Tom-san’s First Experience in Purchasing Real Estate in Japan

We were given the chance to interview one of our customers, Tom-san, who purchased a home in Edogawa, located in eastern Tokyo through Beyond Borders in May 2017. He is a writer who has been residing in Japan for the past 2 years. He was very welcoming when we approached him for an interview to share his experience purchasing real estate in Japan as a foreign citizen. In brief, the experience for him was not an easy one, he even thought of giving up. However, he went through with the purchase and now is happy with his new home. We would like to share his experience for future buyers.

[Background of Tom-san]

  Why did you choose to come to Japan? 

There are several reasons to why I came to Japan. Initially, I came as a tourist a few years back and had an enjoyable time here. I liked the food and found it a very welcoming place.

Prior to moving to Japan, I lived in London, which held the 2012 Olympics. The Olympics was a very fun experience and thought it would be nice to live in another country hosting it. Since I work as a writer, my occupation allows me to do so. So, I went to the 2016 Rio Olympics and stayed there for about 6 weeks.

Brazil was nice, but because of the high crime level, I chose not to stay longer. Tokyo was the next to hold the Olympics and I already had some friends living in Japan.  It made me want to try living in Japan.

Why did you buy a home in Japan?

 I had been renting an apartment in Shinjuku for about 2 years but it was very expensive. Especially after two years, they expect you to pay double rent for one month. That rule only applies in Tokyo and it seemed a little unfair. Thus, I thought it would be better long term if I just bought a place. Even if I decided to leave the country, I could always rent it out.

How long do you expect to stay here?

 I will want to stay at least until 2020 for the Tokyo Olympics. After that, I don’t have a firm plan yet. I may choose to continue to stay in Japan or rent the place out and go elsewhere (Japan or overseas). Not a solid plan yet.

What were you doing before you came to Japan?

I grew up in the countryside in the south of England. I did my studies at Cambridge University and while I was there, I came to realize that I enjoyed city life. So, it was an easy decision to move to London and had a few different jobs. One of them was for the Olympics as a logistics supervisor. I worked night shift so my work began at 7:00 PM and finished at 7:00 AM.  Although, I would go as early as 5:00 PM since I was given an all-access pass. It was a very good time for me. I had several jobs, but my main thing was always writing. Eventually, I had my book published. 

Are you still working as a writer in Japan?

Yes, that is my main thing. Unfortunately, I can’t get a visa for writing. To the immigration office, it is not a Japanese job. Although my main job is writing, I also work in the evening for 2 or 3 hours at an Eikaiwa (English conversational school) which allows me to attain a visa. My books are for aimed at teenagers, the same age group as Harry Potter.

[The Process of Finding the Right House]

When you started looking for properties, how did you find out about Japanese real estate companies?

I went on an English real estate website, which had listings from various realtors. I contacted them and visited properties with them. They had Japanese agents who could speak some English but not native speakers and not as accommodating. I found an interesting listing with Beyond Borders. As they had native English speakers I thought they would be the most helpful.

You were initially looking for a small one room apartment in the Shinjuku area. How did you end up getting a 6LDK home in Edogawa?

Yes, I ended up with the complete opposite of what I was initially asking for, which was also a surprise to me, but I am happy with how it happened. When I first started looking, I was renting an apartment in Shinjuku. My first thought was, if I were to buy now, I would buy something similar to what I am currently living in. I really like Shinjuku as it is very central, convenient, and in demand. Therefore, I looked at a few apartments in Shinjuku, but they were all very small with my budget.

 One day, after viewing apartments with Beyond Borders just outside of Shinjuku, our final showing was an old 2 storey house in Koenji. It was an outside idea but just happened to be within my budget as it was located on the outskirts of Shinjuku.  I ended up really liking the house. It was by a little river. It was old and would have needed to be done up, but I liked it. I put a bid on the house, but they said they didn’t want to deal with foreigners so they rejected the offer which made me a little upset at the time.

How did you feel when you found out that some vendors are not foreigner friendly?

 I was very disappointed and a little angry at the time. In western countries, it would be considered discrimination which is against the law. Since Japan does not have any law like that, people can openly discriminate against a foreigner. I thought it was very unfair for them to say, “You have given me the highest bid, but you are a foreigner so I won’t accept it”.

Even though the offer did not go through, it was okay as it broadened my search. Prior to that, I was only looking at apartments in a convenient location. However, after seeing that house in Koenji, it made me consider houses too. I started to search online for all the homes in Tokyo’s 23 wards that I could afford. In the north, east, west, and of course in the center but properties in central Tokyo are much more expensive.

But when I considered the transport link, places in the east such as Edogawa were the best for me. From my new home in Edogawa, I can use the Keisei Line and access Narita Airport and Ueno easily. I can also walk to Koiwa Station on the Sobu Line, which can take me to almost everywhere. So, it is very convenient for me to be in the east. Although Shinjuku is a bit far now I can still get there from Koiwa Station by a 35-minute direct train, so it is not too inconvenient. But I prefer Ginza and Tokyo now.

What are the other things that you like about Edogawa? 

I lived in Shinjuku for 2 years. It was a very busy and crowded place. It is great to live in at first as it is very convenient, you can find everything you want to eat and buy. Yet, after 2 years I got a little tired of Shinjuku. There are a lot of people so you have to wait for a long time just to sit in a café or restaurant. These things made me consider changing locations.

Furthermore, most of the people in Shinjuku are aged 20 to 60 years old. A lot of businessmen drinking and people going to party. The atmosphere in Edogawa is the opposite of that of Shinjuku. There are a lot of children and then there is a lot of elderly people as well. It feels more like a neighborhood.

What attracted you in buying an older home?

Yes, this is an old house and cannot be rebuilt by law as the road leading to the house is too narrow. So legally, I can’t change what the walls are, the structure must stay the same which is a bit inconvenient. Thus, it is not ideal for an investment because most Japanese people want to buy something that can be pulled down and rebuilt. However, I like this home for two main reasons.

First, it is a spacious home. It is a 6LDK home (6 rooms, a living room, and a kitchen) with 2 bathrooms and there is a music room with a piano. The size of the home was what attracted me. I was looking for what Japanese people didn’t want. I wanted a traditional Japanese home, with a tatami room and sliding doors. Since I am living in a foreign country, I want to enjoy the things that I cannot get back home. So, a home that cannot be rebuilt was acceptable because I wanted something traditional and a bit old fashioned.

Secondly, this home is only a 2-minute walk to Edogawa river.  There is a park with a lot of flowers and greenery along the river. Every summer, there is a big firework event by the river. I can most likely watch it from my balcony on the second floor and invite friends over to watch it together.

As I mentioned before, Edogawa has convenient transport which was another reason why I decided to live here. I had to decide to either go to the east of Tokyo such as Edogawa or to the west like Ogikubo. The prices were similar in both areas. However, Edogawa was much more convenient to Narita Airport easily accessible.

[Difficulties Faced by Tom-san]

How long did it take from the showing to closing?

It took quite a long time. It took around 3 months from the showing to closing the deal. 3 months isn’t unusual but in my case, I wanted a fast settlement since I wanted to get out of my Shinjuku apartment before the rental contract ended.

Were you able to close the deal before the rental contract ended? 

No. This was one of the negative points of the purchase. When I looked into the place, I had about 6 months until I had to move out of my apartment. So, when I put in the offer, I thought I would be able to negotiate the date once I decided and be able to move fast. But it turned out the vendor's agent did not negotiate. I ended up homeless for 2 or 3 weeks. I had to pay a lot of money for accommodation (Airbnb).

I asked whether I could put my belongings in one of the rooms before the settlement. They allowed me to do so, which was nice (Tom-san was asked to sign a contract to do so). However, because they allowed me to do that, they were not open for any other negotiations at all.  For example, when I requested for them to sort things quickly so I can move in as soon as possible, their response was surprising. They said, “You have already asked too much by requesting to put all your belongings in a room, no more negotiation, it should be at our client’s convenience”.

I thought they would be happy to negotiate but they delayed quite a lot of things. It took about 2 months after I put in my offer to the settlement. The settlement deadline was about 2 months from the contract day. I wished to settle within a month but they ended up using the 2 whole months, only leaving a couple of days from the settlement deadline.

Why did it take so long?

 The land boundary was not clear so they had to get that sorted before the settlement. It was the vendor's agent’s responsibility to hire a surveyor to survey the land and find the exact boundaries.  They took a very long time to organize it which delayed the process. They could have done it much faster.

 If they found that there was a problem with the boundaries, then it would have taken much longer. Luckily, the were no problems with the boundaries and everything turned out to be okay. Though, I felt the survey should have been arranged much sooner just in case there had been a dispute over the land boundaries.

 I felt that there was no room for me to negotiate or any chance to express my wishes. I realized that I should have negotiated at the time of offering. Part of my offer should have been that I wanted to settle within a month and if that was not possible, then they could have turned it down. Once the offer was accepted, they had 2 months to close the deal. They used the full 2 months and legally that was fine for them. On the other hand, it was extremely inconvenient for me as I had to stay in 2 different Airbnb places.

You bought the property with cash. Did you have any difficulties transferring the money from England to Japan?

No, but of course the bank did a security check to prevent money laundering and such. You cannot transfer that kind of money without anybody questioning it. They made me call the head office to explain where all the money came from. So far, everything seems to be fine.

Did the money take a  long time to transfer from England to Japan? 

 No, it was very easy. My bank in Japan, Shinsei Bank is very good with international customers. They accept foreign currency. If you transfer foreign currency from overseas, it will go into your Japanese bank account unconverted. You can convert it to Japanese Yen on their website. It may not be the best conversion rate, but that was just what I did. Overall, the process was very smooth.

Were there any fees applied for converting the money?

 No fees. I think the sender may have had to pay a fee in England to send it to Japan but in terms of converting the money, no fee was charged. You just have to accept their rate. I’m guessing the fee is included in their transfer rate.

Before your purchase in Japan, did you have any experience buying properties in other countries? 

Yes, I have experience buying property in London. Not my own property, but with my family’s company, a property investment company. We have a small portfolio.

What were the differences in buying in Japan and in England? 

It is more straightforward in England as we do not have the traditions that you have in Japan. There are also some differences in the market. In England, we don’t have many natural disasters such as earthquakes and floods. Houses last for 100 to 200 years and that is not rare. If you have a house that is 50 years old, it is still a great house to sell and gets a lot of competition. On the other hand, a 50-year-old house in Japan is not as popular and can be difficult to sell.  So that makes a very different dynamic in the property market.

The house that I bought in Japan has no competition and I was not used to that. I was probably the only bidder. I put in quite a low bid, expecting them to say too low, come up a bit, and give a counter offer but they accepted my offer. I was both happy and surprised because I was paying lower than what I expected to. The seller was probably quite lucky because not many people want an old house like this. I particularly liked it for its size and character. But if a Japanese person bought something as old as this, they would want to rebuild it. However, as this home cannot be rebuilt due to restrictions, it had no competition.  They probably thought that this house was going to be on the market for a long time so they must have been happy that I came along.

Do you think that the  Japanese property market is done on the seller’s terms? 

It seems to be based on my experience, but again I have only had one experience. In England, the seller and the buyer are the two most important people, the agents are there to get the connection. I noticed that in Japan, the selling company felt that they were very important, deserved respect, and things were done on their terms. It was difficult for me because I always had to ask that I want this and that. Back home, they will treat you with respect. But in Japan, they said, “You are asking for too much”.  So, I think in terms of customer services that Japan is famous for, was lacking. In my opinion, there is much more respect given to the buyer in European countries.

There was even a stage where I was going to give up buying the place and go back to renting because the selling company was not meeting any of my wishes. They were taking so long with the survey and being homeless was quite scary. I had second thoughts during the process.

What made you continue with the purchase?

 Mostly it was because the deposit was too much to just give up (Tom-san would not have been able to reclaim his deposit if he had canceled the contract) and I did want this house. I had fallen in love a little bit with the house because it was quirky and big. In the end, I thought I should see it through as I had already committed to it. Had the survey taken a long time to solve problems, I could have always rent a place and use the home as an investment. I could rent it out to a family or turn it into a share house.

Do you think it is difficult for a foreigner to buy real estate in Japan?

 Yes. Obviously, it is possible but very difficult. I don’t think the system is adapted to foreigners. I received a lot of help from Beyond Borders who were very helpful in facilitating it and guiding me through the process. But it may not be easy with the existing system, by the people selling and just by the legal framework. What you are required to do, the certificates you must get are in Japanese, and sometimes you are signing things that you don’t fully understand even though there is a translator.

These are the extreme level of difficulties. The language barrier, the tradition on how things are done in Japan which we are not familiar with, and the culture gap. I should probably mention that I made it slightly more difficult for myself as well. As most people who are buying properties from English-speaking real estate agencies, they can just go to an English website and find the best one for them. I personally went through Japanese websites which did not have English assistance (As they have much more listings on Japanese websites). That made it more difficult. It would have been much easier for me if I had found the property on an English website.

[Tom-san’s Suggestions for Future Buyers] 

Are you satisfied with your purchase?

Yes, even though there were many difficulties. I like living here and having lots of fun moving in. Overall, I’m satisfied and Beyond Borders was very helpful.

Do you have any suggestions in terms of our services so that we can improve in the future? 

 One thing that I would like to have improved, would be the help at making an offer. The stage when you say, “I want to buy this, I’ll make an offer.” I think that was the stage where I was badly prepared. I told the Beyond Borders agent that I would like to make an offer for the home and he very happily did it. I think it was better if I was told, “Okay, we will do that, but first, consider this, this and this.” Things like contract settlement date and moving costs. Consider if you can’t move in, where would you store your belongings, because that was one of the problems I had. So, I suggest people prepare before putting in an offer. If I have done a bit more at that stage, I would have fewer problems later I think.

In England, if you want the contract to be settled quickly, you make the offer first and then you will negotiate after. But here in Japan, it’s something that I really should have negotiated at the offering stage. Maybe I will suggest Beyond Borders to make a document saying things to consider when you make an offer. To consider the closing date, consider the moving cost, consider storage of your belongings if there is some delay. I think that would be a good idea.

What do you find different about staying in a house in Japan and in England?

There are many differences. The Japanese style bathroom is very different as the bath talks to me when I press buttons. Another thing is the windows. There are a lot of these door style windows and all of them are frosted like this.

In England, we only have this in the bathroom but every single window in my Japanese house is like this, there are no clear ones, which is unusual for me. In England, a which you can see the view from, you can see the garden. But I guess it is because, in Japan, the houses are very close to each other. If you have clear windows, you might just see your neighbors.

Insulation, of course, makes a difference. In most other countries, houses are much better insulated. If you make it cold, it stays cold for a long time. If you make it hot, it stays hot. They have gaps between the walls with insulation inside. Japan doesn’t have any of that. So, the house gets colder much easier in the winter, hotter much easier in the summer. We have to use air-conditioning all the time.

Is there any advice that you would like to give to foreign buyers?

 You should always keep in mind that this is Japan and the rules are a little different. Be prepared for that, because if you are used to buying or investing in other countries, the rules are not the same, you may be surprised. Make sure to do your research and prepare.

Also, I think people should be aware of the Japanese requirements for buying properties. There are some things that are necessary in Japan, but not necessarily in other countries. For example, I was required to get a registered seal. In Japan, instead of a signature, they require you to have a stamp (Hanko). Not only a Hanko but a registered one. To get a registered one, the writing must be the same as on your ID. Beyond Border’s agent helped me with it, we had to go to several places to find a place that made English lettering Hanko. We then had to go to the wards office and register the Hanko. That was part of the property buying process. If you don’t live in Japan, I am not sure how it will be handled.

There is another thing as well. In Japan, you are expected to pay 10% of the sale price as the deposit, but it also has to be in cash. Paying a deposit is normal, but it is usually done by a bank transfer. I know I said earlier I came to Japan because it is a very safe country, but crime still does happen. If you are buying a luxury apartment for a billion yen, that is 100 million yen you have to take in cash to give on the day of the contract, that is a lot of money. If you get mugged on the way, that’s 100 million yen that the thief takes.

I think it is pretty dangerous as a system. If you buy an expensive apartment, you probably want somebody to protect you when you carry that much cash. If you are in New York City, you probably won’t want to carry that amount of cash because it would be too dangerous. I think it is a strange tradition and made me uncomfortable having a million yen in cash. Firstly, it is inconvenient to withdraw from the bank. Secondly, it is scary to carry around.

Beyond Borders agent (left) and Tom-san (right) on settlement day

Postscript:

Just after we finished the interview, Tom-san took me around his house. I was told that it was initially a very old and empty house at the purchase. However, I was impressed with the renovation and arrangements made by Tom-san himself. From what I have seen, it is now a very cozy and unique Japanese traditional house. Surprisingly, it belongs to a foreigner who values the beauty of a Japanese-style home.

The living room

A small pond being built by Tom-san in the front yard (In process)

Japanese sliding doors

Japanese dining table on tatami mat

DISCLAIMER: The views and opinions expressed in this article do not necessarily reflect the views of BEYOND BORDERS CO., LTD.

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