Can A Foreigner Buy Property In Japan?
You may have read about cheap (or even free) akiyas in Japan and now you’re dreaming of buying and fixing up a beautiful old kominka in the Japanese countryside. But first you want to know for sure: “Can a foreigner buy a house in Japan?”
The short answer is: YES! Foreigners have (almost) exactly the same rights as Japanese citizens when it comes to purchasing property or land in Japan, whether you have a permanent resident status or not, or even based on your visa type. There’s no extra requirements for foreigners and no extra taxes either. You can even purchase Japanese real estate as a non-resident on a tourist visa (which is what I did) or from outside the country (though the latter is not recommended, for several reasons we’ll discuss later).
Buying a house in Japan can be magnitudes less costly than buying a similar house in countries like Australia, Canada and the US. Japan’s aging population, increased urbanisation and preference to build new homes has made buying your dream house in Japan an affordable reality — one that some foreigners are right now discovering.
In 2019, there were approximately 2.93 million expats registered as living in Japan, making up about 2.3 percent of the entire population, and rising. The number of foreign residents purchasing real estate is on the increase, with some taking advantage of the government’s new housing incentive schemes that have been designed to kickstart investment and encourage people to migrate into the rural areas especially.
Becoming a homeowner in Japan is an exciting prospect but it’s incredibly important to do your research! Buying a house in Japan has its challenges and is further complicated by the language barrier. There are also potential pitfalls specific to Japanese real estate that you should be very aware of before making a purchase.
In this guide, I’ll provide you with an overview of the buying process, the things you should bear in mind when searching, and how to go about buying property in Japan. I’ll also share with you some of my own personal experience of how I bought my vacation home in Japan, what I learned from the process, and how to make your experience as streamlined and pain-free as possible.
Can I Get A Loan / Mortgage?
For residents of Japan, yes, it is possible to get a mortgage to buy a house.
In order to qualify for a mortgage you first must have either a permanent residency status in Japan, or a spouse who’s a Japanese citizen (or permanent resident). If you have a Japanese spouse then they are required to sign the housing contract as a joint guarantor.
Furthermore, both foreigners and Japanese nationals must fulfil the following criteria:
- must be 20-65 years old, and have paid the entire loan off before turning 80
- must have a group credit life insurance
- must be in full time employment/contract worker for at least 2/3 years
- yearly income must be at least 3-5 million yen
The property should also be built in accordance with the Building Standard Act, and it should come with land ownership. Some Japanese banks may require you to be fluent enough in Japanese to understand the loan contract details, talk about them, and be able to write your name and address. Otherwise, your options become more limited.
Please note, the criteria mentioned above do vary slightly from bank to bank. It’s worth doing your own research directly with the bank if you are serious about taking out a loan or mortgage to finance your home.
The Buying Process In 5 (Mostly) Simple Steps
Step 1: Search For A Property Online
Unlike some other countries, Japan has no single online database that manages all real estate data, so you’ll have to do much of your research with individual real estate companies or aggregator websites.
There are plenty of cheap houses in Japan to choose from, so long as you know what to look for. In fact, there are more Real estate companies in Japan than there are convenience stores! (I didn’t believe this at first, but it’s true!)
Most only offer their services in Japanese, however there are a few that cater to English speakers. Here’s a handy list of English-speaking realtors & professionals put together by Plaza homes (could be useful to get you started), otherwise google translate will be your best friend.
Many of the best deals will be only available in Japanese, so I really recommend searching on Japanese sites. Here are a few good Japanese sites to start with:
A large listing aggregator site with an excellent search function, AtHome have a huge selection, but sometimes limited info about properties. They usually pass you off to the local real estate company in charge of a particular property.
A smaller site with decent search function. You can sometimes find some gems on here.
When looking to buy a house in Japan, it’s recommended to first filter properties according to your specification. Some examples might include:
- Type of House
- Budget range
- House layout (floor plan),
- Building and land area
- Structure material
- Age of the building
See the screenshot below for the search options on a typical Japanese real estate website:
You can then start to get a clear picture of exactly what it is you’re looking for.
How many rooms do you need? Is public transport important to you? Shopping malls and parks? Are you looking for peace and quiet, or proximity to a train line? It might be a good idea to first take the time to brainstorm everything you have in mind.
Step 2: Get In Touch With The Agent And Visit The Property
So you’ve shortlisted a few places – very exciting! The next step is to get in touch with the agent and make sure the properties you’re interested in are still available. Many popular Japanese real estate sites often only update their stock once or twice a month, so it is possible that the house has already been sold. You’ll need to reach out and double check if the property is still available.
Next we need to ensure that everything is as it is in the description. I strongly recommend visiting the property in person before going any further in the buying process to avoid disappointment, or even being ripped off (a rarity in Japan, but it does happen).
You’ll want to look for things like whether there’s any structural damage or defects, warping or floor slant, roof leaks or termite damage. As well, you should double check the fixtures and fittings, boundary markers, plumbing, and foundation.
Here is a good article about what to look for when inspecting a house in Japan:
How to avoid buying a house with problems in Japan : Tips for detecting a malicious defect in your property
By visiting the property in person, you’ll also be able to get a feel for the overall neighborhood and surrounding area.
Here are some questions you might consider asking the agent during this step:
- How much are yearly property taxes? (固定資産税）
- Is there room for negotiation on the price if I pay cash? (I asked this to the agent before making an offer and it helped me knock a large amount off the sale price)
- Have there been any incidents in the past at this property? (fires, suicides, scene of a crime, etc) Legally, the real estate company has to tell you if anything happened in the last 2 years. If you ask though, they will likely tell you the full history even if the 2 years have already passed.
Step 3: Negotiate And Make An Offer
Once you’re happy that everything’s in check, it’s time to make an official offer. You’ll need to submit a purchase application form through your real estate company, filling in information such as your offer price, payment method, date of delivery, and any other sale conditions you might have. The form will then be submitted to the seller.
For new or very popular properties, if there’s multiple prospective buyers, then a lottery will be held to secure a final buyer (this is much less common with older properties).
At this point there might be a bit of back and forth negotiations about specific terms and conditions in the contract.
Oftentimes, the process can be less formal than this. For instance, you might send a preliminary offer through email or by phone to the agent, and he’ll relay it to the seller.
Step 4: Prepare Necessary Documents, Make Payment & Sign The Contract
If your offer is accepted, you can then go ahead and sign the contract. At this point you’ll need to gather together some necessary documents, depending if you live in Japan or not. For those with residency in Japan you’ll need:
- Residence card
- Certificate of residence
- Seal / certificate of seal
And for those without residency, you’ll need:
- Your passport
- an affidavit from your home country’s government
An affidavit is a written statement made under oath to further prove your signature, address, legal status and identity. Usually you get this document from your home country’s embassy in Japan, or from a government office before you go to Japan.
After all the documentation is completed and the contract is signed, there’ll be an official transfer of ownership of the land or building.
Step 5: Receive Keys & Final Documents, Pay Miscellaneous Taxes and Expenses
The final sum of the property sales price will be paid to the seller, usually by bank transfer or sometimes cash, and you’ll be issued a receipt. Usually this meeting takes place at the real estate company’s office, with the buyer and seller present. At this point you’ll finally receive the keys to the house.
Congratulations! At this point you’ll now be a fully fledged owner of your very own house in Japanese! Along with the keys you’ll also receive all the documents that come with the property. The property documents will include warranties, instruction manuals, and any management rules for how to use the facilities and equipment of the property.
You’ll now be responsible for all the extra taxes and fees, including the fixed asset tax, city planning tax (if applicable), real estate acquisition tax, and management fees. You’ll be sent all the necessary documents directly from the tax office that has jurisdiction over the property. You’ll also need to settle any remaining fees or commissions with the real estate company.
You can read more about the different taxes and fees here.
Important! If you don’t have residency and don’t plan on living there permanently, then you’ll have to abide by the “Obligation of Notification due to the Foreign Exchange and Foreign Trade Control Act”. You have 20 days to fill in a notification form and notify the Minister of Finance (via the Bank of Japan).
Note, this won’t apply to you if you’ll be using the property for business, as an office, or for relatives/employees (i.e. if it’s in permanent use).
Things to Consider When Buying A House In Japan
1. Buying Property Doesn’t Give You A Visa
First and foremost, buying a house in Japan does NOT help you acquire a visa or permanent resident status. The residency process is the same whether you own property or not.
If you don’t have residency, you may still purchase property in Japan (even on a tourist visa), however you’ll be limited to the amount of time you can spend in Japan.
One option is to visit Japan frequently or for long periods on tourist visas. Officially, the limit is 180 days per calendar year, though your mileage may vary. This could be a reasonable option for someone wanting to retire part of the year in Japan.
While I’d love to see the Japanese government endorse a residency by investment program, or even a remote worker visa program, I don’t really hear too much talk about this.
For those who are already living in Japan and who hold a PR (Permanent Residency), I would highly recommend you check out Ben Tanaka’s excellent blog/newsletter about all things finance and retiring in Japan, RetireJapan.
2. The Language Barrier Is Real
Despite there being a large number of foreigners in Japan, your options will still be very limited if you can’t understand Japanese, for the sole reason that most sellers do not speak English. There’s cheap houses in Japan for sale posted all over the internet, but — in my experience — 95% of the best deals are only available in Japanese.
Some sellers might even require you to know Japanese so they can best communicate their intentions for the property and negotiate the terms in more detail. Thankfully, there are many agents who can do this for you and many that cater specifically to foreigners, but you can expect to pay a premium for it.
Having lived in Japan will be a great asset to you because you can reach out to your network of friends or coworkers for help with any language barriers you might face. Otherwise you might find yourself having to rely upon paid translators, or limit your options to only English catering real estate companies.
On the language note, I would hesitate to recommend buying a house in Japan without at least some Japanese — even with the help of a good Realtor. Living outside of Tokyo with zero Japanese ability is difficult to begin with, and doubly so if you have to manage your property, deal with taxes and local government, and become a long-term part of the local community.
3. How To Take Care Of The House
If you’re buying a vacation home in Japan, then it’s likely that you’ll be spending long periods away. You’ll therefore need to have a plan in place to keep the house in good condition, especially when bearing in mind the long and humid Japanese summer.
Imagine arriving back at your vacation house in Japan after a long flight from Australia (or wherever your usual home is), preparing a refreshing drink and kicking your feet up… when you notice a bad smell lingering in the air. In the summer months especially, the drains can dry out, leading to some unpleasant smells. It’s also recommended to open all the taps a couple of times per month to clean out all the drains and keep them in good condition.
Furthermore, it’s recommended to regularly open all the windows and doors to air out the house to avoid it becoming stagnant. This is especially important for traditional wooden houses as they can be more susceptible to mold.
But don’t worry. There’s companies that can do all this for you while you’re away, however it’s something you’ll have to factor into your overall budget.
As an example, Plaza Homes provides property management services (including rental management) to English-speaking foreigners in Tokyo. Outside of main centers like Tokyo and Kyoto, many property management options will be Japanese-only, so you’ll need a translator or friend to help with the arrangements (you could also try to wing it with Google translate — let me know how it goes!)
Conclusion: Is It Worth Buying A House In Japan?
Is it really possible to find quality, livable homes in Japan for very cheap? It’s certainly true that there’s a great deal of very cheap houses on offer in Japan but they are often cheap for a reason.
Many of the dirt-cheap (ie. under $15,000) ‘akiya’ houses you see reported in the media are in de-populated areas far from the cities and require extensive renovation works to make them livable again.
That said, the notion that all Japanese houses only have a 30 year shelf life is also misleading. It really depends on the quality of the build, how well the house has been maintained, and the level of past renovations. Most Japanese people tend to opt for new houses rather than ‘used houses’, but the truth is many existing older houses still have many years left in them, especially with a little bit of DIY work.
In the $40,000 to $100,000 range, there are even plenty of excellent newer builds that are move-in ready. They just might not be in the ideal location. If you’re willing to compromise, there are exceptional deals to be had.
However, many foreigners choose to buy a house in Japan for this very reason – to get away from the hustle and bustle, and embrace a quieter, more serene life.
As one expat who recently made his first house purchase put it:
“Countryside living has me close to the beaches, mountains and rivers and wouldn’t trade it for the world. With teleworking on the rise, for those who can manage it, I’d recommend getting out of the megalithic cities.”
For foreigners who are looking for a specific type of lifestyle, buying a property in Japan could turn out to be an incredible investment in future happiness.
Get The Cheap Houses Japan Weekly Newsletter
If you’re thinking about buying a house in Japan, you might consider signing up for the Cheap Houses Japan newsletter. I spend many hours each week sifting through literally thousands of Japanese real estate listings to find the absolute best deals under $100k — some as low as $30k or even $20k.
The houses I include in the newsletter represent excellent value: if they’re older homes, they often feature renovated modern bathrooms and kitchens, or at the very least are ready to move in.
I also scout for houses near the major cities and with good train access. For example, within 1 hour by train from Shinjuku for less than $100k. (If you’ve ever searched for property in Tokyo, you know how difficult this is to find!)
In my experience, these houses are often much better value than super cheap akiya. Especially for someone either looking for a vacation home in Japan, or a Japan resident looking to purchase their forever home.
Here are a few examples of recent homes in my newsletter:
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