How Foreigners View the Japanese Real Estate Market: Ministry of Land Survey Results

In an effort to boost the Japanese real estate market, Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) has been focusing on increasing market transparency, especially with respect to the participation of non-Japanese in domestic real estate transactions.

The MLIT’s Construction Industry and International Affairs Division plans to release guidelines soon to make it easier for non-Japanese to carry out transactions in the property market.

Survey: How Non-Japanese View the Japanese Real Estate Market

As part of the groundwork for this, the MLIT tasked Real Estate Japan with conducting an online survey to gather information and data on the areas in which non-Japanese may have difficulty understanding real estate sale and purchase transactions, renting, and property management in Japan.

The target survey group was non-Japanese living in Japan and abroad. Respondents were asked about their understanding of issues specific to real estate sale and purchase transactions, renting, and property management in Japan.

The survey was carried out from January 16 to February 8, 2017, and a total of 511 valid responses were received.

Thank you to everyone who took the survey! We will contact you by email by March 7th if you were one of the people randomly chosen to receive an Amazon gift card.

Real Estate Japan submitted the survey results to the MLIT in mid-February. The Ministry will use this data to write up guidelines to help non-Japanese better carry out real estate transactions in Japan.

Below we summarize some of the main survey results.

Experience in the Japanese Real Estate Market

Q1: Have you ever purchased or sold property in Japan?

A: Yes = 10.5%, No = 89.5%

Experience buying selling real estate japan

Survey on “How Non-Japanese View the Japanese Real Estate Market” online survey conducted by Real Estate Japan Co. Ltd. on behalf of Japan’s Ministry of Land. January16 to February 8, 2017. N = 511. All rights reserved.

Q2: Have you ever rented a house or apartment in Japan?

A: Yes = 81.8%, No = 18.2%

Survey on “How Non-Japanese View the Japanese Real Estate Market” online survey conducted by Real Estate Japan Co. Ltd. on behalf of Japan’s Ministry of Land. January 16 to February 8, 2017. N = 511. All rights reserved.

Most Difficult Things to Understand about the Japanese Real Estate Market

Q3: Regarding the sale and purchase of property in Japan, what are the most difficult things for you to understand or that you think may be difficult to understand? Please pick up to three from the list below.

The most frequently selected answer (13.4%) was, “This question is not applicable to me because I am not interested in the buying/selling of real estate in Japan,” suggesting that 86.6% of respondents had at least some interest in the sale and purchase of property in Japan.

The top three issues that users thought were most difficult to understand had to do with 1) Ownership rights, 2) Taxation of owned property and taxation of real estate transactions and 3) Payments related to the purchase of property, other than the property price itself (such as fixed asset taxes, agent and brokerage fees, and payments to judicial scriveners for registration of rights, etc.).

Choices % of Respondents
who selected this as one of their choices
Frequency
Rank
The sale-purchase transaction process itself 9.5% 7
The different rights relating to the ownership and use of real estate
(for example, common ownership, quasi-common ownership, condominium rights, ground leases)
11.1% 2
Information relating to real estate transaction prices (including how to get that information) 9.6% 6
How intermediary and agent contracts work 8.0% 8
The Explanation of Important Matters (重要事項説明) 10.2% 5
Timing and method of paying the purchase price 4.6% 11
Type and content of payments other than purchase price
(fixed asset taxes, agent and brokerage fees, payments to judicial scriveners for registration of rights, etc.)
10.3% 4
Details concerning taxation of ownership in real estate and real estate transaction taxes 10.4% 3
Details concerning registration of rights in real estate 6.8% 9
How to manage a property that has already been purchased and fees associated with property management 6.0% 10
This question is not applicable to me because I am not interested in the buying/selling of real estate in Japan. 13.4% 1

Q4: Regarding the renting of property in Japan, what are the most difficult things for you to understand or that you think may be difficult to understand? Please pick up to three from the list below.

Respondents overwhelmingly chose two issues related to renting property in Japan that they considered difficult to understand: 1) Up-front costs related to moving into an apartment (deposit, key money, agent fee) (18.6%) and 2) Guarantor system, renters’ insurance, background checks conducted when you move in (18.4%). The third most selected choice was: Costs related to the renewal of an apartment lease (lease renewal fees, lease renewal processing fee) (9.5%).

Choices % of Respondents
who selected this
as one of their
choices
Frequency
Rank
The rental process itself 8.9% 5
Differences between different types of leasing contracts (regular lease, fixed-term lease) 7.8% 7
Information relating to rental price levels (including how to get that information) 7.5% 8
Up-front costs related to moving into an apartment (deposit, key money, agent fee) 18.6% 1
Costs related to the renewal of an apartment lease (lease renewal fees, lease renewal processing fee) 9.5% 3
The difference between rent and common-area-maintenance (CAM) fees 4.3% 9
Monthly fees unrelated to rent and common-area-maintenance (CAM) fees, such as neighborhood association fees 7.8% 7
Guarantor system, renters’ insurance, background checks conducted when you move in 18.4% 2
Fees relating to restoring the apartment to original condition at move out 9.0% 4
Issues related to cultural customs and daily living rules
(such as rules for separating garbage, multiple tenants sharing an apartment, etc.)
8.2% 6

Q5: Regarding the management and leasing of property you have purchased or owned, what are the most difficult things for you to understand or that you think may be difficult to understand?

The majority (37.1%) of respondents indicated that they had never purchased property in property in Japan for the purpose of leasing it out and/or were not interested in property management issues in Japan.

The remaining respondents indicated that 1) Taxes relate to rental income 2) Costs related to the tenant vacating the property and 3) Issues related to the fees payable to the Building Management Association [Homeowners’ Association] (such as the monthly maintenance fee and repair reserve fund) were their top concerns.

Choices % of Respondents
who selected this
as one of their
choices
Frequency
Rank
Taxes related to rental income 10.3% 2
Withholding tax for tenants(in cases where the tenant is a corporation, etc.) 6.5% 7
Content of property management agreements 6.9% 5
Details concerning management of property and buildings 6.7% 6
Information relating to real estate transaction prices and rent levels (including how to get that data) 6.1% 8
Differences between different types of lease contracts (regular lease, fixed-term lease) 5.7% 10
Costs related to the tenant vacating the property 7.6% 3
Issues related to the Building Management Association [Homeowners’ Association] (for example, issues related to the General Meeting of the Building Management Association and voting rights) 6.0% 9
Issues related to the fees payable to the Building Management Association [Homeowners’ Association] (such as the monthly maintenance fee and repair reserve fund) 7.1% 4
This question is not applicable to me because I have never purchased property in Japan for the purpose of
leasing it out and/or am not interested in property management issues in Japan.
37.1% 1

 

Concerns and Comments Regarding the Japanese Real Estate Market

We also invited respondents to share their comments and concerns about their experience in the Japanese real estate market and received over 200 unique responses. Below are some representative sample answers.

Q6: What questions or concerns do you have relating to Japanese real estate transactions, including the sale and purchase of property, renting, and property management? Please feel free to comment on your experience buying, selling or renting property in Japan.

  • “It’s very difficult to find a place to rent if you are a foreigner. We are here studying and learning Japanese, but because we are foreigners we were turned down 4 times. We had to rent an Airbnb for a month because it as almost impossible to find an apartment to rent.”
  • “There is a lack of general info out there for foreigners buying land and houses which may inhibit or discourage them from doing so”
  • “The ability to get bank financing to purchase a single home property. I am under SOFA status with the US Government, I cannot apply for a bank loan with a financial institution in Japan. Currently a pay $700 a month to rent a small single family home. A comparable bank loan for this same house would probably cost me the same amount in monthly mortgage payments. As a foreigner living in Japan I am unable to apply for a mortgage with a Japanese financial institution.”
  • “I wish that the contracts and other documents have english translations”
  • “Guarantor agency fees, and as an eikaiwa employee, concern over leaving my position and losing my apartment with my employer as guarantor.”
  • “Why does the archaic practice of key money and renewal fee still continue when there is no justification for it compared to the initial reasons for having it after the war and development was needed from the private sector . With salaries not rising and inflation increasing, workers’ purchasing and spending power has decreased and this just transfers wealth to landlords / management companies rather than workers who could use it to stimulate the economy.”
  • “High transaction costs”
  • “The lack of English speaking staffs. Very hard to find reliable agents”
  • “I have been searching for a property to buy in Tokyo.I have had issues with selling agents not forwarding requested information and have been informed that some sellers will not sell to foreigners (something illegal in most countries) I have yet to determine how property values are set other than 23 year depreciation,In most countries this is set by similar recent sales and renovation values.With the extraordinary number of vacant and or abandoned properties in Japan I think allowing non resident foreigners to buy or rent properties can only help alleviate this situation.I look forward to the new “Airbnb” regulations to take affect.I look forward to the MLS listing system to be established for better more accurate property searches because of the current system where agents have exclusive control over properties,The current structure is such the foreigners are at the mercy of agents ,having to pay extra costs such as translation fee”
  • “Unfortunately, there is still the issue of racial discrimination when seeking to rent an apartment. It has improved very much but it can still be a problem”
  • “It’s very hard that after you purchased property in Cash, agents do not explain well enough how to maintain or pay for the monthly bills like gas, water , electricity, especially if you don’t live here in Japan. We come for vacation twice a year. But one time, we arrived late at night and the electricity was cut off! Foreigners who buy real estate here in Japan are not allowed by your country to open a bank account for us to pay bills monthly online. It’s very frustrating because we told the agents we are buying for investment. So now we are stuck! The old people, our neighbors ask me one time why we bought an apartment if we are not going to live”
  • “I pay 350000 a month in rent, Japanese banks wont give me a loan because I am an American, this is non sense! I am forced to rent from a Japanese landlord, the rules support them, not me, they get rich off my money, not fair. I hope America decides not to let Japanese buy property in America where you are the Gai Jin.”
  • “Taxation issues explained in English”
  • “Lack of transparency around prices and fees (REINS) is frustrating.”
  • “I had a good experience renting a place in Japan, though I would want an easier system for foreigners to rent properties in Japan, because in most of the cases the language is a really huge impediment to purchase the best option and the documentsn and other legal papers are quite difficult to understand if you don’t have a deep knowledge of Japanese language. Also I think it will be easy if there was an office where foreigners can get some assistance in English to clear all doubts and help them to get a place that supplies all their needs and economic capabilities.”

(c) Real Estate Japan Co. Ltd. All rights reserved.

  • DG Ball

    I remember participating in this survey. I am sadly discouraged instead of encouraged when i first participated in this. It would be nice to live there but it seems super hard. I hope i am wrong

    • REJ

      Thank you for your comment and for participating in the survey! I’m sorry to hear that you came away with that impression about possibly living here. One thing to keep in mind is that sometimes, when people are generally satisfied with something, they tend not to say so in opinion surveys. However, we think that the data is representative of many foreigners’ experiences here. We believe that part of our mission as the leading real estate portal serving foreigners buying, selling, and renting property in Japan is to educate industry participants (agents, landlords, etc.) as to foreigners’ actual experiences here and hopefully help improve the situation and make it easier for non-Japanese to live here. Personally speaking, as a foreigner who has been in Japan for a long time, I’ve experienced some of the things described in the comments quoted above, but I’ve also had very good experiences dealing with landlords and agents. Overall, I would say that my experience in Japan has been a positive one. Thanks again for sharing your opinion! And please let us know if there are certain kinds of content you’d like to see more of on realestate.co.jp.

      • DG Ball

        I would love to live in Japan and i truely appreciate what your group does. Maybe it seemed more complex than it is. I would like to own a house someday in Kyoto, but i would actually live there instead of abroad. If there is a way you can send me more information i would be honored ^_^ *Bows in sai-keirei*