Process of Buying Land and Building a House on it

Poste date: Saturday, September 21, 2024

Many foreigners considering the purchase of a house in Japan would like to build and live in an ideal house of their own choice, rather than a ready-built house in Japan.

Here we will guide you through the process from the purchase of land to the construction of a custom-built house (a house built to order) in Japan including the completion and delivery of the house. There are various processes from the time you start considering building a house to the time of delivery, which may take more than a year. Please refer to this page to understand the entire process in advance so that you can proceed in a planned manner.

The process of buying land and building a house

1．To sort out the conditions for buying land and building a house

First of all, sort out the conditions of where and what kind of house you want to build, and get an image of the house you want. It is also explained in detail in the article Buying Land and Building a House on it - To Sort Out the Conditions for Building a House.

・What area do you want to live in?

・What is the layout of the house? How big a house do you want to build?

・What is your budget for the purchase of land and the cost of building a house?

・How much can you borrow for a housing loan?

2. To search for land

Once you have decided on the area you want to live in, the image of the house you want to build, and the approximate budget, you can start looking for land.　For more information on how to find land and the key points for choosing it, please visit Buying land and building a house on it - Land search and land purchase.

3. To select a construction company

In parallel with the search for land, you should also proceed with the selection of a construction company. Sharing the image of the house you want to build with the construction company will make the land search go smoothly. A construction company is generally a house builder, building contractor, design office, etc., and each has its own characteristics. Some construction companies may assist you in finding land. For more information, please visit Buying Land and Building a House on it - Selecting a Construction Company and Construction Costs.

4. To consider a financial institution to apply for a housing loan

If you would like to take a loan for the purchase of land as well, find out about financial institutions as soon as possible. Not many financial institutions offer "Land advance loan," which can be used to pay for the purchase of land, or "Bridge loan," which can be used to pay for construction and other necessary expenses prior to the execution of a housing loan. You should check the loan terms and conditions of financial institutions in advance to find the loan product that best suits your needs. For more information, please visit Costs of Buying Land + Building a House on it and Housing Loan.

5．Land and ground survey by a construction company

Once you have found the land you want, you should ask a construction company to survey the land and the ground to see if the house you want can be built. As explained in Buying land and building a house on it - Land search and land purchase Points to check when selecting land, there may be restrictions on construction due to restrictions imposed by various laws and regulations, the shape of the land, the difference in elevation, the condition of the front road and the adjacent land, the condition of electricity, gas, water and sewage systems, etc. Be sure to have a construction company look at the land before you buy it.

6. Design plan and cost estimate prepared by a construction company

Ask the construction company to prepare a specific design plan and cost estimate for the house to be built on the proposed land.

7. Financial planning, pre-application of a housing loan

Estimate the cost of land, construction, and other expenses and make a financial plan. When land is purchased through a real estate broker, a brokerage fee is charged. In addition, various other expenses, such as a handling fee and guarantee fee for a housing loan and real estate registration fees, will be charged.

Check when and what payments will be required, and accordingly, check the portion of the payment to be made from your own funds, the amount of the housing loan, and the timing of loan disbursement. When applying for a loan to purchase land, a contract for the land, a design plan for the house, and an estimate of construction costs should be submitted to the financial institution.

For more information, please visit Costs of Buying Land + Building a House on it and Housing Loan.

8. Land purchase contract and payment (delivery)

When you sign a contract for the purchase of land, you will have an explanation of important matters about the land and the contract. If there are no problems, the deposit will be paid, and the contract will be signed. The deposit amount is generally 10% of the purchase price. At the time of contract payment, the remaining balance will be paid and then the land will be delivered. At this time brokerage fee and registration fee will be charged as well. If you take out a "Land advance loan" or a "Bridge loan", you will have to pay by your own funds and a loan.

For more information, please visit Costs of Buying Land + Building a House on it and Housing Loan.

9. Construction contract and start of construction

Once the land has been delivered and the design plan for the house has been finalized, a "construction contract" will be signed and construction will begin. The construction cost of the house is generally paid in 3 or 4 installments from contract to delivery. If you take out a "Land advance loan" or a "Bridge loan," be sure to check the timing of disbursement becuase the loan disbursement will be executed in several installments. On the site, a ground-breaking ceremony may be held to pray for the safety of construction before the start of it, and topping-out ceremony may be held after the completion of the framework. It is also possible for you to visit the construction site to check the construction process.

10. Completion and delivery

When the house is completed,　you will work with the construction company to check for any defects in the house and equipment, and then the house will be delivered.