Understanding Nursing Home Investments in Japan

Invest in Japan Real Estate

Japan Real Estate Investments

10 Mar, 2020 –

Investment in nursing homes for the elderly through acquiring real estate or the shares of companies managing such homes is increasing in Japan. Generally, investors should be aware of the relevant regulations in order to consider risks; however, the structure of Japanese laws and regulations on these homes is complicated because there are historically two authorities involved, each having established different regulations.
The following is a brief introduction from the latest legal perspective for potential investors.

The first authority involved is the Ministry of Health, Labour and
Welfare (MHLW). The MHLW supervises nursing homes based on the Act on
Social Welfare for the Elderly. Under this act, there is a concept of ‘a
fee-based home for the elderly’ (Nursing Home), basically meaning a
facility that provides services for taking in elderly persons and
providing them with nursing care services. The MHLW published guidelines
for prefectural governors on the method of administrative guidance for
Nursing Homes and the desirable conditions involved, such as staffing,
management, internal rules and services.

The second authority involved is the Ministry of Land, Infrastructure,
Transport and Tourism (MLIT), which supervises nursing homes under the
Act on the Securement of a Stable Supply of Elderly Persons’ Housing.
This act has another definition for such facilities: ‘a residence with
health and welfare services for the elderly’ (Service Residence), which
is rental housing for the aged which provides residents with
safety-check services and life-advisory services. The MLIT requires
Service Residences to satisfy certain conditions that are generally
looser than those of Nursing Homes.

As the descriptions above show, most Service Residences also fall under
the definition for a Nursing Home. These Service Residences, therefore,
must comply with both the MLIT requirements and the MHLW guidelines.
However, in practice, due to the differences between jurisdictions, many
of them seem to comply with only the MLIT requirements as Service
Residences. Even though, in 2015, the MHLW amended its guidelines and
clarified that they applied also to Service Residences that fell under
the Nursing Homes definition, the authorities do not as yet appear to be
enforcing this policy perfectly. The local authorities directly
supervising Nursing Homes tend to overlook non-compliance by Service
Residences by applying provisions in the guidelines that use the wording
‘in accordance with the type of service provided’ and thus allow some
flexibility. However, since it is expected that administrative guidance
on Service Residences will become stricter to unify the regulations,
investors should carefully monitor future activities of the authorities.

(Source – Foreign Policy, Pic – Sakamoto Nursing Home/ “Angelina Earley“)

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