When purchasing real estate, there is an important concept that many people overlook. That is thesetback.
Setback refers to the construction of buildings set back a certain distance from the street boundary line in accordance with the Building Standards Law. The purpose of this system is to secure the width of the road and improve disaster prevention and traffic safety.
Understanding setbacks is extremely important for those who are considering purchasing real estate. This is because on a lot that requires a setback, the actual buildable area is smaller than the lot area, which directly affects the size of the building and the value of the property.
In this article, INA&Associates will explain the basic concept and actual impact of setbacks in an easy-to-understand manner for the general public, based on our experience in numerous real estate transactions as real estate transaction specialists. If you are considering land utilization or real estate investment, please read to the end.
Setback is an important building restriction stipulated in Article 42, Paragraph 2 of the Building Standards Law. Specifically, it requires that buildings be set back 2 meters from the centerline of the road on lots abutting a road less than 4 meters wide.
This system was established due to the historical background of the rapid urbanization of postwar Japan, which led to the formation of many residential areas facing narrow roads. Roads less than 4 meters wide make it difficult for emergency vehicles to pass through, and are likely to hinder evacuation and firefighting activities in the event of a fire.
The main purposes of setbacks are as follows
The most important objective isto improve disaster prevention functions.By effectively securing a road width of 4 meters, emergency vehicles such as fire trucks and ambulances will be able to pass smoothly. It is also expected to prevent the spread of fire in the event of a fire.
Ensuring traffic safety is anotherimportant objective. The road will be wide enough for pedestrians and vehicles to pass each other safely, thereby reducing the risk of traffic accidents. In particular, the system is designed to ensure safe passage for children and the elderly.
The formation of a favorable living environmentcontributes to securing sunlight and ventilation, as well as improving the landscape. Appropriate distance between buildings can also be expected to protect privacy and reduce noise.
Article 42, Paragraph 2 of the Building Standards Law stipulates that "roads less than 4 meters wide and designated by the specified administrative agency" shall be considered as roads. These roadsare referred to as "2-paragraph roads" or "deemed roads.
On a lot abutting a 2-paragraph road, a line 2 meters from the center line of the road is considered the road boundary line, and no building can be constructed on the road side below this line. This setbackis calledthe setback area.
The important point is that the setback area is included in the site area but is excluded from the calculation of the building area and floor area ratio. In other words, the effective site area where a building can actually be constructed is reduced.
When applying for a building permit, the setback area must be clearly indicated on the plans. In addition to buildings, structures such as gates and fences cannot be placed in the setback area. However, underground structures may be permitted under certain conditions.
To understand the relationship between road width and setback, it is important to first understand the type of road. The Building Standard Law classifies roads as follows
| Type of road | Width | Setback required or not | Remarks |
| Paragraph 1-1 road | 4m or more | Not required | Road according to Road Act |
| Paragraph 1, No. 2 road | 4m or more | Not required | Road according to the City Planning Law, etc. |
| Paragraph 1, item 3 road | 4m or more | Not required | Existing road (existing as of November 23, 1950) |
| Paragraph 1, Road No. 4 | 4m or more | Not required | City planning road, etc. |
| Paragraph 1, Road No. 5 | 4m or more | Not required | Location-designated road |
| Paragraph 2 road | Less than 4m | Necessary | Deemed road |
Thecriteriafordetermining a Section 2 roadmust meet multiple requirements. First, the road must have been lined with buildings as of November 23, 1950. Second, the road must still be open to public traffic. Furthermore, the road must be designated as a Section 2 road by a specified administrative agency.
Thesetback distance is calculatedbased on 2 meters from the centerline of the road. However, if one side of the road is bordered by a river or cliff, the setback distance must be 4 meters from the boundary line. In addition, corner lots may require setbacks for both roads.
Special provisions alsoexist. In some cases, the setback distance can be relaxed if the specific administrative agency approves. For example, when there are topographical constraints or when it is not reasonable in relation to surrounding buildings. However, the application of these special exceptions is very limited and requires sufficient consideration and consultation in advance.
There are strict restrictions on land use in setback areas.The most basic restriction is theprohibition of building construction.No part of a house, storage room, garage, etc. can be built.
Restrictions on the placement of structures are alsoimportant. As a general rule, the installation of structures such as gates, fences, retaining walls, etc. is also prohibited. However, with the permission of the road administrator, certain structures may be permitted.
There is a relatively high degree of freedom with regard toplanting and pavement. Flower beds, lawns, gravel pavement, etc. are possible, but it is necessary to take into consideration the possibility that the area may be developed as a road in the future.
Use as a parking lot isgenerally permitted. However, covered garages and mechanical parking are prohibited as they are considered buildings. It must be used only as an open-air parking lot.
Underground usemay be permitted under certain conditions. Underground rooms and underground garages may be allowed as long as they are below a certain depth from the ground surface. However, there are strict standards regarding structure and safety, and prior confirmation is required.
To accurately determine when a setback is required, multiple conditions must be comprehensively considered.The most basiccondition is that the site abuts a 2-way road less than 4 meters wide.
Theroad widthis measured by the shortest distance between the boundary lines at both ends of the road. If the road is curved or its width is not constant, the width of the narrowest part of the road is used as the standard. Measurements are taken in terms of horizontal distance, and even if the road is sloped, the horizontal projected distance is used to determine the distance.
The right-of-way requirement is alsoan important determining factor. According to the Building Standard Law, a site must be at least 2 meters from a road. 2-section roads must be at least 2 meters from the road boundary after setback.
There are also restrictionsbased on the use of the building.Setbacks apply not only to ordinary buildings such as houses and offices, but also to special buildings such as factories and warehouses. However, there may be additional restrictions depending on the use.
Particular attention should be paid to corner lots, where a corner lot bordering two streets may require setbacks for both streets. In this case, stricter restrictions apply at the corner where the setback areas overlap.
| Case | Road A width | Road B width | Setback required or not | Points to note |
| Corner lot① | 3.5m | 4.0m | Required only for road A | Not required for road side over 4m |
| Corner lot ② | 3.0m | 3.5m | Both required | Corner area is limited to overlap |
| Corner lot (3) | 2.5m | 6.0m | Only road A is required | If width difference is large |
Ifone side of the road is a river or cliff, the setback distance is calculated differently. Normally, it is 2 meters from the center line of the road, but in this case, it must be set back 4 meters from the boundary line of the river or cliff. This is a system design that requires the buildable side to bear a greater burden because it is physically impossible to widen the road.
The determination in the case ofprivate roadsis particularly complicated. Even a private road may be designated as a Section 2 road if certain conditions are met. What is important is not the type of ownership of the road, but the reality of whether or not it is used for public traffic.
The treatment ofexisting nonconforming buildingsis also important. Buildings constructed prior to the enactment of the setback system that do not conform to current standards are allowed to continue to exist as existing nonconforming buildings. However, in the case of large-scale additions or renovations, compliance with current standards is required.
Surveyingis an essential procedure for lots requiring setbacks. Accurate street boundaries must be determined and setback lines must be established. This surveying is a prerequisite for applying for building permits.
Thesurveyingprocedure is as follows. First, the road boundary is determined through consultation with the road administrator. Next, the center line of the road is measured and a line set back 2 meters from the center line is established as the setback line. Finally, the area of the setback portion is accurately calculated.
Thesurveyingcost varies depending on the size and shape of the land and the condition of the road, but generally ranges from 200,000 yen to 500,000 yen. The cost may increase further if the land has a complicated shape or if the boundary with the adjacent land needs to be determined.
In the preparation of surveying documents, we will prepare documents such as current survey drawings, setback drawings, and area calculation sheets. These documents are required when applying for building permits and registering real estate. They are also important documents for future sales and purchases.
Theimportanceofprior consultationis especially important for building plans involving setbacks. It is strongly recommended that prior consultation be conducted with the Building Guidance Section of the specified administrative agency prior to applying for building confirmation. At this stage, you can confirm whether or not setbacks are required and the specific restrictions.
A wide variety of documents arerequired.Basic documents include current survey map, official map, certified copy of registry, road register, and building plan summary. In addition, documents showing the history of the road and the status of surrounding buildings may also be required.
The examinationperiod may take longer than a regular building permit application. This is because it takes time to determine setbacks and confirm surveyed documents. It is important to set a schedule with sufficient time.
Neighborhoodrelations are also an important factor. When the layout of the building is changed due to setbacks, explanation and understanding of the neighbors is a prerequisite for smooth construction work. In particular, construction work involving boundaries requires sufficient explanation in advance.
The most direct impact of setbacks on real estate is thereduction in buildable area. Although the setback area is included in the lot area, the effective lot area is reduced because buildings cannot be constructed there.
The following is a specific example of thecalculation of the reduction in area.Assume a site area of 150 square meters, a road width of 3.5 meters, and a frontage of 15 meters facing the road. The setback distance is 2 meters from the center line of the road, but the lot must be set back approximately 0.25 meters from the current road boundary. In this case, the setback area is 15 meters x 0.25 meters = 3.75 square meters, reducing the effective lot area to 146.25 square meters.
| Item | Before setback | After setback | Difference |
| Site area | 150 sq.m. | 150 sq.m. | No change |
| Effective site area | 150 sq.m. | 146.25m2 | -3.75m2 |
| Buildable area (building-to-land ratio 60%) | 90m2 | 87.75㎡ -2.25㎡ -2.25 | -2.25m2 |
| Total floor area (Floor area ratio 150%) | 225m2 | 219.38m2 | -5.62m2 |
The effect on the building-to-land ratio is alsoan important factor. Since the building-to-land ratio is calculated based on the effective site area, the buildable area will decrease due to the setback. In the above example, in an area with a building coverage ratio of 60%, the buildable area would be reduced by 2.25 square meters.
The impact onland valuevaries greatly depending on whether setbacks are required or not. In general, land requiring setbacks tends to be 5% to 15% less expensive than land with the same conditions that do not require setbacks.
There are multiple factors toconsider in the price assessment.The size of the setback area, the current road width, future road improvement plans, and the development status of the surrounding area are all comprehensively evaluated. In particular, if the setback area is large, or if the corner lot requires setbacks in multiple directions, the impact on price will be greater.
The impact on building costs should also beconsidered. If the buildable area is reduced due to setbacks, the building will need to be higher in order to secure the same total floor area. This may result in changes to structural and facility specifications, which may increase construction costs.
|
Setback Area Ratio |
Impact on Land Price |
Impact on Building Cost |
Overall Impact |
|
Less than 5 |
-3% to -5 |
Almost no impact |
Minor |
|
5% to 10 |
-5% to -10 |
+2% to +5 |
Moderate |
|
10% to -15 |
-10% to -15 |
+5% to +10 |
Large |
|
More than 15 |
-15% or more |
+10% or more |
Very Large |
In evaluations by financial institutions, real estate requiring setbacks tends to be valued at a lower collateral value. This is because the reduction in effective site area limits the potential for future utilization.
The impact on financing conditionsmay include a decrease in the amount that can be borrowed and worsening of interest rate conditions. Particularly in the case of investment properties, financing conditions may become more difficult due to lower profitability.
In collateral valuation practice, the valuation is based on the effective site area excluding setback areas. The risk that additional setbacks may be required due to future road improvements is also taken into consideration.
Effective use of the setback areais possible within the limits. The most common use is as a parking lot, which can be maintained by paving or grading. It is also possible to plant trees for greenery.
The impact of setbacks can be minimizedthrough creative architectural planning.It is important to design the building so that the setback area can be effectively utilized as a garden or parking lot.
It is also important to plan forfuture road maintenance.It is wise to check the road development plan of the municipality and make a land use plan considering the possibility of road widening in the future.
In terms of taxation, setback areas are also subject to property tax. However, some municipalities offer tax exemptions for setback areas.
In the explanation of important matters, itis necessary to explain in detail the existence or non-existence of setbacks and specific restrictions. It is important to ensure that the buyer fully understands the reduction in buildable area and future restrictions.
In setting theterms and conditions of the contract, it is necessary to clearly define the timing and cost burden of the setback survey, as well as the possibility of changing the terms and conditions of the contract based on the results of the survey.
Prior to delivery,the completion of the setback survey, confirmation of the results of discussions with the government, and confirmation of the boundary with the adjacent landowner should beconfirmed.
From the viewpoint ofliabilityfordefects, lack of disclosure of information on setbacks may be a serious problem. The seller is responsible for accurately disclosing all information to the best of its knowledge.
Setbacks are an important building restriction that cannot be overlooked in real estate transactions.Article 42, Paragraph 2 of the Building Standard LawThis system, based on the "Building Code of Japan," requires that buildings be set back 2 meters from the center line of the road on sites that abut a 2-paragraph road less than 4 meters wide.
The most significantimpact is a reduction in buildable area. Since buildings cannot be constructed in the setback area, the effective site area is reduced and the calculation standards for the building-to-land ratio and floor-area ratio are also changed. This may make it difficult to realize the planned building size or increase construction costs.
The economic impactcannot be ignored. The price of land that requires setbacks tends to be 5% to 15% lower than that of land with the same conditions that does not require setbacks. In addition, in the evaluation of collateral by financial institutions, the assessed value may also be lower due to the reduction in effective site area.
When considering the purchase of real estate, be sure to confirm the following points.
The first step is to accurately determine thetype and width of the road.Check to see if the road that is tangent to the property falls under the category of a Section 2 road and what the current road width is. This information can be obtained from the building guidance or road management department of the municipality.
Confirm specificallywhether and towhat extentsetbacks are required.If setbacks are required, the area and its impact on construction must be accurately ascertained. Corner lots may require setbacks in multiple directions.
The status of surveying is alsoan important confirmation. Make sure that accurate setback surveying has been conducted and that discussions with the government have been completed. If not, additional costs may be incurred after the purchase.
Decisions regarding setbacks are complex and require specialized knowledge of building codes.It is strongly recommended that you consult with areal estate agent,architect,land and building surveyor, or otherprofessional.
In particular, consultation with a specialist is essential in the following cases When the type and width of the road is unclear, when the setback area is large and there is concern about its impact on the building plan, when the land has complicated conditions such as corner lots or deformed lots, and when profitability as an investment property is important.
If you are considering purchasing real estate, first check whether or not setbacks are required for your potential property. If setbacks are required, accurately understand the impact and use this information as a factor in your purchase decision.
At INA&Associates, Inc., wehave extensive experience and expertise in assisting our clients with setbacks and other building restrictions. Please feel free to contact us if you have any questions regarding real estate purchase or land utilization.
With appropriate knowledge and expert support, we will do our best to help you understand the restrictions of setbacks and help you realize the best real estate investment or home purchase.
Whether or not a setback is required can be confirmed at the Building Guidance Section or Building Verification Section of the municipality in which the property is located. An accurate determination can be made by checking the road register or the road type under the Building Standard Law.
Public maps that can be obtained from the Legal Affairs Bureau and road registers kept by road administrators are also important documents. It is also possible to ask a real estate company or architect to conduct a survey.
It is important to note that an accurate determination cannot be made by visual inspection of the site alone. Even if the road width appears to be about 4 meters, it may actually be less than 4 meters, or conversely, even if it appears to be narrow, it may not fall under the category of a road under the Building Standard Law.
Parking spaces can be installed in setback areas under certain conditions.However, it is limited toopen-air parking without a roof or walls.
Specifically, parking lot improvements such as paving, asphalting, or graveling are permitted. However, covered structures such as carports and garages are considered buildings and cannot be installed.
It is also important to understand that even if the property is used as a parking lot, it may be developed as a road in the future. When road improvements are made, parking facilities may need to be removed.
The cost of setback surveying varies depending on the size and shape of the land and the condition of the road, butgenerally,itranges from 200,000 yen to 500,000 yen.
Surveying is generally requested by land and building surveyors. It is recommended to obtain quotes from multiple firms and compare the costs and work involved.
If an existing building rests on a setback area, it willbe treated as anexisting nonconforming building. It is not necessary to remove the existing building immediately, but it is required to comply with the current standards for any major additions or renovations.
In addition, when reconstructing a building, it must be built in a location that conforms to the setback standards. Therefore, planning must take into account the fact that the buildable area will be reduced when rebuilding.
Thesetback areaisalsosubject to property tax as normal residential land.This is because the ownership of the land does not change even if there are restrictions that prevent the construction of buildings.
However, some municipalities offer property tax exemptions for setback areas. The conditions and percentage of exemption vary from municipality to municipality, so it is recommended to check with the local municipal taxation department.
In addition, if the setback area is provided free of charge as a road, it may be exempt from taxation. However, this is subject to certain procedures and conditions, so it is necessary to check well in advance.