Have you ever considered buying an apartment or a holiday home in Japan? Buying property in Japan as a foreigner can seem daunting, but it is an achievable dream and can be a good investment if you are planning to stay in Japan long-term.
In this article, we will discuss how to get started on your property ownership journey, some rules and restrictions to be mindful of, and a quick rundown on the associated costs of buying property in Japan.
It is also important to mention that we are not experts on the matter, so we strongly recommend getting professional advice from an experienced real estate broker in Japan.
Getting started with buying property in Japan
A foreigner can buy property in Japan just as a Japanese national can. This is also true for buying the land the property building sits on. This means there are no restrictions on visa status when buying property in Japan. Furthermore, there are no expiration dates for the rights to property or real estate, and it is possible to freely buy, sell and inherit property among foreigners in Japan. You also pay the same amount of tax as a Japanese national would.
While this sounds nice and easy on the face of it, there could be a huge hurdle when it comes to securing a home loan in Japan, which we will explain a bit further down.
Additionally, due to many foreigners buying real estate in Japan, there is currently a political movement towards regulating purchases for foreigners. At the time of writing, you may need to report your purchase of property under the Foreign Exchange and Foreign Trade Control Act if you’re not a resident in Japan. This includes submitting a report showing your personal details and the details of the property you’ve bought, within 20 days of purchase.
As mentioned, these things are subject to change so make sure to check the latest information with a real estate broker in Japan.
The documents you need when buying property in Japan are straightforward. If you don’t have residency in Japan, all you need is a proof of identity (for example a passport) and an affidavit to validate your ID.
Affidavits must be certified by a notary public in your home country, or by your country’s embassy in Japan. It’s recommended to obtain an affidavit before arriving in Japan to buy property, in case you aren’t able to get one when you’re in Japan.
If you are a Japanese resident (for example, if you are in Japan on a student or working visa), you need to prepare:
- Proof of identity
- Proof of residence
- Your residence card
- Personal seal (判子, hanko)
- Certificate of seal impression (印鑑登録証明書, inkan tо̄roku shо̄meisho)
Important things to consider
When buying property in Japan, there are some things that are important to keep in mind.
Use a real estate broker
First of all, most purchases/sales are brokered by a real estate company to prevent any bureaucratic mistakes. Buying property in Japan can be a difficult and expensive process, so it’s always best to work with a trusted real estate broker. Importantly, if you are a foreigner, it’s best to find a broker who is experienced with completing real estate transactions with foreigners, as the process is different from one involving Japanese nationals.
Some of the most popular websites for buying property in Japan are SUUMO, at home and lifull home’s. Note that these websites don’t offer English support. If you can’t read Japanese, one website that may be useful is realestatejapan.
Securing a home loan as a foreigner
Technically, foreigners can obtain a home loan in Japan. However, in reality, actually securing a home loan as a foreigner can be tough. This is because many of Japan’s banks are hesitant to approve home loans for foreigners if they don’t meet certain requirements.
Despite anybody – Japanese resident or not – being able to purchase property in Japan, there is often a requirement from banks for foreign home loan applicants to have Permanent Residency. Failing this, you should have lived in Japan long enough to apply for Permanent Residency, or you need to have a Japanese spouse.
This is on top of other basic prerequisites:
- You should be over 20 years old, but younger than 65
- Have had a stable full-time income for at least one year with an employer, or at least two years’ self-employed
- Be eligible for group credit life insurance (団体信用生命保険 dantai shinyō seimei hoken) – this is the most common type of life insurance available for home loans
There are financial institutions that may approve loans for people without permanent residency status. Please check with your bank for their individual home loan application requirements.
The value of property
Another important thing to know is that buildings in Japan generally depreciate in value over time due to a number of factors including the aging population, slow economic growth, and natural disasters.
This means that on the one hand it is possible to find property cheap, especially in the countryside. But on the other hand, it means that buying property may not be viable as an investment – unless you also purchase the land that the building is built on, since land in Japan doesn’t lose value over time.
Land and the buildings on top of it are separate legal entities in Japan, so you may either hold a freehold title 所有権 shōyūken or a leasehold 借地権 shakuchiken when buying property in Japan.
We won’t be covering the finer details of freehold and leasehold property titles in this article. However, we do recommend you do your own research about property ownership and rights in Japan before buying.
Finally, when buying property in Japan you want to make sure that your future home is earthquake resistant. Some rules of thumbs are:
– never buy a property built before 1982. This is due to the homes being built on old earthquake codes. For wood-framed houses, choose a building built after 2000.
– Where is the building located? It is best to avoid buildings built on soft soil such as reclaimed land. Also it may be wise to avoid homes near the sea and rivers.
Associated costs with buying a property
The price for buying a property in Japan varies greatly depending on the location, so it is difficult to give exact figures on the price. It tends to get cheaper the further away you get from the large cities. Some prefectures even pay you to take over an abandoned house (空き家, akiya) in exchange for your written pledge to repair and maintain it.
For information on pricing, we recommend visiting the websites mentioned above and speaking to a broker.
Some associated costs to consider when buying property in Japan are:
Down payment (頭金, atamakin)
When buying a property you’re also required to make a deposit of approximately 5-10% of the total value.
Brokerage fee (仲介手数料, chūkaite sūryō)
Usually around 3-4% as well as a fixed price of around 60.000 yen). This fee is paid in two steps. One half at the time of signing the agreement, and the other half at the time of settlement.
Revenue stamp (収入印紙, shūnyū inshi)
The price of the revenue stamp varies with the cost of the property or real estate you are purchasing. There is also a special mitigation measure by the government that allows you to cut the cost in half when buying a revenue stamp for real estate contracts concluded between April 1, 2014, and March 31, 2024. This means that buying a property up to 50 million yen requires a stamp that costs 10.000 yen.
Registration fees (登録費用, tōroku hiyō)
For buying a real estate or a property you also need to pay registration and license tax (登録免許税, tо̄roku menkyo zei) as well as legal service associated fees.
Liquidation fees (清算, seisan)
Finally you also have to cover the expenses that the seller has already paid. This is typically the fixed-property tax (固定資産税, kotei shisan zei) and maintanance fees (管理費, kanri-hi). These fees vary depending on the circumstances.
Helpful words and phrases
Finally, let us introduce you to some helpful vocabulary that might help you in your endeavor buying a property in Japan!
To start off, have you ever seen the word “LDK” before? This is a term often seen when scrolling through websites that list different apartments. LDK means “living, dining and kitchen area. Usually families tend to live in a 2LDK or 3LDK. Other common abbreviations are “1K” (one room with kitchen), or “1DK” (one room with dining area and kitchen).
Here is some other vocabulary that may be useful to know:
Real estate – 不動産 fudо̄san
Property – 物件 bukken
Real estate agent – 不動産業者 fudо̄san gyо̄sha
Deposit – 保証金 hoshōkin
Loan for buying a house – 住宅ローン, jūtaku rōn
Purchase – 購入する kо̄nyū-suru
Contract – 契約書 keiyaku-sho
Budget – 予算 yosan
That’s it for this time! Did you find the article useful? If you ever bought a property in Japan before, feel free to share your story with us!
We do regular updates about all sorts of cultural things in Japan, as well as about learning the language and daily life here.
If you are interested in more things like this, feel free to follow our blog!