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Your All-In-One Guide to Buying Property in Japan as a Foreigner


Guide to Buying Property in Japan as a Foreigner

As one of the most developed countries in APAC, Japan is one of the most popular investment destinations for international corporations and property buyers. Foreigners find Japan safe and ownership regulations transparent and favourable.

Not to forget, Japan is very liveable too. Many decide to settle here or to buy lifestyle property for vacation or rental purposes. Read this article to find out about the best time for homebuying in Japan.

  Find out the best time to visit Japan 

  How to get Japan Investor Visa? ⇒

Before you commit to purchasing real estate in Japan, you must learn about the following:

Can foreigners buy property and land in Japan?

The answer to this fundamental question is ‘yes’. There are no legal restrictions on buying a property in Japan for foreigners. In fact, the same rules and legal procedures apply to both Japanese and non-Japanese buyers.

There is no need to possess citizenship or residency to buy a house in Japan. However, buying a property in Japan will not grant the purchaser a Japan residence visa or investor visa.

Moreover, Japan is one of a few Asian countries where foreigners can own land on a freehold basis. Many investors find this very tempting, and we see strong demand for lifestyle properties in places like Niseko in Hokkaido.

Foxwood Homes in Niseko, Japan

Foxwood Homes is an exciting new off-plan development of detached chalets in Higashiyama, one of the premier all-season destinations in Niseko. Contemporary 3 bedroom homes overlooking the iconic Mount Yotei are for sale starting at ¥146M.

When it comes to acquiring land, you can either buy on a freehold or a leasehold basis.


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Choosing between Freehold Property and Leasehold Property

In Japan, the freehold title (Shoyuken) gives you full ownership of the land and the physical structure built upon it. When you buy a condo, on the other hand, you co-own the building and a small part of the land underneath.

Japan introduced a law which set the initial leasehold term for 30 years, including all property types. After the first leasehold period expires, you can extend the lease for an additional 20 years.

Take a look at both ownership options and what benefits each brings.

Benefits Drawbacks
Freehold property Ownership of land and physical structure outright More expensive
Profit from capital appreciation of the land Higher property taxes
Faster buying process Additional taxes required
Leasehold property 30-40% cheaper than freehold Monthly rents to the landowner
No land taxes Harder to resell
Higher rental yields Sometimes harder to apply for property loans

Step-by-step Process to Buying a House in Japan

We refine our years of experience in an 8-step best practice guide for how to buy a house in Japan.

Step 1: Find a Japanese real estate agent

With such a big decision as investing in a property, foreigners need trusted guidance from local real estate professionals in Japan. There are many aspects they can help you with, including:

  • legal safety
  • documentation translations
  • professional advisory regarding price levels, market trends and transaction activities
  • local knowledge about neighbourhoods
  • property viewing assistance
  • negotiations and formal procedures with the seller

Your first step should always be consulting an agent and outlining your preferred location, property requirements and budget. This will require signing a commission agency/broker agreement. Brokerage commission in Japan is 3%.

To find a real estate agent, you can:

  • Check online., a platform to empower Asians to be global residents, will be a great start offering about 20 agent profiles.
  • Ask friends and other contacts you know.
  • Contact your Chamber of Commerce.

Step 2: View and compare properties

Once you have decided on the fundamental parameters of your dream home, it is time to shop around. We suggest to find comparable properties in your desired neighbourhood and learn about the recent prices paid for these properties.

The Ministry of Land, Infrastructure, Transport, and Tourism has a website to help you find comparable prices for property transactions. A local property agent can be an invaluable resource, or you can start by virtual viewing and comparing property listings on

It is also essential to attend as many open houses as you can to distinguish factors which matter the most to you.

Step 3: Express property purchase intent

If you are buying a new house or condo, you will need to fill out an Application to Purchase (購入申込書, kounyuu moshikomisho) created by the developer or real estate company. For new properties, there is often a lottery carried out depending on the number of applications received, so please consider the chance of your offer to purchase may not be accepted. There is an application fee between ¥20,000 and ¥100,000.

If you are buying a pre-owned residence, you may like to submit a Letter of Intent (買付証明書, kaitsuke shoumeisho) to the seller. The purpose is to express your sincerity about purchasing the property and serve as the beginning point for negotiations.

Step 4: Pay the earnest money

The buyer pays the deposit, known as Earnest Money (手付金, tetsukekin) to the seller. It usually accounts for 5-10% of the total purchase price and is calculated as part of the total purchase price when the deal is closed.

Step 5: Get a pre-approval of your property loan

When you’ve submitted your Letter of Intent, it’s time to negotiate your loan options with your bank. The bank will make an individual assessment of your records and request documents, such as:

  • Identification documents, e.g. your passport and local driver’s license
  • A recent health certificate
  • Annual tax receipts

Keep in mind that it is difficult for foreigners to get a property loan in Japan unless you’re a permanent resident. We will dig into details later in this article.

Step 6: Review the Explanation of Important Matters

The Explanation of Important Matters (重要事項説明書, juuyoujikou setsumeisho) is one of the most important documents that you should review carefully before you finalize the purchase.

As a legal disclosure document prepared by the seller’s agent, it is supposed to contain all of the information any buyer would need to make an informed purchase decision, for instance:

  • Any existing mortgages registered on the property
  • Other liens or encumbrances
  • Boundary disputes with neighbours
  • Broken items
  • Management fee

Explanation of Important Matters is an essential document when buying property in Japan

Sample of an “Explanation of Important Matters” document

Under Japanese law, this comprehensive document often of 20 – 100 pages must be delivered to the buyer (and also explained verbally) before the buyer executes the purchase agreement.

Step 7: Execute the Purchase Agreement

Once you are satisfied with the content of the Explanation of Important Matters, it is time to sign the legally-binding Purchase Agreement.

Some of the documents and information to include are:

  • A copy of your passport
  • Value of the stamp duty
  • A registration certificate
  • A seal (印鑑, inkan)
  • Information from your inspection report, for example, regarding pests

A seal used to stamp on official documents in Japan

Seal the deal: Japanese are using a seal to stamp on official documents to verify personal or business transactions.

Step 8: Final settlement

The final settlement usually takes place at the buyer’s bank and is handled by a judicial scrivener (司法書士, shihoushoushi). The buyer will transfer the remaining balance to the seller’s account, then the title of the property will be transferred to the buyer. On completion, the seller handovers all the keys to the buyer and the transfer of ownership is complete.

Let the professionals take care of every step of how to buy a house in Japan. Contact us now.

Property Purchase Costs in Japan

Brokerage Fee Brokerage fees include 3% of purchase price + ¥60,000 + consumption tax.
Acquisition Tax A one-time payment 2 to 3 months after title registration. It is taxed against the government’s assessment of the land and the building value.
Registration & License Tax Registration licenses are necessary for the purchaser to claim legal ownership of a property.  Tax rates vary from 0.4% to 2% of the assessed value of land and building, depending on how the transfer occurred.
Stamp Duty Stamp duty is levied on documents of contracts and agreements, payable at title registration.

¥10M - 50M = ¥10,000
¥50M - 100M = ¥30,000
¥100M - 500M = ¥60,000

Judicial Scrivener Fee The role of Judicial Scriveners is to assist clients in property registration procedures. Fees for engaging Judicial Scriveners vary depending on property type, assessed value, and if registration of a mortgage is required.

Can foreigners get a home loan in Japan?

Getting a home loan in Japan as a foreigner

Some Japanese banks lend to resident foreigners in Japan. You are most likely to be viewed favourably by a lender if you have permanent residence status or are married to a Japanese citizen. Some banks also lend to foreigners with long-term work experience in Japan.

In case you’re a non-resident and require financing, our recommendation is to look for a bank in your home country that has local branches in Japan. Japanese banks like Mizuho and Shinsei have offices in Australia, Mainland China, Hong Kong, Singapore, Malaysia, and Vietnam, just to name a few.

These banks will conduct a personal assessment and check your:

  • Current employment and work history
  • General financial situation
  • Current salary. In general, banks require you earn at least between ¥ 2-5 million, but it varies.
  • Age
  • What mortgages you currently have

Next, decide whether you want a fixed or variable interest rate loan. Currently, fixed-interest loans are favourable in Japan because interest rates are at historic lows.

Property prices and rental yields in Tokyo

The Real Estate Economic Institute (REEI) released a cautiously optimistic 2020 forecast for supply and price trends in the new condominium market in the greater Tokyo area.

Tokyo Metropolis and its surrounding areas

Tokyo Metropolis and its surrounding areas

The average sales price for a new apartment in the greater Tokyo area, as a whole (from January to November 2019) was ¥60,060,000 (US$ 549,000). This was a year-on-year increase of 2.4% and the second time that prices have hit the 60-million yen mark (the first was in 1990).

  • Tokyo 23 Wards (23W): Average sales price ¥72,470,000, up 1.5% YoY;  ¥1,113,00 per sqm, down 0.7% YoY
  • Tokyo Western Suburbs: Average sales price ¥57,040,000, up 9.0% YoY; ¥834,000 per sqm, up 11.9% YoY
  • Kanagawa Prefecture: Average sales price ¥52,980,000, down 2.9% YoY; ¥768,000 per sqm, down 0.1% YoY
  • Saitama Prefecture: Average sales price ¥45,630,000, up 6.0% YoY; ¥642,000 per sqm, up 3.7% YoY
  • Chiba Prefecture: Average sales price ¥44,500,000, up 3.3% YoY; ¥609,000 per sqm, up 4.1% YoY

Rents are increasing. In Tokyo’s 23W, the average mid-market asking rent rose by 5.8% y-o-y to ¥ 4,044 (US$ 37.5) per sq. m, according to Savills. Likewise, in Tokyo’s central five wards (C5W), average asking rents increased 6.2% y-o-y to ¥ 4,842 (US$ 44.9) per sq. m.

In Tokyo’s central districts, gross rental yields range from 3.4% to 5.4%, according to Global Property Guide research. Smaller apartments tend to yield higher, though, on the other hand, need more maintenance.

Can the Olympics could create a golden opportunity for Tokyo's booming real estate? With less than 30 days to the 2020 Tokyo Summer Olympics in Japan, starting July 23rd and ending on August 8th, real estate investors urge that the games must go on despite the debate on its safety.

Why? According to an analyst, "Countries that host the Olympics and Paralympics see their real estate investment trusts (REIT) indexes gain for two years, starting from the year they host the games,".

Buying a house in the countryside in Japan

Young Japanese move to the bigger cities, like Tokyo, in vast numbers. This brings foreigners many opportunities to find good property deals in the Japan countryside.

If you look for a property as saving or a holiday retreat, you can find cheap traditional houses in rural areas, for example in Okinawa or Hokkaido.

Some of these houses are old and can be a bit torn down, so be prepared to roll up your sleeves or hire renovation professionals.

The prices for houses in the countryside can be surprisingly low, as there’s an oversupply of homes in Japan. In fact, in February 2019, the estimate of Akiya (abandoned houses) in Japan had risen to exceed 10 million!

If you search in rural areas in Hokkaido, you can be sure to find houses with 4-6 bedrooms that merely cost US$ 200,000 – 300,000.

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