Can a foreigner purchase property in Japan?

Poste date: Thursday, November 21, 2024

With a weaker yen, increased foreign tourism, and a growing foreign resident population, there's been a surge in foreign real estate purchases in Japan.

There has been a rise in the number of foreign purchases of condominiums, commercial buildings in central Tokyo, and resort properties in Hokkaido.

Can a foreigner purchase property in Japan?

Absolutely, it can be done.

Foreigners can easily purchase real estate in Japan, including land and property, with the same rights as Japanese citizens.

Unlike many other countries, Japan does not restrict foreign ownership of real estate based on residency status or visa type. This means that foreigners can purchase both land and buildings in Japan.

Foreigners enjoy the same property rights as Japanese citizens. There are no expiration dates on property ownership, and properties can be freely bought, sold, and inherited. Additionally, foreigners pay the same taxes as Japanese citizens when purchasing property.

It's important to note that owning property in Japan does not automatically grant a visa or permanent residency status.

Japan's parliament passed a new Land Use Regulation bill on March 26, 2021.
In recent years, there has been growing concern over the increasing number of foreign purchases of land, particularly in Hokkaido and remote islands. As a result, the Japanese government is considering stricter regulations on foreign real estate ownership.

>> Japan enacts Land Use Restriction Bill

Important Points for a Foreigner purchasing Real Estate in Japan

We're here to guide you through the process of purchasing real estate in Japan, highlighting the key differences for foreign buyers and providing essential tips.

Real Estate in Japan: Transactions and Information

Real estate transactions in Japan are typically facilitated by real estate agents to ensure a smooth process. Direct transactions between individuals are uncommon. Property listings are primarily found on real estate information networks like REINS (Real Estate Information Network System) or private real estate portals, rather than a centralized national database. Japan does not have a centralized database that records all property information and transaction history.

*For newly constructed condominiums, transactions are typically handled directly between the developer and the buyer, often before the building is completed. In these cases, the involvement of a real estate agent is usually not required, except for some specific situations, such as the sale of completed units.

Search for properties online

Anyone can easily search for property information online. Start by defining your desired location, budget, property type, and age of building.

Japan's leading real estate portals are a great place to begin your search.

SUUMO: https://suumo.jp/
HOMES: https://www.homes.co.jp/
athome: https://www.athome.co.jp/

While there are numerous Japanese real estate websites, English-language resources specifically tailored to foreign buyers are relatively limited.

Websites that offer multilingual support

At PLAZA HOMES, we offer a wide range of English and Chinese property listings for central Tokyo. Discover detailed information about neighborhoods, properties, and the buying process.

If you're searching for properties all over Japan, realestate.co.jp is the place to go.

Ask a real estate company providing foreign customers support

While Japan has numerous real estate companies, finding one that caters to foreign buyers, especially outside major cities like Tokyo, Yokohama, Kobe, and Fukuoka, can be challenging.

Purchasing real estate in Japan can be a complex process, involving legal documents and significant financial transactions. It's crucial to work with a reputable real estate agent, especially if you're a foreigner. Experienced agents can guide you through the intricacies of the process, including the additional paperwork and international financial transactions that may be required.

At PLAZA HOMES, we assist foreign clients looking to purchase properties in central Tokyo and its surrounding areas.

Additionally, our website features an article titled "English-speaking Realtors and Real Estate Professionals in Japan", which highlights companies outside of Tokyo that offer multilingual support.

The Process of Purchasing Real Estate in Japan

Once you've identified a property of interest, arrange a viewing with a real estate agent. After deciding on a property, you'll need to submit a purchase offer and negotiate the terms with the seller. If both parties agree, you'll enter into a formal contract.

For a more in-depth look at the real estate purchasing process in Japan, please refer to our article, "Guide to Buying Property in Japan".

Costs associated with purchasing real estate in Japan

In addition to the property purchase price, there are various fees and taxes associated with buying real estate in Japan, including registration fees and brokerage commissions. These costs are typically calculated as a percentage of the property value and assessed value. When budgeting for a property purchase, it's wise to allocate an additional 6-8% of the property price to cover these expenses.

For a detailed breakdown of the costs and taxes involved in buying property in Japan, please refer to our article, "Property Buying Costs and Taxes in Japan".

Preparation for Foreigners Purchasing Real Estate in Japan

The required documents vary depending on whether you are a resident of Japan.

Residents of Japan / Those who have the status of residence

■Certificate of residence
■Residence Card/ Special Permanent Resident Certificate
■Seal (If you do not use a housing loan, you do not need it unless you have it)
■Certificate of seal impression (required when using a housing loan)
■Identification documents (driver's license, passport, etc.)

Non-residents in Japan / Those who do not have the status of residence

■Affidavit (as proof of address, signature) *
■Identification documents (driver's license, passport, etc.)

*An affidavit is a legal document that validates the accuracy of a private document. The writer swears before a notary public that the information contained within the document is true and accurate.

When purchasing real estate in Japan, non-residents may need to provide an affidavit to verify their current address and signature. This notarized document, certified by a public notary in your home country or by your country's embassy or consulate in Japan, is often required. It's advisable to obtain this affidavit prior to your arrival in Japan to expedite the real estate transaction process.

As of April 1, 2024, affidavits can be certified by a notary public in your country of residence, in addition to your home country. Along with the affidavit, a notarized copy of your passport is also required.

For assistance with notarizing affidavits and preparing necessary documents, consider consulting with a bilingual judicial scrivener affiliated with PLAZA HOMES.

How can a foreigner use housing loans in Japan?

Foreigners can indeed obtain housing loans from Japanese financial institutions. However, due to potential risks associated with repayment delays, lenders often prioritize factors such as the borrower's length of residency in Japan, permanent residency status, and stable income.

For a comprehensive guide to housing loans for foreigners in Japan, including information on eligible financial institutions and their specific terms, please refer to our article, "Guide to Home Mortgage Loans in Japan".

How to make a payment for real estate purchase by remittance from overseas to Japan

Typically, when purchasing real estate in Japan, a buyer pays a deposit to the seller upon signing the sales contract. The remaining balance is paid at the time of settlement, when the property is officially transferred to the buyer. This final payment is usually made via bank transfer.

If you're a non-resident, you'll likely need to transfer funds from overseas to complete your real estate purchase in Japan. This can pose challenges due to the unpredictable nature of international transfers. To mitigate these risks, many buyers choose to deposit funds in advance into a Japanese bank account held by the real estate agency handling the transaction. This ensures that the necessary funds are available on time to finalize the purchase. It's essential to select a reputable real estate agency with experience in assisting foreign clients to streamline the process and ensure a secure transaction.

To ensure a secure and efficient real estate transaction, we recommend using our dedicated trust account at PLAZA HOMES. This account allows you to deposit funds for your property purchase, mitigating the risks associated with international transfers and streamlining the process from contract signing to settlement. For more detailed information, please refer to our article titled "Funds Remittance for a Real Estate Purchase (From Overseas to Japan)".

Obligation of Notification due to the Foreign Exchange and Foreign Trade Control Act

When a foreign resident (hereinafter referred to as “Non-resident” acquires real estate in Japan, it is classified as a "capital transaction" under the Foreign Exchange and Foreign Trade Control Act. The Non-resident buyer is required to submit a notification form to the Minister of Finance, through the Bank of Japan, within 20 days of the acquisition. This form must include the buyer's full name and the purchase price.

Except in the following cases, where the report is not necessary:

1. When a Non-resident acquires real estate for the purpose of one's own residence or a residence for his or her relatives, servants or employees

2. When a Non-resident who runs a non-profit business in Japan acquires real estate in order to execute business activities

3. When a Non-resident acquires for their own business office

4. When a Non-resident acquires the real estate from another Non-resident

Report Format Style 22, related to Foreign Exchange and Foreign Trade Control Act Article 55-3 eporting the acquisition and acquiring of propriety rights of real estate in Japan

http://www.boj.or.jp/z/tame/t-redown2014/nregt22.pdf

Place of submission:
Post-office box 30, Nihonbashi post office, Japanese postal company, 103-8660
C/O Foreign Trade Control Act procedure group, Section of Balance of Payments, International Department, Bank of Japan

Reference to: Bank of Japan website page
http://www.boj.or.jp/about/services/tame/t-redown2014.htm/#p05

Obligation to pay taxes after acquisition of real estate in Japan

As a real estate owner in Japan, you are subject to annual property taxes, including Fixed Asset Tax and City Planning Tax. Additionally, if you rent out your property, you'll need to file an annual tax return on the rental income.

Therefore, if the property owner is a Non-resident of Japan, they must appoint a tax agent to handle tasks such as receiving tax documents, paying property taxes, and filing income tax returns. A Notification of Tax Agent appointment must be submitted to the local tax office.

If you own a condominium, you will be required to pay monthly management fees and contribute to a repair reserve fund to the condominium management company.

PLAZA HOMES offers comprehensive property management services for overseas property owners, including tenant recruitment, maintenance, and financial management. For more detailed information, please refer to our article titled "Property Management Services in Tokyo, Japan".

Reference Links
■ Property Taxes in Japan - Explaining Fixed Asset Tax and City Planning Tax for Non-Japanese
■ Real Estate Rental Income Tax in Japan