total

Remodelling
Newly built
702
379
278
580
346
283
1,155
3,723

(%)
18.9
10.2
7.5
15.6
9.3
7.6
31.0
100.0

Existing
99
211
77
120
120
106
341
1,074

(%)
9.2
19.6
7.2
11.2
11.2
9.9
31.8
100.0

38

13-6. Housing Dispute Resolution System, Consultation and Advice
Diagram 25 Number of cases handled by industry experts (fee charged) and the Review Board of Housing Dispute in 2021
No. of cases
2500
164

2000
1500
1000
500
0

158

126

191

161

172

901

180
158

176

176

595

655

655

1,017

884

899

905

922

949

1011

934

1063

974

898

855

855

2014

2015

2016

2017

2018

2019

2020

2021

2022

846

671
648
2013

Fiscal Year
Number of cases handled by the Review Board of Housing Disputes
Industry Experts' Consultations (Remodelling)
Industry Experts' Consultations (New & Existing Houses)

Source: CHORD: Annual statistics regarding housing related issues
2022

14. Link

Organization

Contents

HP

Housing Production Department, Ministry of Land,
Infrastructure, Transport and Tourism

Housing Warranty Scheme

https://www.mlit.go.jp/jutakukentiku/jutakukentiku.files/kashitanpocorner/

Center for Housing Renovation and Dispute
Settlement Support (CHORD)

Dispute resolution

https://www.chord.or.jp/chord_official/index.html

Japan Federation of Bar Associations

Review Board of Housing
disputehttps://www.nichibenren.or.jp/en.html
39

15-1 Source
Diagram

Name

Sources

Diagram 1

Housing Investment and its share against GDP

Cabinet Office, National Accounts of Japan

Diagram 2

Changes in Housing Warranty System

Organization of Housing Warranty: Databook 2008

Diagram 3-1

Housing Quality Assurance Scheme1

Diagram 3-2

Housing Quality Assurance Scheme2

Diagram 4

HQAS - by housing units & registered business entities

Diagram 5

Security Deposit Scheme

Diagram 6-1

New Housing Defects Liability (Type I) Scheme

Diagram 6-2

New Housing Defects Liability (Type I) Scheme

Diagram 7

Parts in Housing, in which 10 years liability is mandatory

Diagram 8

Inspection at the time of underwriting

Diagram 9

Extension of New Housing Defects Warranty Insurance

Diagram 10

Existing Housing Sale Warranty Insurance for real estate agents

Diagram 11

Existing Housing Sale Warranty Insurance for transactions
between individuals (Real estate brokerage type)

MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)

Diagram 12

Existing Housing Sale Warranty Insurance for transactions
between individuals (Inspection Company type)

Diagram 13

Remodeling Defect Liability Insurance

Diagram 14

Large-scale Repair Work Liability Insurance

Diagram 15

Warranty under Completion Warranty Program

MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)
MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)
MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)
HP from insurance corporations

Diagram 16

Number of newly built houses with financial security resources
for New Housing Defects Liability Insurance (Type I)

MLIT: Number registered newly built houses on either Security Deposit System
or Defects Liability Insurance (Japanese Only)

Diagram 17

Number of insurance policies issued by type of house

CHORD Annual statistics regarding housing related issues 2023

Organization of Housing Warranty: Outline of Housing Quality Assurance
SchemeOrganization of Housing Warranty: Outline of Housing Quality Assurance
SchemeOrganization of Housing Warranty: Databook 2008
MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)
MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)
MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)
MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)
Study Committee of the Housing Defects Assurance Regulation:
The Housing Quality Assurance Act Q&A, 2008, /HP of Insurance Corporations
MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)
MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)40

15-2 Source
Diagram

Name

SourcesNumber of insurance policies related to existing houses andremodeling
Defects by area and phenomenon of insured events regarding
Newly Housing Defects Warranty Insurance
Defects by area and phenomenon of insured events regarding
Existing Housing Sale Warranty Insurance

Diagram 23

Consultation and Dispute resolution system for houses andremodeled houses
Number of Telephone Consultations (new and existing houses)

MLIT: Recent Trends of Defects Liability Insurance scheme July 2023
(Japanese Only)
CHORD: The integration of information system regarding housing 2021 & 2022
(Japanese Only)
CHORD: The integration of information system regarding housing 2021 & 2022
(Japanese Only)
MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)
MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)
CHORD: Annual statistics regarding housing related issues 2023 Table 4

Diagram 24

Number of telephone consultations (remodeling)

CHORD: Annual statistics regarding housing related issues 2023 Table 5

DiagramNumber of cases handled by industry experts (fee charged)
and the Review Board of Housing Dispute
Name

CHORD: Annual statistics regarding housing related issues 2023 ADR Table 4,
Expert's Consultation 1
Sources

Table 1

Defects reported during 1986~2007 based on HQAS

Organization of Housing Warranty: Databook 2008

Table 2

New Housing Defects Liability Insurance Mandatory vs Voluntary

Table 3

Security Deposit Calculation

Table 4

Housing Defect Liability Insurance Products

MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)
MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)
MLIT and HP from Insurance Corporations

Table 4

Housing Defect Liability Insurance Products (2)MLIT and HP from Insurance Corporations

Provisions for defects liability between construction contracts
and sale and purchase agreements
Houses eligible for telephone consultation, consultation byIndustry Experts, and Review Board of Housing Disputes
Clients’ desired resolution(new and existing houses, remodeling)
Consultation by area (new and existing houses, remodeling)

MLIT Housing Bureau Housing Production Department : The Housing Quality
Assurance Act - revised version 2020
MLIT: 10 years of implementation regarding Defects Liability Insurance(Japanese Only)

Diagram 18
Diagram 19
Diagram 20
Diagram 21
Diagram 22

Diagram 25

Table 5
Table 6
Table 7
Table 8

Safety net of Housing Defects Liability Insurance

Annual statistics regarding housing related issues 2023 Table 61
Annual statistics regarding housing related issues 2023 Table 64

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