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The information on this page provides you with an outline of general ideas for purchasing property in Japan.
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Japan's property market is fully accessible to foreigners
Unlike most Asian countries, the real estate market in Japan remains wide open to foreigners, regardless of visa status. You can own land and buildings outright; titled to your name or a corporation. Your right to own property is the same as a Japanese national, even if you're a non-resident or plan to own property through a foreign corporate entity.
Learn more details at: Purchasing real estate in Japan
Purchasing property
In most cases, when you purchase a new property, you visit the property developer's office and deal directly with their representative. Some developers also work with agents. Resale properties need the helpful assistance of real estate agents. If your Agent is honest, knowledgeable and experienced, property shopping will go smoothly. But there are many paper-pushers too. Take care to choose the right person as your agent. If you want to deal directly with property owners, you must have experienced advisors. Social skills adequate for dealing in real estate, including layering, are often necessary too.
Work with a trustworthy local agent
The easiest way to search and locate your ideal property in Japan, is to hire an English speaking real estate agent. Let the agent do all of the hard work for you, including negotiations. Make sure the agent has sufficient knowledge and experience. Results will vary, depending upon who you hire. That is especially true if you are purchasing for investment purpose. An agent's job is not only to select properties and open doors for you. Another key issue is the commission system in Japan. Be aware that the agent's commission is normally not included in the sales price.
Learn more details at: Hiring your real estate agent
Follow the straight path to avoid costly mistakes
Each country and jurisdiction has its own laws and customs pertaining to real estate, you should proceed in a modest manner while learning local ways and means. Japan offers the full support of well defined property laws, including full-fledged property rights. Even so, if you decide to purchase property in Japan, you will likely notice a few peculiarities in the way things are done, compared to your country.
Do not be overly greedy to scope out that so-called “super deal” until you have ample knowledge and experience in the country or jurisdiction. Just use common sense, foreigners typically don’t happen upon unique deals until they are very well connected with local business people. That takes time. If a deal looks incredibly good to you, make sure the seller is not somehow taking advantage, it could be a trap. That said, it is still possible to find obvious property price discrepancies between regions and countries, whether it be due to various stages in the economic cycle, currency exchange differences, or other factors.
Do not sign any documents until every detail has been spelled-out, especially the purchase contract. Be sure to obtain complete English translation. In all cases transact through a bank, leaving a money trail as proof. Real estate prices normally reflect the market. A very low price, much lower than average, often means that there is something behind it. Always proceed with your eyes wide open.
Consider when you sell
Real estate is your asset, it is important that you will be able to sell a property when you want out. The basic idea of a property’s popularity rings true for any country. Location. Of course there are many other factors pertaining to the value of property, but the bottom line is still location. Normally, property in a good area of a good city with suitable population and long term economic growth, can easily sell, depending on price. But property in an area with nothing around it is pure speculation about the future. Even a well constructed house, with nice architecture, is unlikely to attract many buyers if located in an unpopular area. More so, if the building design is quite unique (e.g., Art Decco design style). Generally speaking, the more expensive and popular the location, the easier it is to sell, and the greater opportunity it has for appreciation in value.
Condominium
Condo’s (called Mansion in Japan) are the most popular type of property foreigners buy for their vacation home or as an investment. In most cases the Home Owners Association makes decisions about property management and maintenance of the property and controls the association fee collected from unit owners. In a few cases where a Condo building has a small number of units, it can result in difficulties selecting directors for the HOA. If a building has many small units, like studios, a higher rate of non-owner occupied (investment) units may create more maintenance issues. Keep in mind that each condominium has its own set of rules, for example, some allow pets while others do not. Make sure you read all HOA rules and by-laws prior to proceeding with a purchase transaction. Another point to verify is elevators, make sure there are enough of them and that the speed of the elevators is adequate for the number of units, especially in high rise buildings. How you dispose your waste is another important issue requiring your pre-purchase attention in order to avoid frustration.
Learn more details at: Tokyo investment property options
The local tax rules
When you purchase property in Japan, you must become informed about Japan's tax system. How much do you have to pay in terms of Value Added Tax to purchase property, is there a doc stamp tax, what is the annual property tax rate (to hold property) and how much do you have to pay when you sell the property? Make sure you review all such issues with your agent and/or tax adviser. If your goal is to purchase property as an investment, be aware of the following guidelines:
1) In most cases you must file taxes at a local tax office for the income from property you own and/or when you sell the property.
2) In most cases you must report to your country of residence or nationality, all overseas capital gains from property sold, and all rental income, if any. It ultimately depends on each country’s tax regulation. Many countries require you to file global income at your resident address.
Learn more details at: Tax rules for purchasing and renting property in Japan
Financing
Even if you are not generating income in Japan, you must deeply look into all aspects of financing if you plan to loan. Some banks offer a non-resident mortgage loan based on the value of the property. It usually requires 25-35% cash down payment to obtain this kind of loan, and it is usually provided in the local currency with an adjustable interest rate. Check for such a possibility with the developer or agent. But an important issue not to neglect is the exchange rate. Generally, interest rates do not fluctuate 20% in a short time period, but exchange rates sometimes move drastically in a short period. Your monthly payment can go up or down 20% depending upon how currencies moves. So beware. Study the historic stability of a given jurisdictions' currency if you are seriously considering a loan.
Explanation of types of Homes
*The following information is mostly based on real estate terminology widely used in Tokyo, so it may not apply in some areas of Japan.
Condominium (Mansion)
A form of ownership of self-contained housing units in a building or buildings holding multiple housing units with a percentage of share rights included for shared common areas. Commonly managed by a Home Owners' Association (HOA).
Single Family Home (Kodate or Ittsukenya)
Detached free-standing building on its own piece of land (which is sold part and parcel with the home).
Tract House (Tateuri jyutaku)
Also known as cookie-cutter housing, is a style of housing development in which multiple identical or nearly-identical homes are built to create a community.
Apartment (Apart)
Commonly self-contained housing units of more than 4 in a building (sometimes a set of buildings) under single party ownership and managed for rental housing.
Town House (Town house or Terrace house)
3 or more houses in a row, with neighbors sharing an adjacent "party" wall. Town Houses are typically multiple stories. They are not very popular in Japan.
Differences between Japanese and Western style homes
Most homes in Japan have become Westernized. Many new properties no longer offer a Tatami mat room with a Japanese style closet to store a Futon mattress. However, there are still some differences due to lifestyle.
1) Entrance to unit:
Japanese do not wear shoes inside the home. They take off their shoes at the entrance (inside the unit) and usually wear slippers inside. So there is a shoe closet at the entrance, in order to store shoes. The custom of taking off shoes helps to eliminate bringing in dust and germs from outside the home.
2) Bathroom:
The Japaneses way of taking a bath is different than in the West. They wash the body outside the tub and then dip into the hot tub water. Many family members share the hot water, thus it is not drained and refilled for each person. Many bath tubs offer a feature to occasionally heat the bath water. However, shower equipment has become a standard feature in Japan. So in most cases, there is no need for foreigners to adjust to how they wash their body or use hot water. This is only mentioned as a precation to verify.
3) Toilet:
Most Japanese do not like a Western style bathroom layout, which is a toilet bowl in the bathroom. A separate toilet room is most popular. Some properties do offer Western hotel type bathrooms, in order to save space, but you may experience some difficulty when you decide to sell the property.
Purchaser check list
1) Title search lot and building. Title registry of building and land are done separately in Japan (verify title holder, mortgage, lines of credit, outstanding judgments, liens against the property, unpaid taxes, etc.).
2) Rights to lot ownership (outstanding ownership, lease etc.).
3) Property lines, adjacent lots. (single family home, etc.).
4) Building inspection (structure, termites, etc.).
Obtain professional assistance to verify the issues above.
5) Price, what is included (appliances, interior, etc.).
6) Confirm availability of all facilities attached to the building and units (elevator, water tank, the possibility to use food disposal, etc.).
7) Parking (whether included in the price and its location, etc.). Some buildings offer no parking spaces.
8) Various costs related to purchase price (agents fee, lawyer's fee, registration tax, etc.).
9) The date of property transfer and the condition (as is, after build improvements, etc.).
10) Warranty after moving in (building defects, equipment problems, etc.).
11) Utility meter (location, average cost and how they charge).
12) Neighbor conditions and transportation access (you must make sure by walking around the entire area to carefully observe).
13) Noise (street noise, upstairs unit/ next-door units noise, etc.).
14) Verify view from all windows (too much or not enough sunlight?).
15) Verify that neighbors have no construction plans (possibly obstructing view or sunlight).
16) Home Owner Association rules (pets, renting out, security, waste disposal, etc.).
17) Schools nearby (if you have children).
18) Past history of natural disasters (floods, earthquakes, typhoons, tornados, etc.).
19) Owner's cost for obligations (tax, HOA fee, management fee, insurance, etc.).
20) Possibility for selling and associated costs (agent's fee, tax, etc.).
21) Possibility to rent out the unit and associated costs (agent's fee, tax, etc.).
Disclaimer:
The information provided above, to the best of our knowledge, is accurate. Even so, it is provided for reference purposes only. You should treat it as a preliminary step, requiring further research and investigation. Unique cases can arise based upon each persons circumstance as well. |
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Copyright 2007 Homes International, Co., Ltd. All Rights Reserved
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