(3) Environmental development of a housing market that meets diversified housing needs

## 1 ) Promotion of ensuring housing quality

The Housing Quality Assurance Act provides (1) the mandatory 10-year defect guarantee liability for the fundamental structure and prevention of rain leakage, (2) Housing Performance Indication System which allows a private organization to evaluate and indicate the performance of newly-built housing and existing housing including quake resistance and energy efficiency. Performance Evaluation Reports for Housing Plans were issued for 200,097 housing units, and Performance Evaluation Reports after Completion of Construction were issued for 192,606 newly-built units and 308 existing units.

The Designated Housing Dispute resolution bodies mediate problems regarding contracts, construction of houses with Performance Evaluation Reports after Completion of Construction between the housing company and clients. The Center for Housing Renovation and Dispute Settlement Support (CHORD) provides a range of support to the Designated Housing Dispute Resolution Bodies. The CHORD also provides a consultation service for housing problems. In FY 2008, the number of applications of dispute resolution and telephone consultation was 33 and 12,956 respectively.

## 2 ) Residential finance (JHF)

In order to support private financial institutions providing a comparatively long-term, fixed and low interest rate residential loan, Japan Housing Finance Agency implements securitization business. The business is composed of Flat 35 (Purchase Type) and Flat 35 (Guarantee Type). Flat 35 (Purchase Type)

is a loan type that gathers and securitizes the residential mortgages of private financial institutions while Flat 35 (Guarantee Type) is a loan type that supports securitization practiced by the private financial institution itself. By the end of March 2010, the total number of applications of Flat 35 (Purchase Type) was 313,047, the total number of purchased loans was 219,216 and the total number of the participating financial institutions was 338. Furthermore, the number of guarantee applications was 17,621, the number of guaranteed loans was 10,988 and the total number of participating financial institutes was four. For residential houses purchased or guaranteed in securitization business, technology standards such as durability are prescribed, and residential house quality assurances are worked out through house examinations. At the same time, by utilizing the framework of securitization business, the support scheme for acquiring high-quality housing is being implemented. This scheme reduces the first 10-year (20-year for long-term good-quality residential buildings) interest rate for the houses that satisfy one of the four basic standards, which are earthquake resistance, energy-saving ability, barrier-free and durability/flexibility.

In addition, the implementation of the agency’s direct loan origination business is limited to the politically important loans that are difficult to be provided by private financial institutions, such as loans for disaster, loans for reconstruction in areas densely congested with houses, and rental housing for households with small children and for the elderly. In June 2009, as part of “Economic Crisis Policy”, measures such as raising the loan-to-value ratio limit for mortgages in securitization business (purchase type) were adopted. Moreover, in February 2010, as part of the “Urgent Economic Policy for Future Security and Growth”, measures such as expansion of the interest rate reduction for the first 10 years (0.3% to 1.0%) in the support scheme for acquiring high-quality housing were adopted.

## 3 ) Enhancement of the housing taxation scheme

Under the current severe economic conditions, as a temporary measure aimed at economic recovery through promoting wide-ranged housing investment, the tax-exemption measure of gifts for dwelling house acquisition money from lineal ancestors was expanded. Adding to the income limit (the total income amount of donations received for the year is limited to below 20 million yen), the tax-exempt limit was increased by 15 million yen in FY 2010 and 10 million yen in FY 2011.

Altogether, in terms of exceptions to the taxation system for settlement at time of inheritance related to the donation of housing property, the exception of adding 10 million yen on the 25 million yen of special exemption has been abolished and the exception of donation from parents under 65 year-old has been extended by 2 years.