Understanding current market dynamics before you buy property in Japan.
Understanding why you would buy property in Japan is a critical first step in your investment journey.
Every week we see the headlines of new players entering the Japan real estate market with massive capital commitments deploying dry powder left and right, while conversely, we read of the many real estate and credit market crises occurring in other markets globally.
From the US where interest rates remain stubbornly high, often exceeding cap rates, with historic low inventory and elevated prices; to Singapore’s slowing transaction volume and tightened restrictions on foreign investment. In China, we see a continued annual slide in domestic investment, down 9.6% ($1.5 trillion) this last year. There is a pessimistic outlook in Hong Kong with investments at a 15-year low while financing costs are at a 22-year high; and Europe, overshadowed by geopolitical volatility, where bonds are almost more attractive than real estate.
And meanwhile;
Japan dominates as the preferred country of choice for cross-border real estate investment, 5th year in a row.
What makes Japan such an attractive market is the confluence of a weak yen, low-interest rate environment, domestic asset appreciation, and Japan’s renowned social and political stability, creating an unprecedented opportunity for astute real estate investors in probably the only bull real estate market globally.
The time is ripe to capitalize on the advantages presented by the Japanese real estate market, and with Housing Japan by your side, your real estate journey is sure to be seamless, informed, and ultimately rewarding. Whether you’re a permanent resident, non-permanent resident, or a non-resident of Japan, our services cater to your unique requirements, ensuring your foray into Japan’s real estate market is met with success and satisfaction. As a comprehensive real estate brokerage, we offer solutions in sales, investment sales, property management, development, and project marketing – a truly one-stop shop.
So, how can you get in on the action? After assessing your own investment goals, start by getting in contact with one of our sales professionals for a personalised consultation. We are ready to offer bespoke solutions at the highest levels of service.
Transaction Process – How to buy property in Japan.
In Japan, real estate transactions follow this general flow.
| 1 | Initial Consultation with Brokerage | ||
| 2 | Financing – Part I (skip if all cash) | ||
| a. | Introduction to banks for loan discussions (actual loan application will occur after submitting an LOI/purchase application) | ||
| 3 | Property Search & Viewings | ||
| a. | Proactive – we will consult other agents internally and externally and search real estate databases. | ||
| b. | Passive – through our website you may create a Property Alert by entering your search criteria. You will then be notified via email whenever a property matching your criteria has been registered to our company’s database. | ||
| c. | Viewings – we will arrange for and accompany you on property viewings. | ||
| 4 | Letter of Intent (LOI) | ||
| a. | Issuance of an LOI (Purchase Application) to the seller is standard practice in Japan. This is a non-legally binding document expressing your intent to purchase said property at your offered price and should be executed in good faith. | ||
| 5 | Financing – Part II (skip if all cash) | ||
| a. | Formal loan application with bank. | ||
| 6. | Purchase and Sales Agreement (PSA) | ||
| a. | Unlike many other markets, PSAs in Japan are non-living documents i.e., once executed, no alterations or addenda may be added. Housing Japan’s internal legal team will carefully plan and review documents with the sales agent. Typically takes 7-10 days to prepare. | ||
| b. | Upon completion, submit the PSA to the seller. After acceptance, the property will be taken off the market. | ||
| c. | Transfer of Down Payment | ||
| i. | For non-residents, Housing Japan can take custody of remittance. There are noescrow accounts in Japan. | ||
| d. | Explanation of Important Matters – legally required for a licensed real estate transaction agent to explain all items in the PSA (takes about 1-2 hrs). An English version will be provided in advance of the explanation for your review. | ||
| e. | Execute PSA | ||
| 7. | Settlement/Closing (usually 1 month after execution of PSA) | ||
| a. | Final walk-thru of the property. | ||
| b. | Remainder of purchase price amount plus appropriate fees will be settled. | ||
| c. | Document signing | ||
| d. | Handover keys and documents | ||
How to Buy Property in Japan – Banks to Consider.
*Current at publication, check directly with the bank for exact rates, terms, and requirements.
SMBC Trust Bank PRESTIA
Japanese trust bank offering home loans to residents of Japan.
LTV: depends on residence status
Currency: JPY
Loan Term: up to 30 years (must be repaid by age 80)
Amount: ¥10,000,000 – ¥500,000,000
Qualifications: resident of Japan
SBJ (Shinhan Bank Japan)
Korean commercial bank operating in Japan since 1986.
LTV: up to 60%
Currency: JPY
Term: 25 years
Amount: min. ¥20,000,000
Qualifications: investment purposes
SBI Shinsei Bank
Japanese financial institution providing English support.
LTV: inquire
Currency: JPY
Term: 35 years
Amount: ¥5,000,000 – 300,000,000
Qualifications: Japanese citizen or permanent resident (conditions apply for non-permanent residents – spouse must be a Japanese national or permanent resident and will be appointed as guarantor of the mortgage).
UOB (United Overseas Bank)
Headquartered in Singapore, is multinational bank founded in 1935 with branches in 19 countries, including the United States, Australia, Canada and Hong Kong. Ideal for overseas investors as no Japan residency requirements exists. Currently, offering the most wide-spanning international property loan for Kanto, Kansai, and Kyushuregions (Tokyo, Yokohama, Kyoto, Osaka, and Fukuoka).
LTV: up to 70%
Currency: JPY or SGD
Term: up to 35 years
Amount: min. $200,000
Qualifications: investment purposes
Bank of China (BOC)
A state-owned commercial bank headquartered in Beijing with a global presence, ranking as the 5th largest bank in the world by market capitalization. The Japan branch offers home loans to Chinese and other foreign nationals, however, loans are granted on a case-by-case basis including whether Japan residency is required or not.
LTV: up to 50%
Currency: JPY
Term: up to 20 years
Amount: consultation required
Bank of Taiwan
Headquartered in Taipei, providing commercial banking services in North America, Europe, and Asia.
LTV: up to 70%
Currency: JPY
Term: inquire
Amount: ¥30,000,000 – 100,000,000
Orix
Japanese investment bank with offices in 24 countries. Orix currently offers overseas real estate loans for purchases in Greater Tokyo and Osaka. This loan allows for a variety of purchases, including residential and commercial properties for either personal or investment use.
LTV: Up to 70% of purchase price or 100% of Orix’s valuation (whichever is lower)
Currency: JPY
Term: Up to 15 Years
Amount: min. ¥30,000,000
Qualifications: Hong Kong citizen (ID holder) or own a Hong Kong incorporated company
OCBC (Oversea-Chinese Banking Corporation, Limited)
Singaporean multinational bank with branches across APAC – Thailand, Hong Kong, and Malaysia. Currently, OCBC offers an Overseas Property Loan for newly built real estate in Tokyo.
LTV: Up to 70% (JPY), up to 60% (SGD)
Currency: JPY or SGD
Term: Up to 30 years
Amount: min. ¥25,000,000 or S$200,000
Qualifications: Singaporean national, Singaporean PR, Singaporean resident
Buy Property in Japan – Transaction Fees & Taxes.
＊ Total transaction costs range between 5-6% of the purchase price (additional 1-2% if financed).
| Time of Occurrence | Name/Type | Amount | Notes | |
| Upon Execution of PSA | Down Payment | 5-10% of purchase price | No escrow, direct transfer or HJ can hold. | |
| Stamp Tax (for PSA) | JPY 500 – 160,000 | Depends on purchase price.＊Not applicable if executed electronically. | ||
| At the Time Loan Contract | Stamp Tax (for loan) | JPY 1,000 – 200,000 | Depends on borrowing amount. | |
| Upon Settlement/Closing | Brokerage Commission | 3% of purchase price + JPY 60,000 + 10% consumption tax (if either buyer or seller don’t reside in Japan, then tax is not applicable) | Brokerage fee may not be imposed if property is newly built as some developers will cover these fees, but not always the case. | |
| Judicial Scrivener | JPY 100,000 – 150,000 | Judicial Scriveners are responsible for ownership transfer and registration only. | ||
| Registration Tax | estimated value * 2% | Estimated value depends on asset type and construction materials. | ||
| Loan Fee | Bank Commission | Around 2.2% | For underwriting the loan. | |
| Loan Fee | Guarantee Commission (保証会社・保証料) | n/a | Usually included in the bank loan fee/commission. | |
| Loan Fee | Insurance Premiums | n/a | Required as per loan terms (fire, disaster etc.) | |
| Fixed Asset Tax | estimated value * 1.4% | prorated (annual tax) | ||
| City Planning Tax | estimated value * 0.3% | prorated (annual tax) | ||
| Building Management Fee | depends on property | prorated (annual fee) | ||
| Building Repair/Maintenance Fund Fee | depends on property | prorated (annual fee) | ||
| HOA/Neighborhood Association Fee（町会費用） | depends on property | prorated (annual fee) | ||
| Post Settlement/Closing | Acquisition Tax | Value (assessed by the government every year) less any deductions * 3% (deductions depend on building age, asset type, and construction materials) | Only happens once, and is about 3-6 months after purchase, necessary documents will be mailed from the appropriate tax authority. ＊can be deducted if used as primary personal residence. | |
Buy property in Japan – About Housing Japan
We are a Tokyo-based full-service real estate brokerage, specialized in the luxury residential market catering to foreign clientele, providing outstanding results since our establishment in 2000. Services we provide include sales, investment sales, property management, and development. HJ Group Companies include HJ Asset Management, Resort Japan, Trunk Room Tokyo, and Ken’s Place.
Check out other related articles for more:
- Guide to Buying a Home in Japan
- Yen Loan Calculator For Buying A House In Japan
- Tokyo Property Taxes and Fees
- Fees and Taxes of Selling Your Home in Japan
- How Expats Can Obtain Real Estate Investment Loan In Japan
- More Real Estate resources here
What Next ?
At Housing Japan, we specialise in buying, selling, and managing residential luxury real estate. Whether you are a local resident or simply seeking a second home or temporary residence for business trips, we have you covered. Our one-stop service includes expert management services, so you can sit back and relax knowing that everything is taken care of. Whether you are looking for a luxurious living experience or an investment opportunity, we are here to help you every step of the way.
