So you’ve bought an akiya vacant house in Japan and want to walk away from it

This article is part of our series on buying a vacant home in Japanand deals with an issue that comes up more often that you might think in the real estate industry: buyer’s remorse.

As part of our popular real estate webinar series, attendees are welcome to submit questions to presenters after the main presentation. At a recent seminar, this was a topic that caused a bit of discussion: what do you do when you’ve bought a vacant house but don’t want it anymore? Can you just walk away from it?

The short answer is “no.” While this may seem obvious, the reasons behind why the answer is “no” are worth discussing.

The main reasons are that once you’ve bought a property:

  • There is a public record of your ownership
  • You are responsible for paying taxes on the property, regardless of whether you abandon it
  • Safety issues related to abandoning a property

Below we briefly discuss these points:

Real estate registration (不動産登記, fudousan touki)

Real estate registration (不動産登記 or fudousan touki) is a recording system for the purpose of publicly clarifying ownership of land and buildings in Japan.

When you complete a real estate purchase, such as buying a vacant house, you will be required to register the transfer of ownership to show that ownership of the property or land has been transferred to you. There are also other situations where registration or a change in registration is required, for example, when a new building is constructed, when the owner of a property passes away, or when you finish paying off your mortgage.

There is a record for each piece of real estate or lot of land in the country. This record entry is recorded in the real estate registry, or toukibou (登記簿), which is a public book that describes matters related to a piece of property, in order to publicize and protect ownership rights related it. By looking at the toukibou, you can see how ownership of land or a building has changed or whether there are any mortgages or rents that restrict ownership rights, for example.

Each entry in the real estate registry is divided into three main parts.

It is beyond the scope of this article to describe each section in depth, but as related to purchasing a house, including a vacant house, it’s good to at least know the basics of what is included in each section:

  • Title
    • Including location, lot number, building number, structure, floor area, registration date
  • Rights related to ownership
    • Owner’s name and address
    • Date and cause of acquisition (sale, purchase, inheritance, etc.)
    • Any seizures of the land or property due to delay in loan payment
  • Rights, other than those related to ownership
    • Information on rights other than those related to ownership, such as mortgages, superficies, and easements
    • If there are rights registered in this section, the use of the land or building may be restricted
    • So, before you buy real estate, it is important to check this section to see what other rights are registered because they may restrict how you can use the land or property after you purchase it.

Anyone can get a certified copy of the register for a piece of land or property at any local office of the Legal Affairs Bureau. It’s also possible to get a copy online.

Example of a certified copy of the real estate register for a pice of property. Source: Ministry of Justice

 

Registering your purchase

Even if you have a signed a contract and paid for a piece of real estate, you cannot claim ownership of it to a third party unless you have registered the transfer of ownership in the real estate register. There are instances of unscrupulous sellers who sell the same property to multiple people. In this case, if someone completes the registration before you do, you will lose ownership of the property. For this reason, in most sales and purchase transactions, it is common to register transfer of ownership at time the payment is transferred to the seller.

Registration tax

There are different registration fees for recording a transaction in the real estate registry.

The buyer is usually responsible for paying these recording taxes, or 登録免許税 (touroku menkyozei).

The registration license tax required for registration of transfer of ownership at the time of sale is:

  • Land: 1.5% of the assessed value (if registered by March 31, 2023)
  • Buildings: 2% of the assessed value, but there is a reduced rate of 0.3% for residential properties that meet certain conditions:
    • Residential houses meant for private use with a floor area of 50-sqm or more
    • For previously owned homes, those that were built in the last 25 years (or the last 20 years in the case of wooden construction)
    • For previously owned homes, homes that meet certain earthquake resistance standards

Judicial scrivener (司法書士, shihoushoshi) fees

Judicial scriveners are legal professionals in Japan who represent their clients in real estate registrations, commercial registrations, and who prepare legal filings with legal affairs bureaus.

It is possible to research a real estate registry and to do a real estate registration by yourself, but it is highly recommended that you use a judicial scrivener when carrying out a real estate transaction. Judicial scriveners are trained to look for any potential issues in the registration of a property and to properly record your ownership rights.

Judicial scrivener fees vary by the region of the country and the particular office handling your transaction. Your real estate agent will be able to help you find a judicial scrivener to help you with your purchase.

So, whether you are buying a newly built property, a “regular” previously-owned home, or a vacant home, you will want to factor in judicial scrivener fees when estimating the cost of a real estate purchase.

Looping back to the main topic of the article, as has been made clear by the discussion above, researching and properly registering a property is a serious matter. There are also taxes and fees associated with registering ownership that you will have borne as the purchaser.

Once you’ve bought a property and registered it, there is a written public record of it. Walking away from a property does not expunge the record of ownership.

Taxes

Whether you occupy and maintain a property, you are responsible for paying the taxes associated with it, including the property (fixed asset) tax and city planning tax. The exact amount will vary from region to region and is also dependent on the characteristics of the building and site area.

The fixed asset tax (koteishisanzei) and city planning tax (toshi keikakuzei) are taxes levied every year on the owner of a property as of January 1st.

The fixed asset tax rate is 1.4% of the value of the property as indicated in the ‘fixed asset tax book’ (koteishisan kazeidaichou) for such asset, and the city planning tax rate is 0.3% of such value.

Both of these taxes are payable to the local city authorities quarterly in April, July, December and the following February. The city planning tax only applies to properties located in designated city planning areas (toshi keikaku kuiki) under Japanese zoning laws.

If you ignore a tax bill, it will continue to accrue and also tack up penalties for late payment.

For an in depth guide, please see this article: Guide to Japanese real estate taxes

Safety issues associated with abandoned homes

Properties that are abandoned or otherwise left unmaintained can become health and safety hazards to the neighborhood. Overgrown landscaping and gardens can lead to insect and rodent infestation not just in the property itself, but also to surrounding homes. Abandoned homes can also be fire hazards and lead to increased break-in crimes in neighboring homes.

These health and safety issues are actually one of the main reasons that local municipalities are working hard to promote the sale of vacant homes to responsible buyers.

What to do with a vacant home

If you have inherited a home in Japan or have bought a vacant home that you no longer want to live in or maintain, what should you do with  it? There are a number of options available that we will discuss in a a follow up article. These include: registering it for sale and renting it out for home sharing or other businesses.

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FAQs About Buying Property in Japan

Can a foreigner buy property in Japan?

Yes. You can buy property in Japan regardless of your nationality or country of origin. There are also no residency requirements for buying real estate in Japan. Securing financing as a resident foreigner is more complicated. For info on financing, please see Basic Requirements for Getting a Mortgage as a Foreigner in Japan

Seminars on Buying Property in Japan

Please see our seminar page for a current list of seminars on: how to buy a home in Japaninvesting in Japanese real estate for beginnershow to apply for permanent residency in Japanhow to sell property in Japan, and much more.

How do I get a property loan as a foreigner in Japan?

Please see this article for information on: Getting a property loan as a foreigner in Japan

What is the process for buying a property in Japan?

Please see our step-by-step guide: Guide to Buying Property in Japan

See how much you can borrow and your monthly payments in yen: Yen Mortgage Loan Calculator

For information about purchase and brokerage fees: Breakdown of real estate purchase fees and taxes in Japan

Need to know: Earthquake building codes and technology in Japan

Bilingual Real Estate Agent in Tokyo Answers Your FAQs on Buying and Managing an Investment Property

How much is my property worth?

Real Estate Japan is pleased to offer free, no obligation appraisals for owners of property in Japan. Please click here and fill out the form: How much is my property worth?

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Lead photo: Shirakawago, Gifu, via iStock 459365799 Credit:ksbank