Your Complete Guide To Purchasing Real Estate In Japan As A Foreigner 2022.
If you want to invest as an expat or high-net-worth individual, which is what i specialize in, you can email me ([email protected]) or use WhatsApp (+44-7393-450-837).
Introduction
Japan is a popular investment location for multinational firms and property buyers because it is one of the most developed countries in APAC.
Foreigners consider Japan to be safe, with clear and favourable ownership restrictions.
Not to mention, Japan is a very livable country.
Many people choose to live here or buy lifestyle property to use as a holiday or rental property.
Find out when is the ideal time to buy a house in Japan by reading this article.
Is It Possible For Foreigners To Purchase Property And Land In Japan
‘Yes,’ is the answer to this essential question.
Foreigners have no legal limits when it comes to purchasing property in Japan.
In truth, both Japanese and non-Japanese buyers are subject to the same norms and legal procedures.
To buy a house in Japan, you don’t need to be a Japanese citizen or have lived there for a long time.
Purchasing a property in Japan, however, does not entitle the buyer to a Japan residence or investor visa.
Furthermore, Japan is one of the few Asian countries that allows foreigners to buy land freehold.
Many investors are attracted to this, and lifestyle villas in regions like Niseko, Hokkaido, are in high demand.
When it comes to purchasing land, you have the option of purchasing it as a freehold or a leasehold.
Choosing Between A Freehold And A Leasehold Property Is A Difficult Decision
The freehold title (Shoyuken) in Japan grants you complete ownership of the land and any structures constructed on it.
When you buy a condo, on the other hand, you share ownership of the structure as well as a small portion of the land beneath it.
Japan passed a law requiring all property categories to have a 30-year initial leasehold term.
You can renew the lease for another 20 years after the first leasehold period has ended.
Advantages Of Owning A Freehold Property
Outright ownership of land and physical structures
Profit from the land’s capital appreciation
Purchasing time is reduced
Drawbacks Of Owning A Freehold Property
a higher price
Increased property taxes
Additional taxes are necessary
Benefits Of A Leasehold Property
30-40% less expensive than a freehold
There are no land taxes
Rental yields that are higher
The Disadvantages Of Owning A Leasehold Property
Rental payments to the landowner on a monthly basis
It’s more difficult to resale
Applying for a home loan might be difficult at times
Buying A House In Japan: A Step-By-Step Guide
We’ve distilled our years of knowledge into an eight-step best practise guide for buying a home in Japan.
Step 1: Locate A Real Estate Agent In Japan
Foreigners require credible advice from local real estate professionals in Japan when making such a major decision as purchasing a home.
They can assist you in a variety of ways, including:
legal protection
translations of documentation
expert advice on price levels, market trends, and transactional activity
local understanding of the surroundings
aid with property viewing
with the seller’s negotiations and formal formalities
Consult an agent and outline your chosen location, property specifications, and budget as soon as possible.
Signing a commission agency/broker agreement is required for this.
In Japan, the brokerage commission is 3%.
You can look for a real estate agent by using the following methods:
Look it up on the internet.
Juwai.asia, a platform that empowers Asians to live in other countries, will be a good place to start, with roughly 20 agent profiles.
Inquire with your friends and other acquaintances.
Make contact with your local Chamber of Commerce.
Step 2: Compare And Contrast Properties
It’s time to start looking for your dream home once you’ve settled on the basic requirements.
We recommend that you look for comparable properties in your selected neighbourhood and learn about the most recent prices paid for them.
The Ministry of Land, Infrastructure, Transport, and Tourism has a website that might assist you in locating comparable property transaction prices.
You can start by virtual viewing and comparing property listings on Juwai.asia, or you can contact a local property agent.
It is also critical to attend as many open houses as possible in order to identify the characteristics that are most important to you.
Step 3: Make It Clear That You Want To Buy A House
You’ll need to fill out an Application to Purchase (, kounyuu moshikomisho) created by the developer or real estate business if you’re buying a new house or condo.
When it comes to new homes, a lottery is frequently held based on the amount of applications submitted, so keep in mind that your offer to purchase may not be accepted.
The application price ranges from $20,000 to $100,000.
If you’re buying a pre-owned home, you might want to send the seller a Letter of Intent (, kaitsuke shoumeisho).
The goal is to demonstrate your seriousness about buying the property and to serve as a starting point for discussions.
Step 4: Make The Earnest Money Deposit
The buyer pays the seller a deposit known as Earnest Money (, tetsukekin).
It typically accounts for 5-10% of the entire purchase price and is included in the total purchase price once the deal is closed.
Step 5: Get Your Property Financing Pre-Approved
After you’ve submitted your Letter of Intent, it’s time to talk to your bank about your loan possibilities.
The bank will analyse your records on an individual basis and will request documentation such as:
Passport and local driver’s licence are examples of identification documents.
A recent certificate of good health
Tax receipts on an annual basis
Keep in mind that obtaining a home loan in Japan is tough for foreigners unless they are permanent residents.
Later in this essay, we’ll get into more specifics.
Step 6: Review The Important Matters Explanation
The Explanation of Crucial Matters (, juuyoujikou setsumeisho) is one of the most important documents to read attentively before completing the transaction.
It is designed to contain all of the information a buyer would need to make an informed purchase decision as a legal disclosure document provided by the seller’s agent, such as:
There are any existing mortgages on the property that need to be paid off.
Liens or encumbrances of any kind
Disputes with neighbours over property lines
Items that have been broken
Fee for management
This thorough document, which can range from 20 to 100 pages, must be handed to the buyer (and verbally discussed) before the buyer signs the purchase agreement.
Step 7: Put The Purchase Agreement In Writing
It’s time to sign the legally binding Purchase Agreement once you’re happy with the content of the Explanation of Important Matters.
The following are some of the documents and information to include:
a certified copy of your passport
The stamp duty’s worth
A certificate of registration
A seal (, inkan) is a type of animal that lives in the ocean.
For instance, information on pests from your inspection report
Step 8: Complete The Transaction
The final settlement is normally handled by a judicial scrivener (, shihoushoushi) and takes place at the buyer’s bank.
The buyer will send the remaining sum to the seller’s account, after which the buyer will receive the title to the property.
The seller hands over all of the keys to the buyer at the end of the transaction, and the transfer of ownership is complete.
Fee For Brokerage
Brokerage fees consist of 3% of the purchase price plus $60,000 plus consumption tax.
Tax On Purchases
Two to three months following title registration, a one-time payment is required.
It is assessed against the land and building value as determined by the government.
Taxes On Registration And Licence
Purchasers must have a registration licence in order to claim legal ownership of a property.
Depending on how the land and structure were transferred, tax rates range from 0.4 percent to 2 percent of the assessed value.
Duty on Stamps
Stamp duty is a tax charged on contracts and agreements that is paid at the time of title registration.¥10M – 50M = ¥10,000
¥50M – 100M = ¥30,000
¥100M – 500M = ¥60,000
Fee For A Judicial Scrivener
Judicial Scriveners are responsible for assisting customers with property registration procedures.
The cost of hiring Judicial Scriveners varies depending on the type of property, the assessed value, and whether or not a mortgage must be registered.
Is It Possible For Foreigners To Obtain A Home Loan In Japan
Some Japanese banks make loans to foreigners who live in the country.
If you have permanent resident status in Japan or are married to a Japanese citizen, you are more likely to be accepted by a lender.
Some banks will lend to foreigners who have worked in Japan for a long time.
If you’re not a Japanese resident and need money, we recommend looking for a bank in your home country that has a branch in Japan.
Mizuho and Shinsei are two Japanese banks with offices in Australia, Mainland China, Hong Kong, Singapore, Malaysia, and Vietnam, to name a few.
These financial institutions will do a personal assessment and examine your:
Work experience and current employment
Financial Situation in General
Salary at the moment.
Banks, on average, require you to earn between $2 and $5 million, but this varies.
Age
What kind of mortgages do you have now?
Next, choose between a fixed and a variable interest rate loan.
Fixed-interest loans are currently advantageous in Japan due to historically low interest rates.
Tokyo Property Prices And Rental Yields
The Real Estate Economic Institute (REEI) issued a cautiously optimistic 2020 projection for supply and pricing trends in the greater Tokyo area’s new condominium market.
From January to November 2019, the average sales price for a new apartment in the greater Tokyo area was $60,060,000 (US$ 549,000).
This was a 2.4 percent increase year over year, and it was the second time prices had topped 60 million yen (the first was in 1990).
Average sales price in Tokyo’s 23 Wards (23W): 72,470,000, up 1.5 percent year on year; 1,113,00 per sqm, down 0.7 percent year on year.
Western Suburbs of Tokyo: Average sales price of 57,040,000 yen, up 9.0 percent year on year; 834,000 yen per square metre, up 11.9 percent year on year.
Kanagawa Prefecture: Average sales price of 52,980,000 yen, down 2.9 yen year on year; 768,000 yen per square metre, down 0.1 yen year on year.
Saitama Prefecture: Average sales price of 45,630,000 yen, up 6.0 percent year on year; average sales price per square metre of 642,000 yen, up 3.7 percent year on year.
Chiba Prefecture: Average sales price of 44,500,000 yen, up 3.3 percent from the previous year; 609,000 yen per square metre, up 4.1 percent.
The cost of living is rising.
According to Savills, the average mid-market asking rent in Tokyo’s 23W increased 5.8% year on year to 4,044 (US$ 37.5) per sq. m.
Similarly, average asking rentals in Tokyo’s central five wards (C5W) jumped 6.2 percent year on year to 4,842 (US$ 44.9) per square metre.
According to Global Property Guide study, gross rental yields in Tokyo’s central districts range from 3.4 percent to 5.4 percent.
Smaller apartments produce higher returns, but they require more maintenance.
Is it possible that the Olympics will provide a golden chance for Tokyo’s burgeoning real estate market?
With less than 30 days until the 2020 Tokyo Summer Olympics, which will take place in Japan from July 23 to August 8, real estate developers argue that the games must go on regardless of safety concerns.
Why? “Countries that host the Olympics and Paralympics see their real estate investment trusts (REIT) indices improve for two years, beginning the year they host the events,” according to an analyst.
Purchasing A House In Japan’s Countryside
In large numbers, young Japanese people migrate to the larger cities, such as Tokyo.
This provides many opportunities for foreigners to find fantastic property deals in Japan’s countryside.
If you’re looking for a place to save or vacation, traditional residences in rural locations, like as Okinawa or Hokkaido, are inexpensive.
Be prepared to roll up your sleeves or employ renovation pros because some of these houses are old and may need to be knocked down.
Due to an abundance of housing in Japan, prices for properties in the countryside might be unexpectedly inexpensive.
In fact, the number of Akiya (abandoned dwellings) in Japan has surpassed 10 million in February 2019!
If you look in rural areas of Hokkaido, you can locate houses with 4-6 bedrooms for as little as US$ 200,000–300,000.
Pained by financial indecision? Want to invest with Adam?
Adam is an internationally recognised author on financial matters with over 830million answer views on Quora, a widely sold book on Amazon, and a contributor on Forbes.
