Buying A House In Japan – Not As Difficult As You Think

In terms of law, the procedure of buying property in Japan has almost nothing different in comparision to other countries. Nevertheless, the actual process is always way more opaque and time-consuming, especially when you don’t speak Japanese. And as purchasing house is a big deal, you’d better skim thoroughly rules and regulations in advance. This article will provide you with a detailed guide about common procedures taken when buying a house in Japan.

How’s A Typical Japanese House?

In Tokyo’s 23 wards, a new house’s average size is around 100 square meters. The house is typically narrow and has three storeys. On the ground floor is a car space, bedroom and bathroom. The LDK (which stands for living/dining/kitchen) is on the second floor, two more bedrooms are on the third floor and sometimes there is a small rooftop deck for drying clothes. A typical house in Tokyo rarely has a garden because of high land values and small block sizes.

In a two-storey house, bedrooms and bathroom are also on the ground floor where is the darkest part of the house, making it the most suitable for the sleeping space. Besides, installing a bathroom on the ground floor is the cheapest, so you will usually see it on this floor. Like in a three-storey house, the living area is on the second floor where people spend most of daylight hours.

What to consider when buying a house in Japan 

Why you should own a house in Japan

A wise investment 

Recently, Japan has witnessed an increase in purchasing real estate property by foreigners due to the upcoming 2020 Olympic Games being held in Tokyo along with the falling Japanese yen. Thousands investors and Japan lovers have come to Japan to take the plunge for either investment purpose or private use.

Besides, living in an apartment, even a very cheapest and most basic rooms will nearly cost your life due to the management fees. So buying a house helps you to save a big budget in the long term. Though newly built Japanese homes quickly lose both the glossy appearance and building value after a period of time, it’s still worth to have your own space in Japan!

More than a property

Purchasing a Japanese house will not only work out in financial terms, but also have significant effects on other aspects of your life. The idea of owning a stamp-sized piece of Japanese land with an ultra-modest home could be a thrill to anyone. Let’s think, you can enjoy weekend parties with friends at home or have some adorable neighbors visit some time. That house is more than a property. It helps you settle down and may completely transform your life in Japan. 

Understanding The Floor Plans’ Abbreviations

Before buying a house in Japan, it’s essential that you understand the abbreviations used in Japanese floor plans. You will mostly see the capitalized letters “L, D & K” in the layout of a room, but there are still more acronyms related to the floor plans. Below is the table of floor plan abbreviations that should come in handy whether you’re looking to purchase property or rent a room.

Floor Plan Abbreviations
L	Living Room
D	Dining Room
K	Kitchen
WC	Water Closet (Restroom)
RF	Roof Floor (Loft)
UB	Unit Bath (Bathroom)
CL	Closet
SB	Shoe Box (Shoe Closet)
MB	Meter Box (Meter for Gas, Electricity, and Water)

And these are common real estate terms.

Common Real Estate Terms
Balcony	Balcony
Closet	Closet
Roka	Corridor
Yoshitsu	Western-style Room
Sen	An abbreviation for laundry room
Walk-in Closet	A large closet that you can walk into.
Washitsu	Japanese-style room with tatami mats
Jo	The size of one tatami mat (1 tatami mat=1.6562㎡)

The followings are some common abbreviations for the house layout that you will encounter when looking for properties.

Layout Abbreviations	Meaning	Size
1LDK	One bedroom and a kitchen with a living-dining area./About 13㎡ of kitchen and living-dining area	About 23 to 35㎡/Bedroom: 7 to 13㎡
1DK	One bedroom and a kitchen with a dining area./7 to 13㎡ of kitchen and dining area	About 20 to 30㎡/Bedroom: 7 to 13㎡
1K	One bedroom with a partitioned kitchen.	About 13 to 25㎡/Bedroom: 8 to 12㎡
1R	One bedroom with a kitchen in the corner.	About 13㎡/Bedroom: 8 to 12㎡

The number of bedrooms always appears first in the layout abbreviations. For example, “1LDK” indicates that there is one bedroom and a kitchen with a living-dining area in the floor plan. “2LDK” means two bedrooms and a kitchen with a living-dining area.

Please note that the common area and balcony in Japanese houses are not regarded as a private area.

Can Foreign Residents Apply For A Housing Mortgage?

There are criteria that foreign residents must meet to apply for a housing mortgage from Japanese banks.

• The applicant must be between 20 and 65 years old, and the mortgage must be paid off before turning 80.
• The applicant is a policyholder in a group credit life insurance.
• The applicant must either be a full-time employee or contract worker for more than two years. Additionally, the previous year’s income, including tax, must be more than three million yen.
• The applicant must have permanent residency status.
• If he/she does not have permanent residency, his/her spouse must either be a Japanese citizen or permanent resident. Additionally, the spouse must sign the housing contract as a joint guarantor.

The three first requirements can apply to Japanese nationals. Please note that the details differ according to the bank issuing the mortgage and the state of the applicant’s visa.

If you don’t have permanent residency status or a medium-to-long term visa, you may not be eligible for a mortgage. If this is the case, you should consider consulting with a bank in your home country for a loan.

Can a foreigner buy a house in Japan?

One question that probably poses up when buying a home is “Can foreigners buy property in Japan”.

Technically, yes, you can. Foreigners regardless of their visa status are free to purchase property in Japan. Proprietary rights to land and house in Japan are also applied for foreigners.

Though there are no restrictions on ownership rights to real estate, property physical check and law collation are necessary to insure a safe transaction. And please note that buying a house in Japan will not enable the buyer to get a Japan residence visa.

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Houses for sale in Japan

Price of a real estate in Japan cities’s center will generally include 30% house price and 70% land price. There might have some differences when it comes to land prices in rural areas. 

The average cost of a simple wood-framed house fluctuates around 200,000 Yen/sqm, while basic reinforced-concrete houses can cost anywhere from 450,000 Yen/sqm and up. 

Prices will rise depending on design, location and the direction of the house. Property with some luxury custom-builds may cost up to 1,000,000 Yen/sqm+. 

Some of the world’s most expensive land can be found in central Tokyo, which contributes to its reputation of being an expensive city. Price normally starts from ¥150,000,000 for a place with 2 bedrooms.

People also seek fo worthless wooden homes in Kyoto and Osaka. Those house are likely to be built since 1900s and they usually cover large area with gardens inside. A 2,962 sq metre house in the western Arashiyama district of Kyoto will cost you roughly 700 milliion yen ($5.65m).

Old and dilapidated house may be priced at land value only, or even slightly less than land value as it will take money to remove the remnant. 

Necessary costs and taxes for buying a house in Japan 

Expect that about 7-8% tax will be added up to the original price not mention a brokerage fee (commission) you have to pay for the real estate agent if you have them assit in purchasing process.

For more information on tax issues, please see the example below.

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Other Things To Consider Before Buying A House

1. Terms Of The Sale

Before buying a house you need to make sure whether the house has a warranty against defects or not.

2. Buildable Size

There are two ratios called “Yosekiritsu” and “Kenpeiritsu” for each block of land in Japan.

Yosekiritsu is the total size of the house. It is expressed in percentage terms. For instance, a 100sqm block of land with a yosekiritsu of 150% indicates that you can build a house up to 150sqm (100sqm x 150%) in size (not including the basement and other allowances for a garage).

Kenpeiritsu is the size of the footprint of the house on the land. It is also expressed in percentage terms. For example, a 100sqm block of land with a kenpeiritsu of 70% means that the footprint of the structure can cover up to 70sqm (100sqm x 70%) of the block of land.

3. Building Height

The building heights may be limited in some areas such as neighbourhoods that are designated scenic or landscape zones. Category I and II Exclusively Low-Rise Residental Areas have the height limits of 10~12 meters.

The Fire Services Act may restrict houses on flagpole or battle-axe blocks of land to 2-storey only.

4. Street Access

Streets in Japan has the minimum width of 4.0 meters, which is enough for fire engines, emergency vehicles and moving trucks to access. Narrower streets can easily be found in Tokyo; however, the land owners along these streets are still required to shorten their land when rebuilding their house to make the streets wider. Therefore, before buying an old house on a narrow street, you really need to check whether you must shorten your block when you rebuild the house or not.

There are two types of streets, which are private and public in Japan. Private roads are some of the smaller back streets that may be owned by one owner or all of the land owners along those streets. If you share the ownership of the private road in front of your house with other owners, you may have to share the costs for repairing the streets.

The minumum legal street frontage for a house is 2 meters, which is wide enough for parking a car on the block. If the street frontage is less than that width, rebuilding a structure may be not allowed. Besides, if the house does not front onto a road but fronts a small pathway or a paved over waterway, you cannot rebuild without local government permission. It is risky to buy a house that only has access via a pathway or covered waterway as there is no obligation for the neighbours to widen the road and no access for fire trucks or garbage trucks.

Checklists Of Things To Ask Your Real Estate Agent

• Was the house built on reclaimed land, former ponds, riverbeds or swampy areas?
• Can the house be rebuilt?
• Does the seller know of any existing defects to the house?
• Does the house have any warranty against defects?
• Is the house built within the current regulations for size?
• Is any part of the land designated for future road planning?
• Is the street public or private?
• How wide is the street and how wide is the street frontage for the block of land?
• Where are the sewerage, gas and water pipes located under the road and where do they connect to the mains?

Process Of Buying A House In Japan

1. Choosing House

The first step for anyone is to pick a house based on your priorities and budget. You can start online by researching price trend data and comparing property listings on Real Estate Japan or having a glance at the official website of the Ministry of Land, Infrastructure, Transport, and Tourism. Local real estate agents is also a reliable source. You will need to consider between a new or pre-owned residence, or if your budget and time allows, even a parcel of land and have a house built for you. 

Buying New 

You can come to real estate agents to purchase a brand new house. Companies could satisfy you by various type of houses and latest designs. The purchase will also come with a 10-year warranty against defects which is still effective if the company goes bankrupt.

Buying An Older House 

A more affordable option is to buy an old house then renovate it. Modern concrete construction could be used up to 50-60 years while traditional Japanese wooden homes can last several decades longer. They’re both fairly easy to upgrade and re-equip.

Renovation cost varies widely, mostly starting from 5 million Yen. Thorough discussion with a renovation company before making the deal is necessary as the actual cost is usually more than initial estimates. 

Once you finish choosing basic parameters of the property, it is time to really shop around. Go see as many places as you can because they can not be as perfect as you see online and the houses could have more troubles than you may expect.

2. Applying For The Purchase 

The following step is contacting the seller to submit your application for purchasing (購入申込書 or kounyuu moshikomisho) or your Letter of Intent. You will likely be required to pay an application fee, usually between 20,000 yen and 100,000 yen. If you succeed to apply, this money will be allocated to the deposit and counted as part of total price. If not, it is fully returned to you.

In case you intend to get a loan, it’s time for you to begin the loan pre-approval (or pre-screening) process. Most Japanese banks do extend financial aid to resident foreigners. Those who have permanent residence status, long-term work experience in Japan or get married to a Japanese citizen will be more likely to get acceptance. 

At this point, needed documents will include the copies of:

1. Identification documents (passport/ local driver’s license)
2. Health certificate (in the last 6 months)
3. Annual tax receipts (源泉徴収票or gensen choushuuhyou)

If you are a non-resident, it will be very difficult to find a lender in Japan, but some may deal with you on a case-by-case basis.

3. Reviewing The Contract And Paying The Deposit 

Next, you will review the Explanation of important matters which is a legal disclosure document prepared by the seller’s agent including information such as property overview, method payment, and procedure in the case of contract cancellation. Under Japanese law, it’s obligate that the buyer receive the Explanation of important matters in written form prior to the execution of purchase agreement. 

Once you are satisfied with the content of the Explanation of Important Matters, you sign in the Sales Agreement Contract and pay the deposit (10-20% of the property value). Make sure the contract contains all of the matters you have agreed with the seller before.

It’s also time to formally apply for a loan if you have already passed the loan pre-screening process. Be prepare that the process can be relatively complex and take up a significant amount of time. When the bank finishes its underwriting of your application and approves your loan, you will have to sign the actual loan documents in Japanese.

4. Completing The Transfer 

The very last step to finish purchasing is to set a meeting with the seller, a representative of the lender and a legal scrivener to legally transfer the registration of ownership.You will receive the loan proceeds from the lender then pay for the remainder of purchase price. Before that, remember to final check the quality of property. Once all the fees have been paid, the buyer will receive warranty documents and manuals, and the key to the new house.

5. Moving In

Now congrats! You are ready to move in and enjoy your new place. 

Please note that the new Proprietary rights of the property are registered at the government office Legal Affairs Bureau) and a “Notice of information for registration identification” will be issued to the new owner after that. Foreigners are also responsible for providing a written notification to the Bank of Japan within 20 days after purchasing.

Conclusion 

And there you have it, the step-by-step guide for buying a house in Japan. Hopefully you find it useful and informative.

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