Why buy property in Japan?

There are many motivations for buying real-estate in Japan.  Long term residents of Tokyo desire to own their own home for stability. A young or growing family wants its own space. It is easy to tire of rental accommodation which is inflexible and poor quality. Many buyers are also excited by the prospect of renovating or building their own home.

Real-estate in Tokyo is also an excellent investment.  After years of deflation, property prices have come down dramatically and interest rates are very low.  Rental returns however are still reasonably high. As such, it usually costs less per month to purchase a home with finance than it does to rent the equivalent property. On top of the financial advantages, the quality of construction is high, the ownership rights are sound and the purchase process is transparent.

Should I buy an apartment or house?

The first decision is whether to buy an apartment or a house.  There are advantages and disadvantages of both.  The table below provides a summary of some of the key points to consider.

Houses are more expensive and there aren’t many available in good locations. The purchase price of an apartment is usually lower but the building management fees and parking costs mean the monthly running costs are higher.

The other issue to consider is control of the asset. In an apartment, decisions about building repairs and eventually rebuilding the apartment are made by the body corporate. As such your control over an apartment is somewhat limited and this can cause the asset to depreciate more quickly.

On the other hand, with a house you are free to renovate and re-build at will. This complete control allows the asset to retain value over time.  Of course, there are downsides to owning a house as well. The owner is responsible for the maintenance and up-keep which can be time consuming and costly.

Purchase Process

1. Finance

   Speak to your bank about finance.  Housing Japan is able to help with introductions to expatriate friendly lenders.




2. Requirements

   List up your requirements and discuss with your agent. Consider the area, budget and level of accommodation you require.




3. Search

   Get to know the market and your agent.  Spend time on the web-site and talking to your agent about properties. Look at the recent sales and understand the values and relative prices of properties in your target range.




4. Inspections

   The more you see the better you will understand the market and the easier it will be to make the decision to buy when you find the right property.




5. Application

   When you find the right property submit an “application to purchase”.  This is a non-binding written expression of your interest to purchase the property at certain price. An application shows the seller you are serious and will start the negotiation process.




6. Explanation of Important Matters

   Once the price is agreed your agent will start the contract process.  The agent is required to investigate the details of the property and provide you with an “Explanation of Important Matters”.  This document defines all the important terms of the contract.  You should read and fully understand this document before executing the contract.




7. Executing the Contract

   The contract execution usually takes place at the agents offices and takes about 2 hours to complete.  It is typical to pay the owner a deposit of 10% or JPY 10 million at the time of the contract.




8. Loan Application

   Although you will probably have pre-approval from a lender, once the contract is complete you can make the formal loan application.  It usually takes a month to six weeks for final approval after which the final closing date can be set. If you using finance, the contract will have a clause saying that you are applying for a mortgage from a particular bank with a proposed approval date. If, for some reason, the mortgage is not approved the contract will be terminated.




9. Final Settlement

   The final settlement usually takes place at the buyer’s bank and is handled by a judicial scrivener. The buyer will transfer the remaining balance to the sellers account and the title of the property will be transferred to the buyer. On completion the seller delivers all the keys to the property and the transfer of ownership is complete.

Note: that official estimated valuations (評価証明書) are generally much lower than the market price.

Summary of Costs

When purchasing a property in Japan, normally the taxes and fees will come to about 5 to 6% of the price of the property.
Acquisition Tax (取得税)

Official land estimated value x 0.5 (1/2) x 3%

Official building estimated value x 3%

Registration Tax (登録免許税)

Registration Tax is about 1% of the Standard taxable value

Stamp Duty (印紙税)

For a property of ¥50,000,000 to ¥100,000,000, the stamp duty will be ¥45,000 for the property contract and ¥60,000 for the mortgage contract.

Judicial Scrivener Fees (司法書士手数料)

For a property of ¥100,000,000 the fee should be about ¥100,000

Agents Fee (仲介手数料)

3.15% of sale price + ¥63,000

For more information about buying property in Japan contact the sales division at Housing Japan.
+81 (0)3-3588-8861