Japan Made Its Building Energy Code Universal in April 2025. Eighty-Seven Per Cent of the Housing Stock Sits Outside It.

On 1 April 2025 the last provisions of Japan’s amended Building Energy Efficiency Act came into force. From that date, compliance with energy conservation standards became mandatory, in principle, for all new residential and non-residential buildings (Anderson Mori & Tomotsune).

Before that, the obligation reached non-residential buildings of 300 square metres or more. Everything else — houses, small offices, the overwhelming majority of buildings Japan actually puts up — was on a notification regime: the developer filed a form saying the building met the standard, and that was the mechanism.

The building sector accounts for roughly 30% of Japan’s final energy consumption, on the Ministry of Land, Infrastructure, Transport and Tourism’s own figure (cited in the same briefing, from MLIT’s explanatory materials). Closing the gap on new construction is a real move. It is also the easier half of the problem, and the ministry has been unusually direct about which half is which.

What changed, precisely

The amendment act was promulgated on 17 June 2022 and enforced in stages, with everything in place by 1 April 2025. Three changes matter for anyone modelling the sector.

Scope. Mandatory compliance now covers all residential and non-residential buildings, with narrow exemptions: work of 10 square metres or less, buildings with no living rooms or a highly open structure that need no air conditioning, cultural properties, and temporary structures (Anderson Mori & Tomotsune). Conformity is confirmed through an energy consumption performance assessment, or, for straightforward cases, inside the ordinary building confirmation review.

The standard itself is two tests. Building envelope performance — heat loss through walls, windows and roof, divided by envelope area — and primary energy consumption across heating and cooling, ventilation, lighting, hot water and, for non-residential buildings, elevators. Houses must pass both. Non-residential buildings must pass the second.

Extensions and renovations conform only in part. Under the previous system, an extension or renovation pulled the whole building into scope. Since April 2025, only the extended or renovated portion has to comply. That reads as a loophole. MLIT wrote down its reasoning while the amendment was being drafted.

Why the law stops at the renovated portion

MLIT set out the logic in a presentation to an IEA workshop in November 2021, while the amendment was being drafted: given the cost of energy efficiency renovation in existing stock, it may be appropriate to apply regulatory measures only to parts of a building. If the act mandated compliance for the existing parts as well, “building owners may give up renovations” (MLIT).

The ministry gave that failure mode a name and designed around it. A rule strict enough to stop renovations happening produces worse buildings than a rule that catches only the part being touched. Existing stock gets support measures instead of obligations.

The instrument that just went universal therefore says nothing about the buildings that already exist.

The stock the code does not reach

The same MLIT presentation carries the number. As of FY2019, about 13% of Japan’s total housing stock — roughly 50 million units — complied with the energy efficiency standards. About 29% was uninsulated, failing even the 1980 standard. Another 36% met the 1980 standard and 22% the 1992 standard.

So the code that became mandatory in April 2025 describes a performance level that around one house in eight in Japan currently meets.

Set that against the pace of upgrade. According to the Housing and Land Survey, thermal insulation renovations of the housing stock ran to about 720,000 units in the period from January 2014 to October 2018 — under five years (MLIT, same source).

Roughly 43.5 million units sit below the standard. At about 150,000 insulation renovations a year, retrofit alone takes centuries. That is arithmetic on the ministry’s own two figures, not a forecast, and it counts only retrofits.

What the arithmetic leaves out, and what it doesn’t

Two other things move the stock.

The first is demolition. Japan’s housing stock turns over by replacement more than most developed markets do, and a house demolished and rebuilt after 2025 arrives compliant by law. The stock improves without a single retrofit.

The second is vacancy. The 2023 Housing and Land Survey counted 65,047 thousand dwellings in Japan, of which 9,002 thousand were vacant — a vacancy rate of 13.8%, the highest recorded (Statistics Bureau of Japan). A meaningful share of the worst-performing stock is empty, and empty houses do not consume heating energy.

The occupied middle is untouched by both. With 86.2% of dwellings occupied nationally, the 36% at the 1980 standard and the 22% at the 1992 standard are mostly lived in, and they are neither bad enough to demolish nor good enough to leave alone. That is the segment where money would have to move, and it is the segment no instrument in the amended act obliges anyone to touch.

What is actually scheduled next

Three things are already in the pipeline, and they are worth separating from ambition.

The standard rises to ZEH/ZEB level by 2030. The plan is a gradual upgrade of the energy conservation standards to the level of net-zero-energy house and building standards over the five years to 2030 (Anderson Mori & Tomotsune, citing MLIT). For housing, the labelling system already defines that level as enhanced envelope performance plus a 20% cut in primary energy consumption against the current standard; for non-residential buildings, 30% or 40% depending on use. The step-up, not the April 2025 mandate, is the one that changes what a Japanese house is built like.

Performance became visible at the point of sale. Since 1 April 2024, sellers and lessors label buildings using a prescribed format showing energy consumption performance, insulation performance, estimated utility costs and whether ZEH/ZEB level is achieved. Authorities can issue recommendations against operators whose failure to label has significant social impact (Anderson Mori & Tomotsune). A mandatory label puts performance into the price, and price is the only mechanism that reaches occupied private stock without an obligation attached.

Municipalities can require renewables, and pay for it in floor area. The act lets municipalities designate zones for promoting renewable energy facilities in buildings. Inside a zone, owners must install them, and the buildings get relief from floor-area ratio, site coverage and height restrictions in return (Anderson Mori & Tomotsune). Alongside it sits the Plan for Global Warming Countermeasures target of solar generation equipment on 60% of newly constructed detached houses by FY2030 (MLIT).

What to watch

The question worth tracking is whether the labelling data starts to show a performance premium in Japanese house prices. That is the only channel through which the 87% gets money spent on it voluntarily. If a Grade-labelled house sells or lets at a measurable premium, retrofit finance has something to underwrite. If it does not, the retrofit market stays a subsidy programme, and the arithmetic above stays roughly where it is.

That is a data question, and the data has only existed since April 2024. It is worth watching the first three years of it closely.

Tech for Impact Summit 2027 takes place in Tokyo on 18–19 May 2027, co-hosted by the United Nations University. It is invitation-only, and the questions above — where regulation stops and capital has to start — are the kind the room is built around. If you are working on them, you can ask for an invitation.