A guide to purchasing a property in Japan

A guide to purchasing a property in Japan


 For those with long term life plan in Japan, buying a house or other properties must be included as one of the lifegoal checklist. But as a foreigner will it be a difficult process? How about mortgages and loans? Does a PR status needed? ... lots of questions started to pop up in your mind.

The process of purchasing a property in Japan is quite similar to purchasing property in other countries, but the actual process can be slightly complicated and time-consuming, especially if you cannot speak or read Japanese. There are a lot of factors to consider before purchasing a property in Japan, including legal procedures, financing, and cultural differences, which all will affect your success rate in purchasing. Now we will guide you through the whole procedures and what should you prepare before buying a property in Japan. 


So, can a non-Japanese purchase a property in Japan?

As a foreigner, you can purchase land and properties in Japan, and no citizenship or residence visa is required. The process is actually much simpler than you think, as both Japanese and non-Japanese buyers have to follow the exact same rules and legal procedures.


Things to consider before purchasing a property in Japan

As mentioned before, there are a lot of factors to consider before purchasing a property in Japan, and those factors are listed below:


  • Your purpose / goal - are you buying the property for a private use? Or for an investment?
  • Your budget - how much money will you spend to purchase the property?
  • Financing options - will you get a mortgage to pay the property?
  • Location - if the property is for a private use, you might want to choose a foreigner-friendly neighborhood. If it is for an investment, you should choose an area with great access to the downtown area.


A step-by-step guide to purchasing a property in Japan

Below are the steps you need to take when purchasing a property in Japan.


1. Find the property to purchase and choose your financing options



If you want to purchase a property in Japan, the first step to take is to research the properties, set your priorities, and determine a budget. There are a lot of options you can take - you can buy a new or used property, including a condominium, a detached house, a townhouse, or even a land to build your own house on it. 

Before moving to the next step, you need to set a budget and choose a payment or financing option for the property. Property price varies depending on its location, but expect to pay more than $1 million when purchasing a new property in Tokyo. As a foreigner, you can purchase the property with a full payment, or get a mortgage from the local banks, but it will be extremely difficult for you to find a lender in Japan if you are a non-resident. Also, if you have permanent residence status or are married to a Japanese citizen, you will be viewed favorably by the lenders.


Some banks like Prestia SMBC Trust Bank and Shinsei Bank provide mortgage loans to foreigners who reside in Japan.


2. Contact a property agency

Once you have decided everything, it is time for you to contact local property agencies so they can guide and assist you through the whole process. It is important to find a well trusted local property agency for the reasons below:

  • Legal safety
  • Language support
  • Price consultation and insights into the market trends
  • Site viewing assistance
  • Price negotiations with the seller
  • Paperwork assistance

Once you have found the property agency, you need to tell them your preferred location, property types, and budget. At this point, you will be asked to sign a commission agency agreement or broker agreement, which costs around 3% of the purchase price.


3. Consult with the local banks first before viewing the property



Before viewing the property you would like to buy, make sure to consult with the local banks first if you plan to get a mortgage. Financing is the main obstacle a foreigner will face when purchasing a property in Japan, so it is better to find out whether you are eligible to get a mortgage loan or not.


Another reason why you should consult first is to get an unofficial pre-approval for your loan request, which you can use as a bargaining chip when talking to the seller.


4. Visit the properties for site viewing



The next step is to visit the desired properties with your agent to view and compare them with each other. Always ask your agent if you have any doubt or questions related to the properties, especially since the property features and standards in Japan are quite different than in other countries. 


5. Show your purchase intention



Once you have decided which property you will purchase, you need to officially express your purchase intention to the seller by submitting a Letter of Intent (for used properties), or an purchase application (for new properties). Once you have submitted one of these documents, you are considered as a serious potential buyer.


6. Price negotiations and initial payments



At this stage, your agent will negotiate details regarding purchase price, payment methods, payment timings, etc. with the seller. It usually takes around a week to a month as both parties draft legal documents, review final due diligence, and fulfill formalities. If you plan to purchase the property with a mortgage, you will need to apply for a loan from a bank this time.


7. Execute your purchase



Once both parties have done negotiating, your agent will provide “Explanation of Important Matters Regarding the Property and Transaction (重要事項説明書, juuyoujikou setsumeisho)”, which is a set of documents that includes owner title registration, ownership type, property legal description, and any terms and conditions in case of contract cancellation.

A cash deposit shall be paid to the seller (usually around 10% of the purchase price) to secure the property at this stage.


8. Finalize your purchase



Your contract will be finalized by a judicial scrivener at the bank where you applied for mortgage. You need to transfer the remaining balance of the initial payment to the seller’s account and the seller will pass the title of the property to you. Once the payment is confirmed, you will get all the keys to the property and the transfer of ownership is completed. 

You can move in, or start marketing your property for rent once the transfer of ownership is completed.



So those are the process to buy a property in Japan, it is quite a hassle but when you have all the documents and information ready then it shouldn't be an impossible task. We will be publishing follow up articles related to mortgage programs offered by the local banks and cost estimation when purchasing properties in Japan, so stay tuned!