One of the early foreclosures of failed share houses developed as part of a wide-scale scam goes up for public auction next week. The minimum bid for the building and land is set at 23,672,000 Yen (approx. 205,000 USD), with results to be announced on October 25 (Update: It sold for 25,180,000 Yen to a private bidder). Back in January, several share houses by a former Ginza-based share house developer were listed for public foreclosure auction, selling for around a third to less than a half of what the original investors would have paid for them.
This particular share house has yet to be connected to the water mains and has not been occupied or rented out since its completion in May 2017.
There are several major red flags that indicate the severity of the scam.
- The structure potentially extends over into neighbors’ lots.
- Generally speaking, construction is not allowed on this land. This is due to a lack of direct road access, instead relying on easements over neighboring land that provide a 0.7 meter wide access path to the share house.
- According to the Nerima City Office, there are no construction records for the building making it a very high chance that this was constructed illegally and without construction permits. Also, share houses are required to have a minimum street frontage of 2 meters, while this one has a 0.7 meter wide path. Land with these conditions tends to have a very low market value and would have been bought dirt-cheap by the share house developer, with plans to re-sell it to an investor at a wildly inflated price.
- The two-storey wooden structure was built in mid-2017 with 12 rooms, two small kitchen units, two showers and two toilets, but no communal living or dining space. As a potentially illegal structure and with a cramped layout, renting it out as a sharehouse in the future may prove impossible.
- Reconstruction might not be possible unless neighboring land is acquired to get proper road access.
Source: Tokyo District Court.
281 total views, 3 views today