Land prices are determined by the balance between supply and demand. There are fears that this balance of supply and demand may be disrupted due to the Productive Green Space Issue in 2022.

This time, we will explain in detail what the 2022 productive green space issue is and the impact the productive green space issue will have on land prices.

What is productive green space?

Productive green space refers to agricultural land designated as a productive green space district based on the City Planning Act.

Because productive green spaces are designated as farmland within urbanized areas, you will often see productive green space signs displayed on farmland in a corner of a residential area.

Taking Tokyo as an example, a considerable area, 395.64 hectares within the 23 wards and 2,576.73 hectares in the city, has been designated as productive green space.

Advantages and disadvantages of productive green spaces

The Productive Green Space System curbed unplanned housing development during the period of high economic growth and promoted healthy urban development by separating agricultural land to be preserved from agricultural land to be converted into housing.

To this end, tax incentives are offered to productive green space farmers, but restrictions are also placed on maintaining the land as farmland.

be given preferential tax treatment

If you acquire farmland as a gift or inheritance from the owner of productive green space and continue to farm on it, you will be subject to significant reductions in inheritance tax and gift tax.

When the system was first introduced, the property valuation of farmland in urban areas had risen sharply, and in many cases people were forced to sell their farmland due to inheritance tax.

As a result, much farmland in urban areas has been designated as productive green space in order to receive reduced gift and inheritance taxes.

Another big benefit is the reduction in property taxes.

Since the fixed asset tax assessment value of productive green spaces is determined on the assumption that they will be used as farmland, the tax amount is kept significantly lower than that for ordinary land.

Various restrictions are imposed

Once designated as productive green space, it must thereafter be maintained and managed as farmland.

The period is set to 30 years from the designated date or until the owner dies.

In addition, there are significant restrictions on building construction and development activities.

The construction of some facilities necessary for continuing agriculture, such as sheds and storage facilities, product processing facilities, and direct sales outlets, is permitted, but other development activities are not permitted.

What is the 2022 Productive Green Space Problem?

The year 2022 marks 30 years since much farmland in urban areas was designated as productive green space under the Productive Green Space System.

The designated period for productive green spaces is 30 years.

There is a provision that owners who reach the deadline can offer to purchase their farmland from their city, town, or village, but there are very few local governments with the financial means to accept such offers.

In the end, once productive green spaces are lifted, they will no longer be eligible for tax benefits.

As a result, concerns arose that many productive green spaces would be put up for sale and land prices would fall sharply.

This is the 2022 productive green space issue.

Continued next time"2022 Productive Green Space Issue"
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