Last updated on February 29th, 2024 at 09:53 am
From supporting a growing family to relocating for work, you’ll have to move at some point in your life. That comes with many responsibilities, like packing up your whole life and getting rid of the old clothes in the back of your closet.
Moving overseas comes with its own exciting prospects that can be confusing or intimidating. If you’re buying a house in Japan, you might have several questions on your mind that could take the focus away from what you need to do. Our team here at Remitly put together this guide on how to buy property in Japan as a foreigner. Read on to learn more.
Why buy property in Japan?
There are many reasons to move to Japan. It’s one of the most beautiful countries in the world, with a culture and cuisine that has spread throughout the globe. Japan consistently ranks as one of the safest countries in the world with low crime rates, and the country’s efficient public transit makes for hassle-free commutes.
The diverse landscape includes beaches, forests, countryside, and dense urban cities. That diversity contributes to a diverse workforce and many job opportunities.
What’s the real estate market like in Japan?
Japan’s real estate market remains largely stable, even with economic declines and a slowdown in demand. Overall, the residential property price index rose by about 2.4% in 2023, with continued growth into 2024.
There are some variations based on location. For example, existing condos in Tokyo saw an average increase of about 9% in the last quarter of 2023. In Osaka, the price of existing condos rose by 5.1% on average in the same period.
Can foreigners buy property in Japan?
The simple answer is that foreigners can buy a house in Japan without legal restrictions. This means you can buy a house in Japan regardless of citizenship, residential status, or nationality.
However, Japan has some restrictions on the types of property foreigners can own. Under the Foreign Exchange and Foreign Trade Act, foreigners have to get permission from the government to purchase land designated as agricultural or forest. Foreigners may also be prohibited from owning land near military bases.
What are the legal requirements for buying real estate in Japan?
Japan has no unique legal requirements for foreigners buying land in Japan. You need general identifying documents (like a driver’s license or passport) and an affidavit. An affidavit is an official, notarized document that proves that you are who you say you are and provides evidence of your current address.
How much does it cost to buy property in Japan?
How much yen is a house in Japan? The exact price will vary based on several factors, from the house’s location to the property’s size and age.
Like most countries, property costs in Japan are highest in popular metropolitan areas. Properties in Tokyo, for example, will generally cost more than most other cities in the country. In the first quarter of 2023, the average price of an existing condo was about JPY 698,300 per square meter, while detached houses had an average price of about JPY 41.65 million.
By comparison, a detached house in Osaka cost about JPY 23.63 million on average in the first quarter of 2023. At that same time, existing condos in Osaka cost an average of about JPY 411,125 per square meter.
Along with the price of the home, you can expect to pay certain taxes and fees:
- Fixed asset tax: 0.3% to 4% of appraised property value per year
- City planning tax: 0.2% to 0.4% of appraised property value per year
- Earthquake insurance: 6,500 to 35,000 yen per year
- Fire insurance: 20,000 to 40,000 yen for two years
Remember to factor in any expenses from visiting Japan to find a property.
Where is the best place to buy property in Japan?
The good news: there are so many great places to live in Japan. You’ll find Japan’s grand culture, tasty cuisine, and kind people wherever you go. Your choice ultimately comes down to what you’re looking for in a new home, but here are some popular cities to consider.
Tokyo
Tokyo is an easy choice, especially for a foreigner. It’s Japan’s capital—a dense, metropolitan city that is a financial, political, and cultural hub for the whole country. It offers a surprising mix of both modern technological wonders and traditional living. The high skyscrapers and amazing skylines are met with quiet residential streets and gardens.
As a cultural and financial hub, Tokyo is home to plenty of multinational companies and businesses in the area catering to those multinational workers. That leads to more potential work opportunities, as well as more English-speaking residents in the area.
Osaka
Japan’s third most populous city, Osaka, is known for its robust nightlife, incredible street food, and modern architecture. It’s as stylish as it is beautiful, with friendly and respectful residents.
While it has a similar density and bustle as Tokyo, Osaka’s properties are decidedly more affordable. However, the city has fewer foreigners and ex-pats, so it may take a little longer for you to transition into the culture.
Yokohama
Just a short train ride south of Tokyo, Yokohama is Japan’s second most populous city, with nearly 3.8 million residents. The city is known for being one of the largest Chinatowns in the world, with hundreds of Chinese shops and restaurants. Add in an amusement park, amazing architecture, and museums (including the Cup Noodles Museum), and it’s hard to deny Yokohama as a prime destination for anyone.
Yokohama is also a peaceful city, and it’s relatively affordable compared to other cities in the area. It’s a good city for foreigners who want to work in Tokyo but maybe want to avoid the hustle and bustle of the country’s capital.
Fukuoka
The sixth largest city in Japan, Fukuoka, is located on the northern shore of Kyushu Island. The best way to think of Fukuoka is laidback. The city supports an extremely relaxed lifestyle with its picturesque mountains, sandy beaches, peaceful temples, and abundant green spaces.
Don’t mistake “relaxed” for “boring,” though. The city still has plenty going on, from lively nightlife to great shopping options to delicious food. While it’s not a popular city for foreigners, Fukuoka has a generally low cost of living that can be enticing for ex-pats.
Nagoya
Nagoya is considered one of the three main cities in Japan, along with Tokyo and Osaka. It tends to get ignored by tourists as a pass-through city between Tokyo and Kyoto, but Nagoya is the fourth most populous city in the country.
Many consider Nagoya a smaller version of Tokyo, featuring many of the same neon lights, highrise buildings, and shopping as Tokyo but in a smaller package. The smaller space can be attractive to newcomers as the city is easier to navigate and travel through, thanks partly to an efficient train system.
How to find a real estate agent in Japan
When buying property in Japan as a foreigner, you legally need a real estate agent present to explain the details to all parties involved. A Japanese real estate agent can also provide greater insight into the market, determine the best property for your specific needs, and act as an interpreter throughout the process, ensuring you don’t miss important fine print or tricky details.
Unfortunately, there isn’t much of a trick to finding a real estate agent. Use your resources, search online, and ask for referrals from trusted friends and family.
When you do find an agent who seems to fit, ask to see their license (known as a takken). Japan has strict regulations for real estate agents, and a license is the bare minimum requirement. From there, talk to the agent and make sure they understand you, both in terms of language and what you ultimately want from their services.
The pitfalls of buying property in Japan
Purchasing property in Japan can come with many of the main pitfalls associated with purchasing any property in a foreign country, like a language barrier and general cultural differences.
The main pitfall is bank loans. As mentioned, you don’t need a Japanese work visa, and you don’t have to worry about any legal or residential requirements as a foreigner. However, opening a bank account and getting a bank loan as a foreigner can be challenging. Many banks have programs that provide mortgages to foreigners specifically, but having an interpreter is essential to the process.
Opening a bank account in Japan also requires strict document requirements. Along with a valid passport, foreigners may need:
- A visa or residence card
- Proof of address
- Proof of income/employment
- A jitsuin, or officially registered seal that acts as your signature on official documents
You can, of course, pay in cash, but knowing how to transfer money to and from Japan will help immensely.
The steps to purchasing a property in Japan
The exact sequence of events may vary with your personal experience, but the general steps for buying a home in Japan are fairly straightforward.
- Find a real estate agent. Discuss your needs, your budget, and your preferred location. This will typically end with you signing a commission agreement with the agent.
- View properties. This can be fun as you get a firsthand look at some properties, comparing prices, sizes, and amenities from property to property.
- Fill out an Application to Purchase (for a new house for sale in Japan) or a Letter of Intent (for an existing, pre-owned residence). New properties typically work on a lottery system, depending on the number of applicants. For existing properties, a Letter of Intent essentially begins the negotiation process with the property’s current owner.
- Pay the deposit or earnest money to the seller. This is usually up to 5-10% of the purchase price.
- Get pre-approved for a mortgage. The bank will review necessary documents, including identification and annual tax receipts.
- Review the Explanation of Important Matters, a legal document that discloses all the information needed for you to make the purchase, including existing mortgages on the property, potential boundary disputes, and broken items on the property. You and your agent may be able to negotiate costs based on this document.
- Once you are satisfied, sign the Purchase Agreement.
- Settle and close on the property. This is handled by a judicial scrivener, who acts as a third party to ensure the proper transfer of money to the seller’s account and the property’s title to you. The seller gives you the keys, and you officially own the property.
If you are looking at Japanese houses for sale, Remitly can ensure a smooth transition with easy, convenient, and secure money transfers. Our quick, reliable service allows for multiple delivery methods, allowing you to send money to a mobile wallet, bank account, or cash pickup. Multiple levels of security protect your money through every step of the process, ensuring that you spend less time worrying about your money and more time focusing on your move to Japan.