The Home Buying Process

Congratulations. You have decided to purchase a property or an investment property in Japan. 

My name is Stephen Underwood and I work for Century21 Niseko. I moved to Japan 30 years ago. 
Japan is an amazing country. Japan boasts an excellent health care system, education system and infrastructure. The food is delicious, the people are kind, the weather is great and the prices are low for real estate compared to the rest of the world. Japan doesn’t have a Fentanyl problem and there is very little crime but the Japanese language is difficult. The expression, “I’m going to see a friend in hospital,” is almost identical to “I’m going to a singles-hookup party.” I still get this wrong sometimes, much to my wife’s chagrin. 

Guide to Buying a House in Japan

First, there are no legal restrictions on buying property in Japan for foreigners. There is no need to have citizenship or even a residence visa to buy a house in Japan. However, buying property in Japan does not entitle the purchaser to receive a Japan residence visa. If you do not have a permanent residence visa, are not married to a Japanese citizen, and/or are not at least resident in Japan with an established work history, it can be exceedingly difficult to find financing to purchase a Japanese property. 

Step 1:   Research Properties

The first step for anyone wanting to buy a property is to start by researching Japanese real estate properties on the internet. Japan doesn’t have a Multiple Listings System like other countries, so I would recommend starting on Suumo. It is the most popular real estate search site in Japan and will give you a general price range for properties in the area that you are interested in. Unfortunately there is only a Japanese page but you can navigate it by using Google translate. Once you have narrowed your selection down to a few properties, give me a call. 

This is the link for suumo.jp below:

https://suumo.jp

Century21 Japan has 998 offices throughout Japan. We will liaise with the local Century21 office in the area that you are interested in and arrange for a viewing or virtual tour. You don't even need to be in Japan to purchase property here. During the Covid19 pandemic, Century21 helped clients buy and sell properties using Zoom and Virtual Tours and third-party property inspections. 

Step 2:   Make an Offer

Once you have found a property that you like, it is time to make an offer to purchase the property through a Century21 real estate broker. The reason to use a letter of intent is to inform the seller that you are seriously considering purchasing the property and serves as the beginning point for your negotiations. The offer is made in writing and requires your name, address, email address and importantly, the date that you would like to make the final payment. 

Please be aware that the purchase price of the property is the only negotiable aspect of the purchase process. The taxes, judicial scrivener’s fees, bank transfer charges, the revenue stamp fee, payment of property tax and city planning tax, registration and license tax, real estate acquisition tax and the Century21 commission are non-negotiable. 

IMPORTANT: The new Japanese banking laws require that the name and address of the sender of the funds be the same name and address of the person or entity that will be purchasing the property. The name on the Sales Purchase Contract will appear on the Property Title Deed. If the name and address on the Sales Purchase Contract doesn’t match the name and address associated with the bank account that will be sending the funds, the Japanese bank will happily take the transfer fees and return the funds to your account. 

Step 3:   Sign the Sales Purchase Contract after the Explanation of the Statement of Important Matters

The Statement of Important Matters is a legal disclosure document prepared by the seller’s agent that contains all of the material information any buyer would want to know to be able to make an informed purchase decision. Under Japanese law, it is a written document that must be delivered to the buyer and also explained verbally prior to the buyer’s signing of the Sales Purchase Contract. The Explanation of the Statement of Important Matters can take about one hour and is conducted in Japanese with an English translation. Once you are satisfied with the content of the Explanation of Important Matters, it is time to sign the Sales Purchase Contract.

Step 4:   Pay the 10% Deposit

The buyer pays to the seller a 10% deposit to demonstrate the seriousness of the buyer’s intention. It will be counted as part of the total purchase price when the deal is completed.

Step 5:   Pay Remainder of Purchase Price and Register Change of Ownership

Between paying the 10% Deposit and the Final Payment, you will be contacted by a judicial scrivener that has been authorized by the seller to act on his or her behalf to change legal registration of the property. The judicial scrivener is the person who is responsible for completing the legal transfer of the registration of ownership from the seller to the buyer on behalf of the seller, and making sure on behalf of the buyer that there are unexpected mortgages, liens or other third-party encumbrances on the property. Basically, the judicial scrivener is your lawyer and they do all of the due diligence on your behalf.

Property Tax and City Planning Tax
 
Property tax and city planning tax, imposed on owners of fixed assets such as land and buildings on January 1 of each year, are paid to the local municipalities where the assets are located. Amounts are calculated based on the value of the assets. The standard rate of property tax is 1.4% and the rate of city planning tax is 0.3%. If your purchase takes place during the middle of the year, the seller will pay the portion of the Fixed Asset Tax and City Planning Tax that corresponds to the number of days the seller owns the property that year. 
 
Real Estate Acquisition Tax
 
A real estate acquisition tax is imposed only once. A standard rate of 4% is applied against the government assessed real estate value, not the sales price. For a 30,000,000 Yen property, budget for 200,000 Yen.

Stamp Tax
 
When documents such as contracts and receipts are prepared, revenue stamps are required to be purchased and pasted on the documents and then postmarks need to be stamped on them. For a 30,000,000 Yen property, the stamp tax is 10,000 Yen.

Real Estate Broker Commissions

When a real estate transaction is concluded, a brokerage commission is required to be paid to the broker. The upper limit of this commission is regulated by the Building Lots and Buildings Transaction Business Act. The Century21 commission is 3% of the sales price + 60,000 yen + 10% sales tax. For a 30,000,000 Yen property, the commission would be 1,056,000 Yen.

Judicial scrivener fees

Without any unified standard, judicial scrivener fees are freely determined and the amount differs materially depending upon the judicial scrivener. For a 30,000,000 Yen property, the fees are around 250,000 Yen. 

Step 6:   Turning on The Lights

Without a Japanese bank account, you will not be able to pay the utility bills or the Fire Insurance payments. Until you can open a Japanese bank account, Century21 can manage the property for you. The cost is approximately 6,000 Yen per month. Fire Insurance is based on the size of the property. Budget for 8,000 Yen per month.

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Century 21 Niseko HouseBank
21 Global Place 1F
Ironai 1-10-11
Otaru, Hokkaido, Japan 047-0031
The Gold Standard
Contact: Stephen Underwood        
Cell: 090-5229-1875
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