Photo/Illutration A suspect flees from a meeting of the renovation committee held inside an apartment in the Tokyo metropolitan area on May 17. (Provided by a source)

Two employees of a renovation contractor have been arrested after sneaking onto a committee of apartment residents in charge of renovations by pretending to be residents.

The suspects attended at least five committee meetings between August and May, according to the management association of the apartment complex in the Tokyo metropolitan area.

In September, one of the “fake” residents proposed requirements for hiring a consulting company that could advise the management association in selecting a renovation contractor.

The suspects, who were arrested in May and June, admitted to the allegations and told Kanagawa prefectural police that they believed they were working for the benefit of their employer.

The two men have since been released without charges, but the case appears to point to a dubious practice involving the lucrative business of apartment renovations.

According to the infrastructure ministry, about 70 percent of large-scale renovations, which involve repainting walls and other repairs, are carried out every 12 to 15 years.

They typically cost about 120 million to 150 million yen ($830,000 to $1 million), but the bill for a large condominium complex can top the 1-billion-yen mark.

The market for these periodic renovations is expanding.

The infrastructure ministry estimates that there were about 7.04 million apartment units under ownership nationwide at the end of 2023, about double the number in 1999.

The market for renovations of apartments’ common-use areas is projected to grow to about 820 billion yen in 2030, up 40 percent from 2022, according to Yano Research Institute Ltd.

The management association, which comprises residents, normally creates a committee to hire a consulting company, determine the details of the work and recruit the renovation contractor.

The consulting company often advises the management association in selecting the contractor.

However, authorities said businesses, such as consulting companies and contractors, may commit an act of malfeasance, taking advantage of residents’ lack of expertise or interest.

The infrastructure ministry warned management associations in 2017 that some consulting companies are working against their best interests.

In a document, the ministry listed inappropriate acts, such as a consulting company arranging for awarding the renovation work to a contractor that paid kickbacks to it.

The Fair Trade Commission has been investigating about 30 contractors and other companies since March on suspicion that they predetermined winning bidders and prices.

The renovation contractor based in Higashi-Osaka, Osaka Prefecture, which employs the two suspects, apologized for their actions.

But the company declined to discuss details, such as whether it instructed them to attend the apartment’s renovation committee, citing ongoing police investigations.

The apartment’s management association decided to hire an Osaka-based consulting company from among 14 bidders in March but canceled the selection following the arrests.

The consulting company’s president, who is a former employee of the renovation contractor in Higashi-Osaka, denied having any interactions with the suspects.

(This article was compiled from reports by Yoichiro Kodera, Tabito Fukutomi and Kaoriko Okuda.)

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