A Comprehensive Guide to Buying Property in Japan for Foreigners: Own a House in Japan in 10 Steps
Have you ever dreamed of owning a property in Japan, one of the most lively and culture-rich countries in the world? Along with this dream, have you ever thought that it might not be possible due to factors such as the language barrier, international financial hurdles, and others? Here at Sekaiproperty, we are eager to assist you in making your dream come true. Located in the heart of Tokyo in Shinjuku, we have a team of bilingual professionals with keen and up-to-date knowledge on the Japanese real estate market. In this guide, we will walk you through the entire process of buying property in Japan, from start to finish, with need-to-know information in each section to help you understand the process 100%.
Can foreigners buy property in Japan?
Firstly, can a foreigner buy a house in Japan? We answered that question in depth in our article here (How Difficult Can It Be to Buy a Property in Japan for Foreigner?), but in short, In Japan, anyone can buy a house regardless of their citizenship, as long as they can afford it. However, it is strongly advised to go to Japan to view the property prior to purchasing, and finish the transaction. After you have have decided you are interested in pursuing the goal of buying property in Japan, we recommend you follow these steps.
1. Assessing your situation + Researching finance options
Before considering purchasing any property, it is important to revise and analyze your own financial situation in addition to your current situation in life. Ask your self if you are financially fit to take out a loan if needed, or if you are prepared to move to a foreign country. It is critical to properly research what sort of costs you will be subject to not only upon your arrival in Japan, but also as a resident if you choose to live in Japan full time. Research your options available for financing, either in the form of a loan from your home country or in Japan. Taking out a loan in Japan may differ from your country, so make sure to check out our article on taking out a loan in Japan (Apply for a Home Loan in Japan as a Foreigner in 4 Steps). Certain types of visas (i.e. Permanent Resident Visa, Work Visa, Spouse of a Japanese National Visa) are required in order to apply. For foreigners living abroad, check if a financial institution in your country grants loans for overseas properties.
2. Researching properties
After you have thoroughly assessed your financial fitness to buy property in Japan, the next step is to research properties. While it may be easy to just say “I want to live in Tokyo,” but Tokyo is very large with many different areas that vary greatly in price and things available. Do you want to live in a place that is peaceful and quiet, or in a place close to a station? Do you want to be in a smaller residence in the downtown area, or somewhere that has a lot of space but further away from the main shopping area? It is important to ask yourself these questions when considering what location and type of property are best for your personal preferences. Here on Sekaiproperty, we have compiled Area Guides based on popular areas in Japan, even down to specific neighborhoods in Tokyo. If you need help on finding an area that is right for you, feel free to contact us, and we will help find the perfect place!
3. Choosing of Property and Consulting with an Agency
After you have narrowed down your choices to a few properties that have piqued your interest, the next step would to be to get in touch with a real estate agency, such as us here at Sekaiproperty. Choosing the right agency to help you navigate the process is extremely important. Your relationship with the agency of your choice will be of importance for all of the upcoming procedures, so choose an agency that is trustworthy and will suit your specific needs. Based on your conditions and information, such as financial situation, the real estate agency will recommend a few properties in addition to your selections.
4. Preparing for coming to Japan
You will need to prepare the following documents and items to move forward in the buying process.
1. Document proving current address
For foreigners residing in Japan, prepare a Residence Certificate (住民票 juminhyo) which can be obtained from the local City Hall or Ward Office. The transaction fee is 450 yen.
For foreigners residing abroad, an Affidavit proving your current address will be the substitute for a Residence Certificate. The document can be obtained from a public office, and must be confirmed by a notary of the buyer’s country.
Make sure the passport has current address and is not set to expire at any point during the buying process.
3. Registered Seal (実印 jitsuin) and Seal Registration Certificate (印鑑証明書 inkan-shomeisho)
A seal (印鑑 inkan) registered in a City Hall or other public offices is called a Jitsuin. For those residing in Japan, buy a seal in a seal store, or have one custom made for you, have it registered, and obtain a Seal Registration Certificate from a local municipal office. For those residing abroad, as a seal cannot be registered without a Japanese address, prepare a Signature Certificate which can be obtained from a public office of the buyer’s country.
5. View and Compare properties in person
Once you have decided on a few properties that meet your expectations and preferences, the next step is to schedule a viewing for the properties in person. This will, of course, require you to come to Japan, but it is an essential step in the purchasing process. In order to make sure the property is similar to what you have seen online, and to check for any potential damages in the property, your physical presence is required. Viewing in person can also help you in the decision making process, as you can compare units more easily than online. One of our agents will accompany you to the viewing, and can answer any questions that you may have about the property immediately in English. You will not have to worry about not being able to fully understand the condition of the property, as we will be here to explain every detail.
6. Applying for loan pre-approval and preparing fees
In the case that you will be using a loan to pay for your property, you will need to apply for pre-approval before you can purchase any property. In order to make sure you can afford the property you are interested in, it is critical to confirm you can receive the amount you need beforehand. If you are unable to secure a loan after you have had your application to purchase accepted, you could run in to some trouble that could cost you your application fee, or more. In addition to preparing your loan process, you will also need to begin preparing your fees that will be necessary when you move further in the purchasing process. You will need to pay the following fees:
- Property Value-Stamp Duty (varies with the property value)
- Registry License Tax
- Property Tax and City Planning Tax
- Judicial Scrivener Fee
- Insurance Fees: Fire Insurance, Earthquake Insurance-Agent Fee-Real Estate Acquisition Tax (due approximately a year after purchase)
- If borrowing loan: Stamp Duty for Loan Agreement, Loan Transaction Fees, Loan Guarantee Fee
Once you have decided on a property that you would like to purchase, your next step would be to submit your application for purchasing or your Letter of Intent. You will likely be required to pay an application fee, ranging from 20,000 yen to 100,000 yen. If your application is not accepted, this fee will be returned, but in the case that your application is accepted, it will be kept and counted towards the earnest money you will pay to confirm the contract. We will assist you in submitting your application or Letter of Intent, guiding you where to sign, what to write, and explaining the essentials, along with any questions you may have. For the application itself, you will need a form of identification, such as an up-to-date passport or driver's license. You will then need to purchase the Application Document (買付証明書 kaitsuke-shomeisho). A Purchase Application Document includes information such as the property overview and the buyer’s conditions. It is sent to the property owner to convey your desire to buy the property. The document also includes specific information such as the buyer’s desired property price, deposit price, contract day, closing day, and utilization of home loan.
If your desired property is popular, there will be a chance of a lottery occurring, even after the submission of a Purchase Application Document. It is advised to sign the contract within a week after getting approved in order to secure your property.
To read more about tips when submitting your property application, check out our useful article in the following link (4 Things to Look for When You Submit a Purchase Application).
8. Sign the Sales Agreement Contract (売買契約書 baibai-keiyakusho)
A Sales Agreement Contract is a document to prove the buyer and owner’s agreement to the property transaction and its conditions. You will need to bring the following items to the signing.
- Residence Certificate (if unobtainable, an Affidavit proving your current address) of everyone who will reside in the new property
- Document confirming income (Withholding Tax Statement, Tax Payment Certificate, etc.)
- Registered Seal and Seal Registration Certificate (if unobtainable, Signature Certificate)
- Identity Document (passport, driver’s license, etc.)
- Revenue Stamp Fee-Deposit
Contract Signing Process
1. Explanation of Important Matters
Once you have been approved, you will receive the Explanation of Important Matters before signing and closing the contract. The document will include information such as property overview, method payment, and procedure in the case of contract cancellation. While this document is rather difficult to understand in Japanese, we will translate the entire set of documents for you so that everything you are signing is 100% transparent. An in-depth explanation of this set of documents can be found by clicking the following link:
An Explanation of Important Matters
Once the buyer and owner are satisfied with the conditions, both parties will sign the contract.
2. Payment of Deposit (手付金 tetsukekin)
A deposit guarantees that the contract has been signed, and will be a part of the initial payment once the whole transaction is complete. On average, a deposit ranges from 10 to 20 percent of the property value. If your application for a home loan was denied, the deposit will be returned.
3. Payment of Stamp Duty
Stamp duty (印税 inzei) is a type of tax due when buying products of high value. It is necessary for products costing more than 50,000 yen, thus required when buying property.
Take note that the required stamp duty varies depending on the property value.
Once the contract is signed, the transaction will proceed to the closing stage. On closing day, the buyer will meet with the owner, a real estate agency representative, and a Judicial Scrivener. They will sign necessary documents, and the buyer will pay the remaining fees. Afterwards, the buyer will receive the keys, and the transaction will be finished. You will need to bring the following items to the closing day meeting.
- Remaining fees
- Identification Document (passport, driver’s license)
- Seal registered with your bank
- Registered Seal and Seal Registration Certificate (if unobtainable, Signature Certificate)
- Bank Passbook
The closing process will take place beginning with an ownership transfer under a Judicial Scrivener’s supervision. They will check if the necessary documents have been signed, and will register the property under the buyer’s name. The remaining fee for the property will be paid for during this stage. If you are using a loan, the funds will be sent to your (the buyer's) bank account, which should be then transferred to the owner’s. Other remaining fees will be paid as well, including Registry License Tax, Property Tax, City Planning Tax, Judicial Scrivener Fee, Insurance Fees (Fire Insurance and Earthquake Insurance) and Agent Fee. Lastly, once all the fees have been paid, the buyer will receive warranty documents and manuals, and the key to the new house. This symbolizes the end of the transaction. You are now the official owner of your new Japanese property!
10. Move in to Your New Property
Now that the keys are in your hands, you are free to move in or begin using your property for investment purposes. If you are choosing to move to your property and live in Japan, you will need to go through the immigration process that will include the issuing of a residence card, my number, and other necessary items for living as a foreign resident in Japan. For more information on the mentioned documents, follow the link to one of our other articles below:
Important Notes for After the Purchase:
After purchasing, the buyer will need to pay Real Estate Acquisition Tax. Around 6 months to a year and a half after the transaction, a form will be sent by the government. Fill in the necessary information and pay the tax.
We hope this article has given you a clear, and easy to understand overview of the property buying process in Japan. Owning a house in a different country may be difficult, however, with thorough preparation and assistance from a reliable real estate agency like Sekaiproperty, you will find the process to be relatively stress-free and easy to navigate! We have many other articles about property, rules, and living in Japan on our website, so feel free to explore those as well.
If you have any further questions about the buying process, Japanese real estate in general, or would like to arrange a viewing, please feel free to contact us! We are eagerly awaiting your inquiry, and hope to be your choice of agency in Japan!
Explore about Japanese properties with our Guidebook
In this Guidebook - from Sekai Property, you will have chance to know:
- An overview about purchasing property in Japan
- Steps in purchasing property in detail with Property Flow, Costs and Taxes
- Example case
Let’s download it if you want to approach this big real estate market!