Buying Land In Japan? Here's What You Should Know

‍Buying land in Japan can be a complicated process. With the right guidance, you can make the process of purchasing land in Japan easier and more efficient.

To buy land in Japan you’ll need to:

1. Do your research and set a budget.
2. Connect with a Japanese real estate agent.
3. Tour properties.
4. Submit a purchase application form.
5. Sign the sale contract.
6. Submit a housing loan application.
7. Site check and transfer.
8. Final settlement.

Purchasing real estate in Japan can be a great way to make an investment. The housing market is stable and the value of land is relatively high compared to other countries. Let’s dive into how to buy land in Japan and what you should know beforehand.

‍Why Buy Land in Japan

For those purchasing a new house, Japan offers incredible support for those who are resident or non-resident foreign buyers with low taxes and interest rates on mortgages.

Furthermore, purchasing land in Japan not only provides purchasing power, but also adds a level of cultural experience that may not be attainable elsewhere. With the combination of all these factors - financial stability, low tax rate and cultural experiences, purchasing land in Japan could very well turn out to be a 良い降下 (good decision).

Stable Real Estate Market

Japan has been known for its stability in the real estate market. With low levels of volatility and good returns, it offers a great opportunity for land purchase. Property values tend to increase over time, and they are rarely subject to drastic drops in value (unless you have a worldwide pandemic). The market also tends to be more transparent than many other countries, providing clear information about investments and helping buyers make more informed choices.

Additionally, Japan has a vibrant economy and is consistently ranked very highly for their lifestyle and quality of life.

Even though prices vary greatly depending on the region, investors can rest assured knowing that any property purchased is an asset that can be held for a long time and will yield positive results overall. Hence, those who want to invest in the real estate market  are full of opportunities for foreign residents or overseas investors.

About Japanese Real Estate

Japan is a beautiful country full of diversity and culture, and many people are increasingly interested in purchasing land there.

Japanese land real estate can be an exciting opportunity, but it's important to consider the most optimal places to purchase. Depending on individual needs and wants, some of the best areas to purchase land in Japan are Kyoto, Tokyo, Osaka, and Yokohama, though there are many more options throughout the country.

Those seeking a delicious food scene should look towards Osaka or Tokyo; those chasing an escape from city life may find what they need in the mountainous regions of Kyoto; or those who love outdoor activities might opt for Hokkaido via its national parks and hot springs.

Consider research into zoning regulations of each prefecture as well as consult with local professionals for knowledgeable advice when looking for land. All that is sure though is whatever area you choose will be sure to provide unique experiences!

Two Types of Land

The right to own land in Japan is an important part of the culture, and has been practiced for centuries. There are two primary categories of land ownership rights in Japan ,called Freehold and Leasehold.

Freehold Ownership

Freehold ownership, or “Shoryuken”, is the most prevalent form of ownership, because unlike leased land, it grants the owner full rights to sell or do with the land as they please.

Leasehold Ownership

Leasehold property, on the other hand, involves a much different situation in which the leased land can be used only according to contract stipulations. Lessors may also choose from a further divided two options; surface rights or right to lease.

To lease only surface rights of their land instead of leasing out all rights including future developments such as buildings and resources.

No matter which type of ownership people decide upon in Japan, there is a great sense of pride associated with properly owning and maintaining a piece of land and all that comes with it.

Can Foreign Residents Buy Land in Japan

For those looking to purchase land in Japan, the regulations can at first appear quite restrictive. That being said, it is possible for foreign or non-resident individuals to obtain land in this country with the proper advice from a trusted professional.

Though there are several issues that must be handled prior to closing the deal, such as gaining approval from local authorities or sorting out tax and inheritance concerns, not unlike land in your home country, these hurdles can be cleared with knowledgeable legal counsel.

Do You Have To Be a Permanent Resident

Japan is famous for its restrictive land policy, so one might assume that buying land as a foreigner would be difficult or even impossible. Obviously a Japanese National has a smoother path to land ownership. However, while permanent residents of Japan are allowed to own and purchase land, you do not have to be a japanese citizen.

Foreigners can buy property in Japan as long as they have a valid visa, such as a work visa, student visa, or other long-term residency visas.

However, land ownership is highly regulated and foreigners may only purchase the type of land specified by their visa conditions.

In addition, approvals from the government for foreign buyers and those who rely on mortgages may take time and involve additional paperwork. The process can be complicated in some cases but it is possible for non-permanent residents to buy property in Japan without permanent resident status.

How To Buy Land In Japan: All The Steps

So you’re ready to build your dream home, your zen zone, your ramen den in Japan. There is a generally understood set of steps to follow for land or property ownership with a few unique to the Japanese real estate listings.

1. Do your research and set a budget.

Do your research on real estate laws and regulatory laws. Understand the costs incurred during sale from real estate companies, and management fees and taxes associated with  real estate purchase.

If buying land is in your financial plan, there is no better investment than to buy real estate. Setting a budget will come along with becoming more knowledgeable of the market. The average price of land in Japan is 197.95 thousand yen per square meter ($1470 USD).

2. Connect with a Japanese real estate agent.

The next step is to contact a real estate broker or an accredited buyer's agent who understands the legal aspects of buying property in Japan. It is important to find someone who can chart a pathway that takes into consideration any local laws pertaining to your purchase.

3. Tour properties.

After you’ve connected with a trusted agent, you’ll need to choose a suitable location for your land acquisition. It is vital that you determine what kind of land it is: unimproved ground or improved with infrastructure already in place? Is it freehold or leasehold?

Your agent should have the answers to all of the above and will generally tour properties with you free of charge.

4. Submit a purchase application form.

Once you decide upon the property of your choice, the next step is to submit a “purchase application form”.

This form requires details such as assessed value, your offer price, the payment method, when you plan to sign the contract, when delivery of the property should take place, and any other special conditions. You’ll need bank accounts, identification documents, and preferably someone to translate and speak English on your behalf.

With all of this information included in the document, it will provide everything needed for authorized parties to make sure that everything moves forward with your transaction seamlessly and to everyone's satisfaction.

5. Sign the sale contract.

Before you sign a contract for land sale in Japan, a registered real estate agent will review all the essential details with you.

As required by Japanese law, each contact comes with an “Explanation of Important Matters.” This document needs to be signed and sealed by a designated real estate notary.

This document includes information such as the property overview on the contract date, the relation of different rights, various legal limits, infrastructure arrangements for the property, management of the building/limitation of its use, payment method, and compensation for any contract violations as well as owner’s rights.

6. Submit a housing loan application.

For foreign land buyers in Japan seeking a housing loan, submitting a loan application can seem daunting. However, with a few simple steps and preparation, the process can be made much easier.

First, potential borrowers should carefully research their financing options, for a land or home loan to ensure they are getting the best terms. Second, it is important that the borrower collects all necessary paperwork such as income tax documents and proof of employment.

Finally, the borrower should submit an application to the lender they have chosen and wait for approval. Although buying property in a foreign country might seem like an intimidating task.

7. Site check and transfer.

A final check of the property will be done in the presence of the buyer and seller. Finally you’ll sign and seal the relevant purchase forms.

8. Final settlement.

Lastly, having possession of the property requires you to have the relevant paperwork. You’ll also make the remaining payment through bank transfer. Once you complete these steps and make payment for the land, then congratulations, you are now a proud owner of Japanese land!

Land Taxes in Japan

In Japan, property taxes are based on the land area and the type of property. The tax rate is set by the local municipality and is usually between 0.3% and 2%. For example, if the tax rate is 1%, and the land area is 500 square meters, the annual property tax would be 500 yen.

Due Dates

Paying taxes is mandatory for all property owners in Japan. Property taxes are typically paid in two installments.

The first installment is due at the end of March and the second by the end of September. If you fail to pay your property taxes on time, you will be subject to a late payment penalty of 10%.

Remaining Fees

In addition to property taxes, there are also remaining fees that must be paid when selling or transferring ownership of a property.

These fees include the registration fee, stamp duty, and transfer tax. The buyer pays a registration fee of 1% of the total purchase price, while the stamp duty is 0.4% of the total purchase price. The transfer tax is 3% of the total purchase price for properties worth more than 12 million yen, and 5% for properties worth more than 25 million yen.

Can You Get Permanent Residency Status When You Buy Land

No, buying land in Japan is not a viable way to acquire residency status in Japan.

You can however apply under the investment scheme. In that sense, if a holding company owned the land, and you invested, this might be feasible.

The first requirement is that the land must be purchased with Japanese Yen. You cannot use foreign currency to buy the land, and then apply for PR status. The second requirement is that the land must be purchased from a registered real estate company in Japan. You cannot buy the property directly from an individual owner.

Once you have met these two requirements, you can then begin the process of applying for permanent residency status. The application process can be lengthy, but as long as you have all of the required documentation, it is relatively straightforward.

If you are thinking about purchasing land in Japan, keep in mind that it is a significant investment. However, if you are planning on living in Japan permanently, it is definitely worth considering as a way to obtain PR status.