Key facts
- Tokyo plans to relax zoning rules to encourage affordable housing development.
- Developers will receive floor-area ratio incentives for building rental apartments at approximately 80% of market rates.
- The initiative aims to address sharp rent increases in central Tokyo.
- A public-private investment fund exceeding ¥20 billion will be established to support affordable housing projects.
- Around 300 affordable housing units are scheduled for delivery starting in fiscal 2026.
The Tokyo Metropolitan Government is set to implement a new policy to boost the supply of affordable housing, particularly in central areas like Shibuya, by offering zoning incentives to private developers. This initiative, expected to be introduced as early as fiscal 2026, aims to combat rising rents, which have seen condominium rates in central Tokyo increase by approximately 8% year-on-year.
The core of the plan involves relaxing floor-area ratio (FAR) limits for condominiums and mixed-use developments. Developers who commit to offering rental apartments at rents around 80% or less of prevailing market rates in surrounding areas will be eligible for these FAR bonuses. This mechanism is designed to improve project feasibility for developers, allowing them to maintain profitability while providing lower-cost housing options. The policy also allows for flexibility, permitting incentives even if affordable housing is provided in a separate building or through renovation of an existing property nearby.
This move comes as Tokyo faces a growing affordability crisis, with rents in the city's 23 wards reaching record highs. The government hopes this will help retain families with children and other households who might otherwise move to suburban or outlying areas due to housing costs. The initiative is also seen as a way to catch up with similar affordable housing strategies adopted in cities like New York and London.
To support these efforts, the Tokyo Metropolitan Government plans to establish a public-private investment fund exceeding ¥20 billion, with an equal contribution from the government and private investors. This fund will specifically target affordable housing projects. Four consortiums, including one involving Nomura Real Estate, have been selected as potential operators, with approximately 300 units slated for delivery in stages starting in fiscal 2026.