Beginner's Guide to Buy Property in Japan as a Foreigner

Dreaming of owning a stylish apartment in Tokyo or a serene holiday home in Japan’s countryside? While buying property in Japan as a foreigner might seem overwhelming, it's a realistic and rewarding goal—especially if you're planning a long-term stay. Whether it's an investment opportunity or a personal retreat, Japan offers plenty of possibilities for prospective foreign property owners.

In this guide, we’ll walk you through the essentials of purchasing property in Japan, highlight rules and restrictions to keep in mind, and provide insights into the associated costs. Let’s get started on turning your dream into reality!

Getting Started: The Basics

The good news? Foreigners can buy property in Japan with the same rights as Japanese nationals. This includes the land on which the property stands. There are no restrictions on your visa status, and ownership rights don’t have expiration dates. You’re also entitled to buy, sell, or inherit property freely, paying the same taxes as Japanese citizens.

While this sounds nice and easy, there could be a challenge when it comes to securing a home loan in Japan.

Securing a home loan as a foreigner might be challenging, and recent political movements may add reporting requirements for foreign property purchases under Japan's Foreign Exchange and Foreign Trade Control Act, such as submitting a report of your personal details and the details of the property you’ve bought, within 20 days of purchase.

Stay updated on the latest regulations by consulting a trusted real estate broker.

Documents You’ll Need to Prepare Before Buying Properties in Japan

The paperwork required for buying property in Japan is relatively straightforward. If you are not a Japanese resident, you will need proof of identity, such as a passport, and an affidavit to validate your ID. This affidavit must be certified by a notary public in your home country or your country’s embassy in Japan.  

For residents, additional documentation is necessary. Along with proof of identity, you will need these documents are essential to ensure a smooth property-buying process:

1. Proof of identity

2. Proof of residence

3. Your residence card

4. Personal seal (判子, hanko)

5. Certificate of seal impression (印鑑登録証明書, inkan tо̄roku shо̄meisho)

Key Considerations Before You Buy

When buying property in Japan, there are some things that you can consider, such as:

1. Work with a Real Estate Broker

Most purchases/sales are brokered by a real estate company to prevent any bureaucratic mistakes. Navigating Japan’s real estate market can be tricky. It's best to partner with a broker familiar with foreign transactions to avoid costly mistakes.

2. Challenges with Home Loans

While it is technically possible for foreigners to obtain a home loan in Japan, securing one can be challenging. Many Japanese banks are hesitant to approve loans for foreign applicants unless specific requirements are met.

Although anyone, regardless of residency status, can purchase property in Japan, banks often require foreign applicants to hold Permanent Residency. If you don’t have this status, having lived in Japan long enough to qualify for Permanent Residency or being married to a Japanese national may improve your chances.

Additionally, you must meet other basic prerequisites, such as: 

1. You should be over 20 years old, but younger than 65

2. Have had a stable full-time income

3. Be eligible for group credit life insurance (団体信用生命保険 dantai shinyō seimei hoken) – this is the most common type of life insurance available for home loans

Some financial institutions may consider loans for individuals without Permanent Residency. It's essential to consult with your bank to understand their specific home loan application requirements.

3. Property Value and Investment Potential

You also need to understand that in Japan, buildings generally depreciate in value over time due to factors such as an aging population, slow economic growth, and the risk of natural disasters.  

On the positive side, this depreciation means you can often find affordable properties, particularly in rural areas. However, it also means that purchasing property may not always be a sound investment—unless you acquire the land along with the building. Unlike buildings, land in Japan retains its value over time, making it a more stable asset.  

It’s important to note that in Japan, land and the buildings on it are treated as separate legal entities. When purchasing property, you may hold either a freehold title (所有権, shōyūken) or a leasehold (借地権, shakuchiken), each with its own implications for ownership.

4. Earthquake-proof housing

Finally, when buying property in Japan you want to make sure that your future home is earthquake resistant. Look for properties built after 1982 for modern safety standards or after 2000 for wood-framed homes. Avoid locations on reclaimed land or near rivers to reduce risk.

Costs to Expect on Buying Property

Property prices in Japan can vary significantly based on location, making it challenging to provide exact figures. Generally, prices tend to decrease the farther you move away from major cities. In some cases, certain prefectures even offer incentives, such as paying you to take ownership of an abandoned house (空き家, akiya), provided you commit to repairing and maintaining it.  

For accurate and up-to-date pricing information, it’s best to explore reliable real estate websites and consult a knowledgeable broker.

Also, you should expect other cost while buying property in Japan:

1. Down payment (頭金, atamakin)

When buying a property you’re also required to make a deposit of approximately 5-10% of the total value.

Brokerage fee (仲介手数料, chūkaite sūryō)

Usually around 3-4% as well as a fixed price of around 60.000 yen). This fee is paid in two steps. One half at the time of signing the agreement, and the other half at the time of settlement.

2. Revenue stamp (収入印紙, shūnyū inshi)

The price of the revenue stamp varies with the cost of the property or real estate you are purchasing. There is also a special mitigation measure by the government that allows you to cut the cost in half when buying a revenue stamp for real estate contracts concluded between April 1, 2014, and March 31, 2024. This means that buying a property up to 50 million yen requires a stamp that costs 10.000 yen.

3. Registration fees (登録費用, tōroku hiyō)

For buying a real estate or a property you also need to pay registration and license tax (登録免許税, tо̄roku menkyo zei) as well as legal service associated fees.

4. Liquidation fees (清算, seisan)

Finally you also have to cover the expenses that the seller has already paid. This is typically the fixed-property tax (固定資産税, kotei shisan zei) and maintanance fees (管理費, kanri-hi). These fees vary depending on the circumstances.

Conclusion

Buying property in Japan as a foreigner is a feasible and rewarding endeavor with careful planning and professional guidance. While the process involves navigating regulations, securing financing, and considering associated costs, owning property in Japan can be a valuable investment or a dream realized for long-term living. By conducting thorough research and enlisting the help of a real estate broker, you can successfully embark on this journey and enjoy the benefits of property ownership in one of the world’s most unique and vibrant countries.