7 Things to Know About Investing in Japanese Property: Insights from Hokushin Fudosan

[SPONSORED CONTENT]

Foreign interest in buying Japanese property, especially in Tokyo, has exploded in the last few years, as investors have become increasingly aware of the attractions of the Tokyo property market.

Many foreign buyers understandably have basic concerns about what it is like to invest in the Japanese real estate market. In this article, we answer seven of the more frequently asked questions, with valuable insights provided by our article sponsor, Hokushin Fudosan, a Tokyo-based multilingual real estate company.

Can foreigners really buy property in Japan?

Yes. There are no restrictions on foreign ownership of land and property in Japan. In fact, Japan is one of the few Asian countries that allows foreigners to own land on a freehold basis.

Whether you are resident or non-resident, when you buy a house in Japan you will also own the land, since Japan is a freehold market. If the property is a condo, the land will be co-owned by all the owners in the residential building.

Do I have to be able to understand Japanese in order to purchase property in Japan?

No, if you work with a real estate company that speaks your language, it is not essential that you understand Japanese, since your agent will be able to interpret during meetings and translate all the necessary documents. 

However, the majority of Japanese real estate agents are not conversant in English and all the documents that you sign will be in Japanese. For this reason, it is highly recommended that you partner with a real estate company that is experienced in working with foreign clients, such as Hokushin Fudosan, which has English and Chinese-speaking staff.

A client of Hokushin Fudosan said this about the importance of this capability:

“The purchasing procedure was very smooth. Since I am not fluent in Japanese, the company translated all the contracts into Chinese, even though they have no obligation to do that. I am very grateful for that. Otherwise, I would be blindsided and the investment would be very risky if I have limited understanding about the property and the contracts.”

Can I buy a property and lease it out when I am not visiting Japan?

Yes. Many overseas investors are interested in buying a condominium, detached house or en-bloc building for the purpose of leasing it out as a vacation rental when they are not themselves using it. This is possible, but it is highly recommended that such owners retain the services of a qualified property management company. 

There are many issues involved in managing a property remotely, from on-site maintenance issues to fire inspections and paying utility and tax bills. Additionally, if you plan to lease out the property, it is essential that you have a professional to help with tenanting, rent collection and remitting rental income to your home bank account.

A full-service real estate company, like Hokushin Fudosan Group, can provide buyers with end-to-end service, from initial consultation to property management, so that you know your property is in safe hands even when you are not in the country.

Can I buy a house and rebuild it from the ground up or renovate a condominium to suit my needs?

Yes, this is possible but there are various zoning and other building regulations to be aware of if you are considering tearing down a property or doing a major renovation of a condominium. 

A detailed answer is beyond the scope of this article, but a few important things to know are that in the case of freestanding houses, regulations can affect whether you can tear down the building at all, how far back from the property line the structure can be built or the height of the roofline.

In the case of condominiums, many new owners do renovate the interior to suit their tastes and needs, but it is highly recommended that you work with a qualified architect and interior designer who can help you navigate the regulations and options available to you.

In any event, a rebuilding or renovation is a complicated process. By working with a full-service real estate company, such as Hokushin Fudosan Group, you will be introduced to their network of professionals, who would otherwise be very difficult to connect with.

Can I get a loan from a Japanese bank to finance a property purchase?

In general, most banks in Japan do not offer loans for non-residents to purchase property, so it is very difficult to finance a purchase this way as an overseas buyer.

However, it is possible for foreign residents of Japan to obtain a bank loan to purchase real estate, especially if you have permanent residence status. Foreign residents who have a long-term work visa can qualify for a bank loan depending on their income level and length of employment at their current employer, among other factors.

It is much easier to obtain a loan from a Japanese bank, if you work with a real estate agent, such as Hokushin Fudosan, who has previously worked with foreign clients and who has long-term established contacts with lenders. 

A recent client of theirs gave this feedback about getting help from Hokushin Fudosan with their mortgage:

 “The company helped me to ask for quotations from different banks and liaised with the banks closely in order to get the best mortgage offer for my property. I couldn’t have secured any mortgage offer without their help. The options were very clear and well explained.”

Will I be able to get a residency visa if I buy property in Japan?

No. Buying property in Japan is not a pathway to getting a residency visa in Japan. Property purchases are not considered a qualifying activity for the purposes of applying for a visa.

What are the main costs involved in buying a property in Japan?

The main costs involved in acquiring a property in Japan can be divided into two categories: taxes paid to the government and handling fees, which are paid to the real estate agent or judicial scrivener. Roughly speaking, these taxes and fees add up to about 6% to 10% of the purchase price of a second-hand property.

Depending on your particular situation, there may also be fees associated with the mortgage and insurance. It is best to consult with your real estate agent, who can provide you with the details and costs involved for your particular target property.

If you are buying a property for investment, your agent can also help estimate the expected revenue and costs of ownership, so that you can evaluate whether the investment makes sense. 

Related to this, a recent client of Hokushin Fudosan said this about their experience working with the company:

“The budget estimation was very accurate and invaluable. The company has listed out all the fees and costs involved in order for me to calculate the yield on the property…The overall experience is very positive and their level of service is unparalleled. I would definitely recommend their services to others. And they would be my preferred real estate company when I purchase other properties in Japan in the future.”

Hokushin Fudosan

Hokushin Fudosan is a multilingual (English, Mandarin and Cantonese) real estate company with 60 years experience in the Tokyo real estate market. 

They specialize in helping global clients buy and invest in properties in the Tokyo 23 Wards and have served clients from diverse backgrounds, including Hong Kong, Taiwan, Singapore, Malaysia and other parts of Asia, as well as the U.S. and Europe.

Their website has a wealth of information about the Japanese real estate market. There is a White Paper on “Navigating Property Purchases in Japan: A Complete Guide to Procedures & Fees for Foreigners,” specially prepared for overseas customers. This resource outlines essential steps and provides answers to frequently asked questions, helping guide customers through the process and can be downloaded here.

If you’re considering investing in Tokyo’s real estate market or buying a house, please contact them for a free consultation and advice specific to your situation, in your language, whether it’s English, Mandarin or Cantonese.