Niseko and the surrounding region of Hokkaido Japan has experienced the full beam of the international development spotlight in recent years.
While nationwide land prices have fallen for the first time in six years (-0.5%), Kutchan and Niseko lead Japan overall in terms of the rate of increase which has seen prices rise by 25% in the last year alone (2020-2021).
As small and larger scale developments continue to rapidly increase, one of the most frequently asked questions that potential investors have when entering the Japanese market is: how difficult is it to buy property in Japan and is it a safe investment?
While every situation is different, posing its own unique challenges and stumbling blocks, this guide aims to simplify the whole process.
Is it Possible for a Foreigner to Buy and Sell in Japan?
From the outside it may seem like a pretty daunting task buying property and land in Japan, but it’s actually a relatively straightforward procedure.
There are no legal requirements or restrictions for a foreigner wishing to buy property in Japan. You do not need citizenship or residence to enter the market.
Property titles can be registered to an address outside of Japan which means that wherever you are in the world you will be able to buy and sell any type of land or property.
However it is worth noting that buying property or land in Japan does not entitle the buyer to apply for and receive a residence visa.
Types of Land Ownership Rights in Japan:
Before explaining the step-by-step process it is worth highlighting the different types of land ownership rights that can be found in Japan. The two main categories are ‘freehold’ (所有権 shoyuken) and ‘leasehold’ (借地権 shakuchiken).
This article will cover the ‘freehold’ ownership process which gives total ownership of the land and any structures that have been built on it to the buyer. This is the most common type of ownership in Japan and the process is much faster than creating a ‘leasehold’ agreement.
Please click here if you wish to find out more about ‘leasehold’ agreements and their potential benefits.
1. Finding the Right Property or Land
Probably the hardest part of whole process is finding a suitable plot of land or real estate to invest in.
Speaking to a local Japanese realtor can often be a difficult or time consuming process. At Apex Real Estate we have partnered with a variety of local agents to make sure anyone around the world can access those hidden gems.
Once you have chosen the general area you wish to invest in an agent can advise you in the following ways:
- consultation of current market trends and prices
- legal translation of Japanese documents
- virtual 360 property tours or in-person viewing assistance
- legal safety and insurance walkthrough
- negotiate between buyer and seller providing legal documentation
Choosing a real estate agency will usually require signing either a broker agreement or commission agency agreement.
Alongside the asking price of the property or land there are other fixed taxes and fees that will be levied at the point of purchase in Japan. Please click here to read our full breakdown of these fees and taxes.
Another useful article to read is our in-depth guide to Japanese Real Estate Taxes that are levied yearly.
2. Securing Financing
If you already have financing then you can skip this step.
There has been movement in recent years with bigger multinational banks starting to look into the option of offering mortgages for foreigners. Currently the general requirements are: you are a resident of Japan (some banks requiring permanent resident status) and able to communicate in Japanese when signing documents.
Making sure you have the finances available before entering negotiations with the seller is key. It is possible for Japanese banks to unofficially pre-approve financing; this can then be used as a very strong bargaining chip to speed up the process with the seller.
Read our FAQ guide for foreigners wishing to apply for housing loans in Japan.
3. Visiting the Property
COVID-19 has meant that foreigners have been unable to enter Japan for the past year. This has lead to an unprecedented level of solely online transactions without buyers seeing the land or property in person before committing to invest.
We strongly recommend that before deciding to invest in real estate you wait until you are able to enter the country for a full on-site viewing which will proper due diligence to take place.
Having said this, the technology used for house viewing has dramatically increased in the last few years. Feel free to view our listings which include both drone capture imaging and 360 cameras to give you the best view possible of our properties.
4. Notifying Seller of Purchasing Intent
Once the right property or land has been found, the next step is to submit a ‘Letter of Intent’ (買付証明書 kaitsuke shomeisho) which can be taken care of by the real estate company.
There are slight differences if the property is pre-owned or newly built however from this moment onwards you are treated as a serious potential buyer.
Generally, the Letter of Intent application is done on a first-come, first-served basis which means if you already have the finances in place you can act quicker than other interested parties.
5. Preparing Personal Documentation and Negotiations
Now is a good time to prepare all the necessary documents needed for completing the transaction. This will vary depending on if you are a resident of Japan or not.
If you are a resident of Japan or have the status of residence you will need the following:
- Residence Card (在留カード)
- Personal Seal Hanko (認印)
- Inkan registration certificate (印鑑登録証)
- Residence Record Jūminhyō (住民票)
- Identification Documents (driver’s license, passport, etc.)
If you are a non-resident living outside of Japan or do not have a status of residence you will need the following:
- Identification Documents (driver’s license, passport, etc.)
- Affidavit (used for proof of address and signature)*
This period can take anywhere from a few weeks to a month depending on the complexities of the deal. The real estate company will work alongside solicitors to draft legal documents.
6. Signing the Contract
Once the application has been approved the real estate company will provide you with a legal document called the ‘Explanation of Important Matters’ (重要事項説明書 jūyō jikō setsumeisho). This document will contain important information such as: ownership type, title registration, legal description of property or land and provisions if either party terminates contract.
This will be followed by a ‘Sales Agreement Contract’ (売買契約書 baibai keiyakusho) which will legally acknowledge the change in ownership. Once the contract is signed a ‘deposit’ (手付金 tetsukekin) will need to be paid and final date of transfer decided.
7. Final Payment
There are many options for settlement either onshore or offshore. The most common transfer for foreign investors is offshore account into onshore account. This process can be easily done through the real estate company who will act as a third party between buyer and seller.
The final step will be a written notification to the Ministry of Finance within 20 days of the purchase. This notification will include your full name and the acquisition cost. However this step does not need to be done if the seller also resides outside of Japan, or if the property will be used as a place of residence.
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