Japan has numerous ongoing development projects, especially around the Tokyo area – continuously creating countless opportunities for finding a perfect, luxurious house in a great location. However, if you are an expat planning to purchase a house, either for private use or as an investment, there are many factors to consider, including legal procedures, financing and cultural differences affecting successful real estate purchases in Japan.
The process of buying a property requires creating your own team of professionals – a broker, loan officer, judicial scrivener, and tax advisor. Once, you have made this team and have built a relationship, trading real estate will become much simpler.
Can a non-Japanesebuy a property in Japan?
This is the first, fundamental question that needs to be answered. The answer is ‘yes’, as an expat, you can purchase both land and properties in Japan. No citizenship or residence visa is required. In fact, the process is much simpler than you might think andthe exact same rules and legal procedures apply to both Japanese and non-Japanesebuyers. This makes Japan quite unique compared to other Asian countries, where land and real estate ownership is more strictly regulated by the state.
Step-by-step Guide to Buying a House in Japan
Housing Japan experts have been supporting individuals seeking to buy real estate in Japan for years, allowing us to refine our experience into a step-by-step, best practice guide for purchasing a house in Japan.
1. Contacting a Realtor
With such a big decision as investing your money into a property,what you need is trusted guidance from local real estate professionals.There are many reasons for this, including:
- legal safety
- documentation translations
- professional advisory regarding prices and market trends
- property viewing assistance
- market standards and price advisory
- negotiations and formal processes with the seller
Your first step should always be to consult an agent and outline your preferred location, property requirements and budget.
2. Site Viewings
You can move to view your desired properties and evaluating them against each other.It’s always important to have a reliable advisor on your side during this process, to make sure you are aware of the market standards and realistically manage your expectations. Always ask your agent to accompany you for the on-site viewing for the proper due diligence.
It’s important to understand that property features and standards in Japan can be quite different than in the US or Europe. For example, it can be considerably harder to find a house over 100m2 with two (or more) bathrooms.
Housing Japan offers a team dedicated to researching both on-market and off-market real estate deals in Japan to help you find the perfect property for you.
3. Consult with A Bank
Engaging in consultations with a bank is integral to the home buying process. This step is essential for thorough preparation, enabling you to respond promptly when you find a suitable property.
If you intend to purchase your new home with cash, consulting with a bank may not be imperative. However, if you plan to utilize loans, initiating discussions with banks before starting your property search is essential.
The significance of securing financing lies in obtaining a preliminary verbal pre-approval from a bank. Japanese banks can provide an informal pre-approval for your loan request, serving as a powerful negotiating tool when communicating with sellers. Moreover, the loan application process requires time, emphasizing the importance of early engagement to facilitate swift action when discovering a desirable property. As an expatriate, it’s crucial to recognize that Japanese society places a strong emphasis on trust, and even a verbal approval from a bank can instill confidence in the seller, making them more inclined to finalize the deal.
4. Expressing Property Purchase Intent
After deciding on a house or an apartment, it’s time to officially express property purchase intention by submitting a Letter of Intent. From that moment onward you are considered a serious potential buyer. The Letter of Intent gives you the right to negotiate the price and is generally treated on a first-come, first-served basis – another reason why having financing in place first so you can act faster than your competition.
5. Negotiations & Initial Payments
The following step is your agent negotiating (with the seller) details regarding purchase price, possible payment methods, payment timings, etc. This process can take about one to two weeks as both parties draft legal documents, undergo final due diligence, and fulfill formalities. Also, if you plan to finance your purchase with a mortgage, this is the time to apply for a loan with a bank.
6. Executing the Contract
Your agent should provide an “Explanation of Important Matters Regarding the Property and Transaction”. This is a set of documents that includes owner title registration, ownership type, property legal description and any provisions in case of contract cancellation.
At this stage, a cash deposit should be paid to the seller (5% to 10% of the purchase price). This is often surprising for many expats as earnest money is usually paid to a third party such as an escrow. The idea behind this is that Japan is a trust-based society, and paying part of the cost up-front is a sign of commitment and solidifies trust. To be clear, even buyers purchasing a house in Japan via a mortgage need to pay the deposit in cash that’s been saved up.
7. Final Loan Approval from the Bank (Only for loan buyer)
After receiving the final approval from the bank, you will proceed to enter into a loan agreement. Contracts are typically executed on weekdays and require several hours to complete.
8. Final Settlement
The final settlement usually takes place at the buyers’ bank and is handled by a judicial scrivener. The buyer will transfer the remaining balance to the sellers’ account and the title of the property will be transferred to the buyer. On completion, the seller delivers all the keys to the property and the transfer of ownership is complete.
Let the professionals take care of every step of the process.
Contact our Expert Bilingual Tokyo Real Estate Agents for more information
Purchase Costs and Taxes
Costs and Taxes
Normally it costs 5% to 6% of the Purchase Price.
(There is an additional 1% to 2% costs by banks, if mortgage is involved.)
| Fee | Judicial Scrivener | About JPY 100,000 – 150,000 |
| Agent Fees | Property Price X 3% + JPY 60,000 + 10% Tax | |
| Other Cost | Insurance, Housing Cleaning, ect. | |
| Tax | Asset Tax | Estimated Value X 1.4% (Transaction Day to 31st Dec) |
| City Tax | Estimated Value X 0.3% (Transaction Day to 31st Dec) | |
| Registration Tax | Estimated Value X 2% | |
| Stamp Duty | Differ according to price: JPY 10,000 – 480,000 | |
| Acquisition Tax | Land: Estimated Value X 1.5% Building: Estimated Value X 3% Commercial Property: Estimated Value X 4% |
To get an estimate on your monthly loan payments in Japan, you can refer to ourYen Loan Calculator.
Other costs might include property tax, registration fee or property management fees.
Important Documents
- If you live in Japan, a residence card, passport, and an Inkan (traditional Japanese seal for signing important documents)
- An Affidavit, if you live outside of Japan
- For loan users, there will be other documents required by the bank such as a proof of income for three years
Contact us for more specific details about sharing your balances and financial documents
Things to Keep in Mind When Buying a Property in Japan
For many expats planning to buy a house in Japan, it might be surprising that no lawyers are being involved in the legal property buying process. Licensed brokers in Japan are required to perform both brokerage and legal roles in every real estate trade they handle.
Also, Yes, Americans can buy property in Japan. However, there are certain restrictions and regulations that need to be followed, such as the need to obtain a visa and hiring a local representative to handle the legal process. If you wish to buy a house in Japan, it is advisable to understand the country’s real estate market and laws. Purchasing property in Japan can be a complex process for non-residents, but there are real estate agents specialized in assisting foreigners with their purchase. By seeking professional guidance, you can navigate the buy house in Japan process more smoothly.
Lastly, one more thing to be prepared for is that often all the documentation during the process will be solely in Japanese. Even though translations are provided depending on your agency, only the Japanese texts of the laws and regulations have legal effects, and the translations are to be used solely as reference materials to aid in the understanding of Japanese laws and regulations. Therefore, it is important to make sure the agency you choose not only has the experience and a reliable legal team. If you’re wondering how to buy a house in Japan, there are a few important steps to consider. Firstly, you’ll need to familiarize yourself with the local real estate market and regulations governing property ownership by foreigners. Additionally, it’s crucial to find a trustworthy Japanese real estate agent who can guide you through the buying process smoothly.
Search for your ideal home in Japannoworcontact usfor comprehensive support.
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Housing Japan
7F BPR Place Kamiyacho, 1-11-9 Azabudai, Minato-ku, Tokyo, Japan 106-0041
As an enthusiast and expert in real estate in Japan, I've had the opportunity to delve into the intricate details and complexities of property acquisition, especially for expatriates. This knowledge has been enriched through hands-on experiences in aiding individuals seeking properties in Japan, understanding the legal procedures, financial considerations, and cultural nuances involved. Here's a breakdown of the concepts addressed in the article you provided:
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Property Ownership by Non-Japanese Individuals in Japan: Yes, non-Japanese individuals can purchase land and properties in Japan without requiring citizenship or a residence visa. Japan's real estate ownership rules are equally applicable to both Japanese and non-Japanese buyers, setting it apart from more regulated Asian countries.
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Buying Process Steps:
- Realtor Engagement: Collaborating with a trusted local real estate agent helps navigate legal aspects, translation of documents, market trends, property viewings, negotiations, and adhering to local standards.
- Site Viewings: Understanding local property standards, differences in features, and having realistic expectations during property visits.
- Consulting with Banks: Essential for financing preparations and obtaining pre-approvals, crucial for negotiation leverage.
- Expressing Purchase Intent: Issuing a Letter of Intent marks serious interest and negotiation rights.
- Negotiations & Payments: Negotiating price, payment methods, and timings, often accompanied by applying for loans if necessary.
- Executing the Contract: Finalizing documentation, paying a deposit (earnest money), showcasing commitment, and building trust in the transaction.
- Final Loan Approval and Settlement: Securing final bank approval for loans and completing the property transfer process.
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Costs and Taxes: Detailing various costs involved in property acquisition, such as judicial scrivener fees, agent fees, insurance, taxes like asset tax, city tax, registration tax, stamp duty, and acquisition tax.
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Important Documents: Mention of necessary documents like residence card, passport, Inkan (seal for signatures), affidavits, and additional documents required for loan applicants.
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Considerations for Expats: Understanding that the process involves licensed brokers in Japan handling both brokerage and legal roles, the need for understanding regulations and market dynamics, and the importance of seeking professional guidance for a smoother transaction.
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Language and Legal Considerations: Highlighting that most documentation will be in Japanese, emphasizing the need for reliable legal teams within chosen agencies for accurate understanding and compliance with laws and regulations.
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Role of a Trustworthy Real Estate Agent: Emphasizing the significance of a reliable Japanese real estate agent specializing in assisting foreigners to navigate the complexities of property acquisition in Japan.
Understanding these intricacies can greatly facilitate the process of acquiring a property in Japan, especially for expatriates unfamiliar with the country's real estate landscape.
