A Step-by-Step Guide to Purchasing Real Estate in Japan
Purchasing real estate in Japan from abroad is attractive due to light restrictions, fair taxes, and increasing property values. The following guide expands on the merits of owning real estate in Japan and outlines the steps that you will need to take once you are ready to buy the property of your dreams.
The Appeal of Purchasing Real Estate in Japan
- There are no foreigner-specific restrictions on purchasing real estate in Japan. Permanent residency is not a requirement, and you can purchase property regardless of your visa status.
- Fair taxation: real estate taxes imposed on foreigners are the same as those imposed on Japanese nationals.
- Real estate values for residential and investment properties have been increasing year by year.
- With low levels of country risk, Japan is highly regarded as a safe investment destination.
- When compared to other popular locations such as Hong Kong and Singapore, Japanese real estate is reasonably priced, making Japan a popular choice for foreign real estate investors and aspiring residents.
The Real Estate Purchasing Process
We realize that buying real estate in a foreign country is intimidating. Fortunately, our team of experts is prepared to support you through the entire process. From searching for the ideal property to post-purchase paperwork, our aim is to provide you with peace of mind every step of the way.
Step 1: Property Search
We only work with the best properties, and you can find prime real estate listed here on our website. We also have access to plenty of unlisted properties as well, and we can conduct a customized search based on your unique requirements. Contact us to begin your search today.
Step 2: Site Viewings
If you can come to Japan, we would recommend you to visit the location of the properties. We will attend the tour for you to view the candidate properties and others as you like.
For residential properties, you can see the interior of the building. But for investment properties, you can only view the exterior and shared spaces such as the entrance lobby. Under Japanese law, you must obtain consent from the tenant to view the inside of your investment property before or after purchase.
Step 3: Application (Letter of Intent)
After you decide on a property, we will inform the seller of your intention to purchase by sending a formal Letter of Intent (LOI) on your behalf. This letter includes the desired purchase price, handover date, and more. If the seller agrees to the terms in the LOI, then we will establish a contract.
In Japan, all price negotiations are conducted through formal written proposals. Additionally, the purchase price is typically locked in once you have expressed your desire to buy a property. Therefore, if the seller accepts the LOI, you can be confident that the agreed upon price will not change going forward.
Step 4: Contract Signing
Once the seller accepts the LOI, it is time to draw up a sales contract. All sales contracts are in Japanese. However, before you sign any contract, we will arrange for an interpreter to explain it to you in your native language.
At this stage, you will need to pay a deposit of 10% of the purchase price in Japanese yen. The contract signing typically occurs at the office of the seller’s agent. There is no need to worry if you cannot come to Japan. As your agent, we can sign the contract on your behalf while you witness the process online from the comfort of your own home.
Step 5: Settlement and Delivery
Payment of the remaining balance and transfer of ownership occur on the same day. We will mail any documents requiring your signature in advance, and they will need to be returned to us and confirmed by a judicial scrivener before the settlement day arrives.
On the settlement day, the seller, the seller’s agent, a judicial scrivener, and a Morinoen agent will gather at a bank specified by the seller to complete the transaction. Just as with the initial contract signing meeting, you are welcome to attend the final settlement meeting online from abroad.
The funds needed to pay the remaining balance should be prepared in advance at a bank located in Japan. Unfortunately, overseas bank accounts cannot be used for this transaction. Once the judicial scrivener verifies all the documents necessary for transferring ownership, the balance owed will be transferred by wire to the seller’s bank account. The transfer process typically takes less than an hour to complete. Document confirmation, balance transfer, and property key delivery occur simultaneously. Keys to the property can only be delivered after the transfer of funds has been confirmed.
Step 6: Post-Purchase Procedures
Multi-family properties are coupled with a management association which commissions cleaning, maintenance, and repairs for building upkeep. As a property owner, you will need to pay monthly fees for property management and for reserve fund for repairs.
For investment properties, you will need to outsource rent collection and other property management services to a property management company in Japan. A remittance agreement with the management company is required to determine how often rent fees will be transferred to you.
After purchasing or earning income from real estate, you will need to notify relevant Japanese government agencies. Additionally, you will have to appoint a tax accountant to file income tax returns and pay taxes on your behalf.
You Can Count on Us
As you can see from this guide, purchasing real estate in Japan is an attractive and potentially lucrative venture where foreign investors can enjoy the same opportunities as Japanese nationals. However, there are language and geographic barriers that can be difficult to overcome.
Fortunately, our team at Morinoen is ready to remove any obstacles that stand between you and your dream of owning property in Japan, the world’s third-largest economy and premier tourist destination. You can count on us to provide all the supporting services you need to successfully purchase property in Japan.
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