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
The question of “can foreigners buy property in Japan” is one that intrigues many. In Japan, there are no legal restrictions preventing foreigners from purchasing property, whether it’s land or residential. This means that for those wondering “can a foreigner buy a house in Japan” or “can you buy property in Japan,” the answer is a resounding yes. The process is straightforward, allowing foreign investors or individuals to buy home in Japan without facing any major legal obstacles.
For American citizens specifically, the queries “can an American buy property in Japan,” “can Americans own property in Japan,” or “can American buy house in Japan” are also met with a positive response. The real estate market in Japan is open to all, irrespective of nationality. This includes not only residential properties but also land, as questions like “can you buy land in Japan” and “can Americans buy land in Japan” also receive affirmative answers. The ability to buy a home in Japan or invest in Japanese real estate offers a unique opportunity for foreigners looking to connect with the culture and lifestyle of this fascinating country. Whether it’s buying apartment in Japan or investing in larger properties, the process is accessible and feasible for foreigners, including Americans.
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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