Old Machiya houses in Kyoto, Japan find new life with niche loans

KYOTO (Reuters) – For generations, artisans and traders in Japan’s ancient capital, Kyoto, have lived in thousands of traditional “machiya” townhouses that are disappearing or falling into disrepair.

Sae Cardonnel and her French husband Sylvain stand in front of their traditional Kyoto “machiya” townhouse, which was restored with a specialized loan from Kyoto Shinkin Bank, in Kyoto, Japan on June 26, 2016. REUTERS / Lisa Twaronite

To help restore wood and tile structures, Kyoto banks have provided tailor-made loans to help preserve architecture in a city that was once the ancient capital of Japan and has a number of world heritage sites.

While borrowers are encouraged to preserve classic machiya elements, such as lattice wood exteriors, they have a great deal of leeway in renovating their homes.

Thanks to a loan from Kyoto Shinkin Bank, Sae Cardonnel and her French husband Sylvain equipped their machiya with a modern kitchen and heated floors, as well as a large open space inside for their family of five.

“We wanted to live in a house, not in a history museum,” she said. “Neighborhood children gather here to play on rainy days.

The almost century-old Cardonnel house is now flanked by modern structures. While Kyoto survived the bombings of WWII while the city was spared, many machiya were subsequently wiped out through modernization and development.

Machiya was included in the 2010 and 2012 Watchlists of Most at Risk Assets compiled by the World Monuments Fund, a U.S. non-profit organization aimed at preserving and protecting endangered architectural and cultural sites.

Abandoned machiya are common in Kyoto neighborhoods. About 13 percent of Kyoto’s machiya were destroyed between 1996 and 2003 alone, and the number has declined since then. Over 80 percent of the surviving buildings have lost at least some of their traditional appearance.

“There are more and more empty machiya in Kyoto. We would like to preserve them, as well as the historic cityscape, ”said Kazuhiro Waki, executive director of retail banking at Bank of Kyoto.

Investing money in old houses shows a change in mindset in a country where these houses are often demolished because they are worth little more than the land they are built on, and bankers have recognized the need for a niche loan product.

Bank of Kyoto, along with its rival Kyoto Chuo Shinkin Bank, started offering specialized loans last year. A third lender, Kyoto Shinkin Bank, pioneered machiya loans five years ago and, as of June, had loaned 2.9 billion yen ($ 28.87 million) for 112 restoration projects.

Bank loans work like this: rather than basing loans on estimated value alone, banks include an appraisal from the Machiya Machizukuri Fund, which certifies a property as a machiya and also documents the necessary restoration work.

The Machiya Machizukuri Fund, or “city creation”, is a public-private cooperative agency created in 2005 after the Kyoto government received a large contribution from a private donor to support and subsidize renovation projects.


Restoring old houses is relatively unusual in Japan as many people prefer newer residences. Most older buildings do not meet Japan’s strict codes for resisting earthquakes.

The country’s 1950 Building Standards Act requires all new timber structures to be constructed using modern construction methods, which has essentially rendered older buildings obsolete, regardless of their structural strength.

Already existing buildings are not required to meet modern standards, although many of their owners choose to strengthen them.

Bankers hope the loans will attract more buyers to machiya restoration projects and make it easier for local real estate companies to market them.

“For real estate companies, it would be easier to develop and promote machiya using this program,” said Waki ​​of Bank of Kyoto.

Interest in machiya catering is also increasing from potential buyers outside of Japan.

Hachise Co, a real estate agency in Kyoto, launched a global service in 2013 and an English website in 2014. The number of visitors to the site nearly doubled after attracting more than 30,000 in its first year, according to Shunsuke Bito of Hachise’s global marketing team.

Some customers ask about the availability of mortgages.

“There is definitely a demand for them,” Bito said. “We would prefer to sell to customers who love the machiya and intend to preserve them.”

With help from the Bank of Kyoto, Yoshinori Murase was able to restore his family’s machiya, built in 1918, to a spacious hideaway, with polished wooden beams above the floors covered with immaculate tatami mats.

“I really appreciated that such loans are now available,” he said.

Murase said he hopes his restored home will inspire other homeowners to renovate theirs, including the one attached to his. It is now empty, as its owner, a childhood friend, lives in another town.

“Hopefully he will come home to fix it one day,” Murase said.

Reporting by Lisa Twaronite; Editing by Malcolm Foster and Simon Cameron-Moore

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