On Dec. 23, 2023, South Korea became an 'ultra-aged society.' The proportion of those aged 65 and older (10,244,550 people) in the South Korean population has surpassed 20%. The United Nations (UN) classifies a society as aging if the population over 65 exceeds 7%, aged if it exceeds 14%, and ultra-aged if it exceeds 20%. Accordingly, ChosunBiz introduces overseas businesses focused on seniors and addressing social issues arising from being an ultra-aged society, centered around Japan, which entered the ultra-aged society 19 years earlier in 2004. [Editor's note]
Japan consists of four main islands. Among them, there is land larger than Kyushu (3,675.3 km²), located in the southernmost part, measuring 41,000 km² (as of 2016), which hasn't been registered for inheritance after the owner's death or where the owner has lost contact, referred to as 'unowned land.' This accounts for 24% of the total land in Japan and is 67 times the area of Seoul.
Since January 2017, an investigation into unowned land has been conducted based on data from the Ministry of Land, Infrastructure and Transport. The 'Unowned Land Research Group' forecasts that if the government does not implement countermeasures, the area of unowned land will increase to 7.2 million km² by 2040, which corresponds to 90% of the area of Hokkaido (780,000 km²).
The increase in unowned land has various causes. First, due to population decline and aging, the asset value of land has fallen, weakening the consciousness that one must own land. When Japan's economy was growing rapidly, there was a high demand for land, causing land prices to skyrocket. However, with the bursting of the bubble, the 'land myth' collapsed, and it became a situation where not only could land not be sold but also could not be rented. Moreover, if an heir registers ownership, they have to bear property taxes and management costs, leading to a culture of avoiding registration.
Thus, the number of those who have inherited land without registering it has increased, resulting in a rise in unowned land. While this is difficult to understand in South Korea, where real estate values are high, many individuals who moved to the three major urban areas of Tokyo, Osaka, and Nagoya do not register inheritance even after their parents in rural areas have passed away. Some of them avoid registering inheritance to evade the costs of legal professionals, estate acquisition taxes, and property taxes. In the context of Japan's ultra-aged society, the increasing number of deaths contributes to the rise of unowned land. It is estimated that after 2030, the number of deaths will increase by 400,000 annually compared to 2015.
Since South Korea is also experiencing low birth rates, aging, population decline, and concentration in large cities, there will likely be lands that are difficult to identify owners in provincial cities and rural areas, which may increase social costs. The rise in unowned land makes it challenging to collect property taxes and incurs administrative costs in locating owners, which results in economic losses. The Unowned Land Research Group estimates that the costs and losses due to unowned land reached approximately 180 billion yen (around 166.02 billion won) in 2016. By 2040, this is expected to rise to about 310 billion yen (approximately 285.92 billion won), and the cumulative losses from 2017 to 2040, according to Age Technologies' CEO Yuta Shiobara, will reach 5.91 trillion yen (approximately 54.51 trillion won).
Accordingly, ChosunBiz interviewed Yuta Shiobara, the CEO of Age Technologies, which provides services to simplify complex inheritance procedures online, on the 20th. Shiobara said, "The application for inheritance registration and inheritance of bank deposits is known to be complicated," emphasizing that "the Age Technologies-operated 'Sozoku.com Real Estate' and 'Sozoku.com Bank Accounts' services reduce the burdens associated with inheritance and facilitate inheritance procedures."
─What was the motivation behind founding Age Technologies in 2018?
Before founding Age Technologies, I worked at a consulting firm specializing in business succession and inheritance planning for small and medium-sized enterprise owners. There, I provided specialized consulting regarding how to pass on equity linked to company management, as well as inheritance tax strategies. However, the cost of these services was high and not accessible to everyone. The affluent class in Japan comprises only about 10% of the population. Drawing on my experience working at an advertising agency and a startup specializing in app development after college, I established Age Technologies to resolve inheritance issues for the remaining 90%.
─Why did you name your company 'Age Tech' to refer to age-friendly technologies? Are you considering expanding your business beyond what you're currently doing?
Around 2020, I learned that technologies aimed at solving challenges related to aging societies were referred to as 'Age Tech' in Silicon Valley. Our flagship service, Sozoku.com Real Estate, aims to address the issues arising from aging societies, and future services will carry the same objective. Hence, we named our company Age Technologies, indicating our ambition to become a leading firm in the Age Tech sector.
─Please describe the services provided by Age Technologies.
Age Technologies operates two services, 'Sozoku.com Real Estate' (launched in January 2020) and 'Sozoku.com Deposits' (launched in May 2022), which allow users to easily process complex inheritance procedures via smartphone. Sozoku.com Real Estate handles the transfer of property ownership due to inheritance, while Sozoku.com Deposits manages withdrawals for inherited bank accounts and deposits. Both services feature an internet-based system capable of automatically generating various forms, maximizing user convenience. Users can also monitor the status of all procedures in real-time via smartphone, anytime and anywhere. The fees are fixed regardless of the number of heirs or the size of the assets. I believe we have gained reliability by processing over 40,000 inheritances.
─From the perspective of South Korea, where real estate asset values are high, it is hard to understand why individuals do not register inherited real estate in Japan. What are the reasons for not inheriting real estate of the deceased in Japan?
There are two main reasons why real estate inheritance does not occur. First, the inheritance process in Japan is complex. It requires compliance with civil law, collection of documents certifying family relations and other related documents, preparation of various application forms, and drafting a family tree, all of which take considerable time. The complexity of the inheritance process increases the number of people who neglect their inherited properties. Furthermore, since most people have never experienced inheritance, they find the process burdensome. Many heirs also often no longer reside in their hometowns, which contributes to their reluctance to proceed with inheritance. The assets transferred from generation to generation in Japan amount to approximately 50 trillion yen (about 461.17 trillion won) annually, accounting for about 10% of Japan's Gross Domestic Product (GDP). However, most of these inherited assets are predominantly transferred to Tokyo, as heirs have moved to urban areas. However, those who have relocated to urban areas think, "It's better not to inherit the hometown property than to pay property taxes every year."
─How many documents are necessary for inheritance in Japan? Is it not possible to resolve these questions immediately through government offices rather than the internet?
The number of documents required varies depending on the method of inheritance and family circumstances, but generally, 10 to 20 or more documents need to be prepared. By using the Sozoku.com Real Estate service, users can answer simple questions via smartphone and can prepare the necessary documents in just a few minutes. Sozoku.com Real Estate is designed to be intuitive and user-friendly, requiring no specialized knowledge whatsoever. Of course, heirs can seek support by visiting government offices. However, traditional processes are inefficient and cumbersome, requiring advance phone reservations and often taking over 30 minutes to issue just one document. Using Sozoku.com Real Estate allows users to focus on inheritance without wasting unnecessary time and energy.
─What is the reason for fixing the fees of Sozoku.com Real Estate as a flat rate? Is this a strategy for securing users?
The fixed-rate system is a differentiating point for the Sozoku.com Real Estate service. We charge 85,000 yen (approximately 780,000 won), excluding taxes, regardless of the number of heirs or the number of assets involved in the inheritance process. This strategy is intentionally designed to make our service easily accessible to people all over Japan. The number of heirs or types of assets does not guarantee wealth for the heirs. For instance, inheriting several plots of land, such as agricultural land or forests, may not significantly increase wealth. We hope Sozoku.com Real Estate becomes a service available to all Japanese individuals, regardless of financial status, providing reliable services without concerns about additional costs during inheritance, thereby contributing to the improvement of Japan's real estate environment.
─What additional services are in the pipeline, and what are your future goals?
From 2020 to 2024, we processed over 40,000 inheritances, yet this represents less than 1% of the inheritances taking place annually in Japan. We will strengthen our marketing to ensure more people in Japan's ultra-aged society can utilize our services. Additionally, starting this year, we plan to enhance post-inheritance services, including real estate sales, vacant home management, and cleaning services, to provide comprehensive services from inheritance to subsequent management. We also aim to raise public awareness regarding the mandatory registration of inheritance implemented last April.
To reduce unowned land, the Japanese government has revised the Real Estate Registration Act, mandating that heirs apply for inheritance registration within three years of recognizing the land acquisition after the owner's death starting April 1 of last year. Failure to complete the registration within the stipulated timeframe without justifiable reasons will result in fines of up to 100,000 yen (about 920,000 won).
─Are there no plans to expand into South Korea?
Currently, there are no plans. However, we aim to assist Japanese residents in South Korea in resolving inheritance issues more easily and to reduce the burden related to asset management and procedures in Japan. Over 40,000 Japanese nationals reside in South Korea. Age Technologies can resolve inheritance issues for Japanese residents living in South Korea.