Guide to Buying a Home in Tokyo

Buying property in Japan can be a daunting task, especially for foreigners who may not be familiar with the language, culture, and legal system. This guide is designed to help you navigate the process of buying property in Japan, from understanding the legal requirements to finding the right property and securing financing.

Whether you are buying a home, luxury residence or investing in Tokyo, you will need to work with an agent who can assist you to complete the Japanese paperwork, financing and contracts. You will need to find the perfect property, make the purchase application, arrange payment methods and close all contracts to Japanese legal standards.

Doing all this, in English, Japanese and Chinese, is something only Housing Japan can do.

We begin by partnering you with an agent who can help you get the most out a deal, starting by consulting with you about what you needs, desires and intentions are, and move on to sourcing the best off-and-on market property within your budget and criteria.

You will need to have a property in mind in order to discuss financing with a local Japanese bank, as they do not provide even a cursory approval for a mortgage before knowing what type of property you intend to purchase.

Other concerns you made need assistance with can include issues around taxation, re-sell ability, or arranging property management for a home you wish to rent out (either on a short-term or long-term basis).

The Search

Your agent will search for a list of property and once you have been presented with these options, they will then take you through the viewings, explaining anything you need to know about the property and its local area.

You will need an experienced agent who has access to the best, and most up-to-date listed property in Tokyo as not apartments or real estate is listed openly in the market – much is listed privately or off-market. This means that having someone like Housing Japan work with you will ensure you have better options when it comes to making a purchase decision.

Financing

Housing Japan agents are in many cases able to advise in financing and tax issues due to our experience and internal knowledge, but in cases where more specialised  knowledge is required, we are also able to put you in touch with the appropriate experts. Specifically in terms of financing, we work closely with a number of major banks in Japan (both domestic and foreign), as well as several smaller banking corporations and financial institutions who approve loans from select locations overseas. Our Singapore office is dedicated to helping those who are primarily based outside of the country.

Application

When you find the right property, submit an “application to purchase”.  This is a non-binding written expression of your interest to purchase the property at certain price and in what way you will finance the purchase. An application shows the seller you are serious and will start the negotiation process.

Explanation of Important Matters

Once the price is agreed your agent will start the contract process.  The agent is required to investigate the details of the property and provide you with an “Explanation of Important Matters”.  This document defines all the important terms of the contract.  You should read and fully understand this document before executing the contract.

Executing the Contract

The contract execution usually takes place at the agents offices and takes about 2 hours to complete.  It is typical to pay the owner a deposit of 10% or JPY 10 million at the time of the contract.

Loan Application

Although you will probably have pre-approval from a lender, once the contract is complete you can make the formal loan application.  It usually takes a month to six weeks for final approval after which the final closing date can be set. If you using bank financing, the contract will have a clause saying that you are applying for a mortgage from a particular bank with a proposed approval date. If, for some reason, the mortgage is not approved the contract will be terminated.

Final Settlement

The final settlement usually takes place at the buyer’s bank and is handled by a judicial scrivener. The buyer will transfer the remaining balance to the sellers account and the title of the property will be transferred to the buyer. On completion the seller delivers all the keys to the property and the transfer of ownership is complete.

Summary of Costs

When purchasing a property in Japan, normally the taxes and fees will come to about 5 to 6% of the price of the property. You can find out more about this on our Tokyo property taxes and fees page.

Laws Relating to Real Estate in Japan

It is one of the great strengths of the Japanese home market that laws are strictly enforced and there is clear understanding of everybody`s rights and responsibilities. Rather than recreate what has already been set down, we have made available for download, a PDF from the Japanese government that explains relevant legal issues. Click here to access that PDF.