Buying A House In Japan As A Foreigner? – A Detailed Answer
Japan is undoubtedly a dream destination for any traveler. In fact, Japan is in Top 15 best countries for quality of life – The 2020 Best countries ranking. (Conducted by BAV Group and the Wharton School of the University of Pennsylvania). Many people around the world has been trying to move to Japan. If you are sharing the same dream, you should start thinking about how to find a place to live here. Purchasing an apartment is an option to go. Of course, buying a house in Japan as a foreigner is costly but it is not too complicated as you think it is. In this location guide, we will provide you a detailed answer on how to buy a property in Japan.
Buying A House In Japan As A Foreigner? – A Detailed Answer
1. Can A Foreigner Buy A House In Japan?
Everybody know that Japan has a very strict law and regulations system. However, it could be more flexible at some areas. Unlike many countries, Japan currently has no restrictions over buying house as a foreigner. So if you are wondering “Can a foreigner buy a house in Japan?” The answer is yes. You even do not need have to visit Japan or own a citizen card to purchase real estate here. However, please keep in mind that buying a house in Japan will not help you in getting a resident visa. These two things are completely separated.
Though the legal procedures are almost the same for both Japanese and foreigners, there are still some conditions that you need to satisfy to be able to own a property in Japan. Let’s take a closer look at these conditions in the next part.
So what are the conditions for a non- Japanese to purchase a property? Firstly, you must have no conviction recorded in Japan. Secondly, you must be able to afford a house here. It is quite obvious, right? There are 2 options for you: getting your cash ready or applying for a loan mortgage. If you already have enough balance in your bank account, the process will be much simpler and easier. But if you need to get financing from a Japanese bank, things can become a little bit complicated. How much money the bank agrees to lend you will depend on whether the bank assesses your trustworthiness as high or low. These questions are normally taken into account:
- How long have you lived in Japan?
- Do you have a permanent resident card or not?
- Where do you work? How much is your annual income? How trustworthy is your company?
- Are you carrying any debts (bank debt, car loan, credit card debt, etc.). Do you have a history of past due?
- How much do you have in savings?
Normally, Japanese bank will not loan you 100% but only 70 – 90% value of the property. So you still need to have a certain amount of money before thinking about buying a house in Japan.
The cost of housing depends on the location and the type of house. Buying an already built house will cost less than buying a land and building a new house. Besides, you can have a much cheaper price if the property is located uptown or in smaller cities. It is not surprising that a house in Tokyo is much more expensive than a house in Fukuoka or Yokohama.
Let’s take a quick glance at housing price in some cities:
|City||Average housing price per square meter|
|Japan — country average||Apartment in city centre: ¥867,796.08 Apartment outside the city centre: ¥449,696.95|
|Tokyo||Apartment in city centre: ¥1,158,370.89 Apartment outside the city centre: ¥588,030.27|
|Osaka||Apartment in city centre: ¥515,150.00 Apartment outside the city centre: ¥400,000.00|
|Fukuoka||Apartment in city centre: ¥625,000.00 Apartment outside the city centre: ¥300,000.00|
|Yokohama||Apartment in city centre: ¥800,000.00 Apartment outside the city centre: ¥300,000.00|
If you can not travel to Japan, the simplest way is to do some research at Suumo or Home’s. These websites provide pricing data across a number of different areas. You can easily find the price range for the location you are interested in.
Site visit is also an helpful way to find out the general price of the area you want to find a home. By that, estimating the amount of money needed to buy a home will be simpler and more realistic.
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4. Detailed guide to buy a house in Japan
4.1. Choose locations
After researching on websites, you should narrow down to few location options. This will increase your chance of finding a suitable house and avoid wasting time for both you and your realtor. While choosing a location, please remember to take local transportation, grocery shops, schools and medical centers into consideration.
4.2. Contact an estate realtor
Second thing you should do is finding a trusted real estate agency. It helps to save your time and make your experience less painful. They will take care of translations and legal procedures, as well as provide you professional price advisory and market insights. In addition, you will be supported in negotiations and formal processes with the seller.
The brokerage fee which is 3% of the total value of the house ¥60,000 + consumption tax. It means that if your house is priced at 100,000,000,000 yen, you will have to pay your realtor more than 3,000,000,000 yen. An important point to be noted here is that many large real estate companies often say that using their company makes it easier for banks to lend money, which is often not true. Getting a loan or not is entirely up to your profile. So be wise and careful while choosing an realtor.
4.3. Apply for a loan mortgage.
Often to be sure, the real estate company will guide you to choose a suitable house first and then guide you to apply for a loan. If the bank agrees to lend you money, they will issue you a notice. With this paper, your loan is secured. Later on, if you want to change to another house with the same amount of money, just a simple notice with the bank to modify information is OK.
There are many Japanese banks provide home mortgage loan for foreigners. Below are general requirements to apply for a mortgage loan in Japan:
- Age 20–65
- Annual income requirement, usually JPY2,000,000–JPY5,000,000.
Normally, mortgage rates in Japan are not high. You should check directly with few banks before making decision.
Please note that it is necessary to apply for a residence permit (住 民 票) in order to execute this loan agreement.
4.4. Site visit
Viewing the house you are going to buy is definitely important. The realtor will help you to contact with the seller for the site visit. You need to be very careful at this step. If any damage or breakdown is found, you need to immediately tell the seller to fix it. You should also bring measuring equipment to calculate and plan for the location of your furniture to where.
If you find a house that you decide to buy, the real estate company will contact the seller. Some key information to provide the seller as below:
- The price you want to buy.
- The amount you want to deposit (usually 100 man).
- Date to sign contract.
The price you want to buy can be lower than the price from the seller. The seller will consider to decide whether to agree or not.
Houses that are easy to get successful discount negotiation are usually:
- New house which has been completed building but not sold yet. The longer it is, the easier to reduce the price (because if it is older than 1 year, it will be considered an old house).
- Old house: has sold information for a long time but not yet sold…
4.6. Initiate contract
When both sides agree with the price, next step is signing the contract. The realtor will help to prepare a contract template and an “Explanation of Important Matters Regarding the Property and Transaction”. This is a set of documents including owner title registration, property legal description and any provisions in case of contract cancellation.
The contract will be signed at the real estate company’s office, with 3 parties: seller, buyer, and real estate. To sign it, you need to prepare the official registered seal.
In the contract, in addition to the common points of ownership, home condition, warranty … (this is different for each house), you need to pay more attention to the terms if the seller has problems in borrowing money from banks.
At this stage, you may require to pay a cash deposit to the seller (normally 10% or less than 10% of the property in some cases).
4.7. Final settlement
The final step is to take the loan from the bank and transfer it to the seller. Money transfer procedure will usually be done at the bank, right after receiving the loan from the bank. Once the final settlement is done, the seller will give you the key to enter the house.
4.8. Move into new house
Now, you can finally move into your new house. If it’s a newly built home, the appliances in the house will be almost nothing. In order to move in and live immediately, you need to calculate buying, renting and installing equipment such as room lights, curtains, air conditioners, antennas, anti-theft cameras … beforehand. You should start planning your budget and looking for new furniture after visiting the house.
That’s a lot of information to digest, right? Buying process in Japan is actually not complicated as you think it is. After reading our blog, hopefully you have answer for the question “Can foreigners buy property in Japan?” and enough information to prepare and make wise decisions while buying a house in Japan.