So, you are interested in buying a house but can't afford one in your market or feel too limited by your options? Or perhaps you have heard of the cheap and even sometimes free houses available in the Japanese real-estate market due to the aging population there? Well you've come to the right place. In this guide I will be explaining how you can not only find, but purchase a Japanese home starting with finding an agent or the home you want yourself all the way to moving into the property.
Buying a home in another country, especially one with a different national language, can be a daunting prospect and hidden fees and requirements can seemingly come out of nowhere. Things shouldn't be this hard though, and I will rectify that here. Finding a cheap or abandoned house in Japan is arguably the hardest part of the Japanese home-buying process, as despite over 13.6% of Japanese homes being Akiya or 'abandoned' (Mitsui Fudosan, 2022) only a small percentage of that is listed online, as many of these homes are simply not worth enough to the owner to sell, as indicated by the low or free prices on those that are listed, or they are not familiar enough with technology to sell them as most of these homes are vacant due to Japan's aging population having no willing family member to take care of them.
It is expected that Japan's population of around 127 million will decrease to a mere 88 million by 2065 (National Institute..., 2015), causing even more homes to become abandoned or empty. This makes it more important than ever for foreigners to not only take advantage of the cheap market and maintain, restore, or build safer houses across Japan, but help prevent entire prefectures from becoming ghost towns. For almost all of the terms I will mention, you can find the Japanese reading and romanization for them in the list at the bottom of this blog as well as some other helpful Japanese phrases, which you can skip to here. I do suggest you read the entire blog though to make sure you aren't buying a kyu-taishu or something that may bring up sizeable unexpected costs.
Looking for a Realtor:
If you don't want to do the searching all on your own, the first step for finding a house would be to get a realtor. Unfortunately, most realtors in Japan only speak Japanese due to the fact that English is only really used around Tokyo and tourist areas, but you can still find a good realtor at both small and large businesses. Just make sure they are experienced or you may find yourself getting lost in Japan. Juken Housing and Recruit are two websites that offer experienced and friendly realtor services, but both require that you visit the homes you are looking at in person. While these realtors require you to visit Japan in person to show the homes, there are a number of virtual options. Most require you to first get in contact with the realtor though, so I suggest asking any realtors of the webpages with listed properties about it. Though 'Wagaya Japan' and 'So The By's Realty' both advertise virtual tours directly on their site and offer personal house-searching options as well as realtor resources. All of the realtor resources and home-buying resources are available here. Some realtors may also require upfront fees for consultations regarding properties.
Something important to mention is that Japanese are very income-centered so they also include something called 'yield' in the listings, which is the estimated total profit you can make by renting the place for more than what the monthly mortgage would cost you. Realtors do take a cut of the sale in something called the Real Estate Agent Commission fee or fudosan gyosha no tesuryo, which can vary based on the company but there is an upper limit of 3% of the sale price as well as 60,000 yen or $448 in 2023 and an extra consumption tax of 10%(only if property price is over 4 million yen), and that cost will have to be calculated into total expenses for the property (International Interface, 2020) This fee is paid by both seller and buyer, and the 3% only regards the base price of the property without the inclusion of the consumption tax, which is usually included in the sale price but which the seller will usually pay. (Japan Property Central, 2022)
Finding a home without a Realtor:
Although most Akiya are not listed online, there are still a substantial number of resources available for an interested home-buyer to locate their perfect property. These typically offer cheaper prices as well thanks to the exclusion of a realtor and realtor company buying the property and paying someone to handle viewing and selling of it. You do have to be careful, as the method of acquiring the property can vary and will come with additional or fewer taxes depending on if you purchased it or were given it as a ‘gift’. I've made a decent list of a bunch of sites where you can find Akiya for sale here. There's also a type of property called a Jiko Bukken where the former occupant died of unnatural causes and will be cheaper because of that, but I don't plan on going into that here (Japan Property Central, 2022a).
Auction: Instead of buying homes based on listed prices, the option to bid for a house before it is bought by a real estate company is also available. These auctions are called Keibai Bukken and the properties in them will usually sell for lower than market value. However, due to the general nature of auctions you can either end up paying way less or way more than the property is worth. Auctions are usually held by the government so there are auction websites typically for every prefecture hosted by the local public tax office. To find them you can search “prefecture name in Japanese characters” and 公売. I will also have links to the Koubai and Kankocho auction websites as well as a site for pre-renovated Akiya after the Japanese Words section.
Costs and Fees:
After finding a suitable property, the next step is to purchase the home, either outright or through payments. You must be aware that when purchasing a house or apartment in Japan, you can typically only obtain a loan at some banks for the price if you plan to use the property as housing. Sometimes the bank may require you to have a permanent residence visa, which you can inquire about at specific banks (Japan-Property, 2017). The buying part of obtaining a Japanese house works similarly to home buying in America, except with a couple extra things. When buying an apartment in a condominium or apartment complex there's a few extra monthly fees that you will have to be aware of, similar to something like an HOA fee. The first item is the Stamp duty fee or Stamp tax when signing the purchase contract. This fee is around 0.1% or less of the price of the home as indicated in the contract, and the percentage decreases with the price of the home (Japan Property Central, 2022). This tax is required for any official contract made in Japan.
Down Payment: If you don't plan to pay for the property outright, you will also be required to make a down payment along with the Stamp tax/duty that will range from 10-20% of the sale price (Plaza Homes Ltd., 2023). In terms of getting a loan, you will also have to pay the bank you get it from a Bank Commission tax (like a bank usage fee), a Guarantee Commission tax, and a Fire Insurance premium. According to their website, the Japanese bank Shinsei has a loan specifically for foreign residents and only charges 3% interest over 5 years (Shinsei Investment & Finance, 2023). If purchasing a property worth 25mm (25 million) yen, it would cost you only 62,500 yen or 467 usd (as of 4/23) per month, which goes up depending on the Government Bond rate that is reviewed twice a year. Your total monthly costs for the loan/mortgage with a 25-year contract would be 118,553 yen or $886 (as of 4/23) per month (Housing Japan K.K., 2022). Something to keep in mind is that many lenders will have a minimum age and minimum income requirement that varies, and you will have to submit extra documents like identification, health certificate, and tax returns. Many lenders require a continuous work history in Japan of approximately 2-3 years. You may need to find a Japanese financial advisor if you are living abroad and can’t locate a willing lender. However, if you pay the price outright and only take a loan out for renovations, the process is much easier, and you may even be able to do this with your home bank (Spendlove, 2021).
Real Estate Registration Tax: Another tax is the Real Estate Registration tax, which is a combination of 1.5% of the fixed asset tax value (FATV) of the land, 0.3% of the FATV of the building, and 0.4% of the value of the mortgage which can be reduced to 0.1% if certain requirements are met (Japan Property Central, 2022). This tax may also go by the name of the Registration and License Tax (National Tax) (Plaza Homes Ltd., 2023). This needs to be paid not only when ownership of the property is transferred, but also when a mortgage is taken out on a property. "A judicial scrivener will provide an estimate of the registration on the tax that must be paid." This is only if the property is a personal residence, and the building FATV tax will increase to 2% if used as a second home or rented out. This tax will be issued upon purchase and after 6-12 months all necessary documents relating to it will be sent by the tax officer responsible for the property (Japan Property Central, 2022).
Real Estate Acquisition Tax: This tax is similar to the Real Estate Registration tax except this is only taxed once, when real estate such as land or a building/home is obtained. This tax is 1.5% of FATV of land and 3% of FATV of building and buyers can expect to receive an invoice for it ~3-6 months after purchase of a property (Japan Property Central, 2022). This tax applies to all acquisitions of real estate, and as International Interface describes, "Acquisition of real estate is defined as acquisition of ownership of real estate through transactions such as buying and selling, donations, exchanges, and construction (for new buildings, extensions, or alterations)", including apartment buildings (International Interface, 2020).
Fixed Asset & City Tax: The last taxes are the Fixed Asset and City tax, which are essentially the annual property taxes. The Fixed Asset tax is 1.4% of the value of the real estate and the City Tax is 0.3% of the property value. However, these taxes vary depending on the property as they will be more or less depending on the property value. You have to pay this tax once when purchasing the property and then every year either once annually or in quarterly payments. These taxes will also be halved for a new apartment/house/building for the first 3-5 years (Japan Property Central, 2022). These taxes also go by the names Property tax and City Planning tax (International Interface, 2020), and the City Planning tax is charged only to those within areas of urban districts or government-designated city planning districts. The tax may also be reduced if the land is less than 200 sqm, and may be applied twice, once for the building and once for the land if you are buying a property with land (Plaza Homes Ltd., 2023). Property assessments will usually be conducted every three years to ensure accuracy and fairness when is comes to paying these taxes, and the condition of the property or development/non-development of the area may affect these assessments (Tokyo Portfolio, 2023)
Management and Repair Fees: These may also be included if you are purchasing an apartment. These are monthly fees that are paid to the building’s management company for the general running of the building. The repair fees contribute to a collective repair fund which will cover future repairs and maintenance of common areas as issues arise. The repair fee will inevitably go up with the building’s age as things begin to break down. These fees together are usually around 350-600 yen or 3-5 usd (as of 4/23) per square meter (Japan Property Central, 2022). A 1-bedroom apartment of 18 sqm would cost around $54-$90 per month. The presence of certain facilities such as elevators, gyms, pools, on-site staff, and other amenities can cause this cost to increase. beware of low Repair/Reserve Fund fees as this is a common tactic to lure buyers and renters. After purchase the fee will increase substantially as something like $10 a month is not sustainable (Wetzel, 2022) Another good rule for the cost is 5% of the monthly rent (Tokyo Portfolio, 2023).
Fire Insurance: This, as mentioned above, is only required as a condition of a bank loan and is otherwise usually optional, as is earthquake insurance. However, earthquake insurance must be bundled with fire insurance if purchased. Coverage varies so check rates before committing (Japan Property Central, 2022), but the average cost for Fire Insurance is around 20,00-40,000 yen for 2 years without additions. Although optional for houses, rentals require Fire Insurance and may include it in the contract. In Japan, Fire Insurance is essentially Property Insurance as it will usually also include damage to electronics and valuables, water damage, and even personal liability such as accidental injury to someone else, so it would be wise to have not just in case of a fire. Earthquake insurance is similar in that it covers not just earthquakes, but damage caused by all types of natural disasters. Pliant, Trinity Inc, Japan Insurance Net, Mojumdar, and Chubb Insurance are a few examples of home insurance companies with English-speaking staff (Plaza Homes Ltd., 2023a)
Utility Fees: These, or konetsuhi, should also be accounted for when considering a house purchase. Some Japanese houses, specifically older ones, are not very well insulated and may have higher fees because of that. These fees are relatively similar to other parts of the world in that the more you use the more it will cost, but location can also affect rates as it may cost more or less to generate and deliver them. Newer more efficient power plants will cost less than older ones. Some local regulations and fees imposed on a particular company in a particular area can also affect rates. If more than one provider exists in the area, rates will also decrease (Tokyo Portfolio, 2023).
Total Costs: All in all, your total taxes and fees will be around 6-7% on top of the purchase price initially, although some like the annual property taxes and utilities need to be paid yearly or monthly (Japan Property Central, 2022). You can apply for tax relief though against your mortgage by paying these fees and taxes in full. If you are buying a new house, you will need to fill out a developer’s application form which is similar to an application in that you are basically bidding for the property (Spendlove, 2021). If you happen to purchase a property larger than 2,000 square meters, you may need to submit a notification under the Japanese National Land Act as well. (Real Estate Distribution Research Institute)
Finally, when actually purchasing the property make sure to pay attention to the contract before sealing the deal as some homes may have requirements you cannot meet, such as being a licensed farmer. Getting a Japanese-speaking friend or translator to carefully go through the contract before signing would be wise to catch these sorts of clauses. Don't forget that if you go the realtor route or the other party has a realtor, you will have to pay the Real Estate Agent Commission Fee I mentioned above. Another thing to keep in mind is that if you decide on a house in the countryside instead of the city, things will be very different lifestyle-wise, so make sure you research the utilities and nearby stores or train stations to make sure you have access to the things you need (Spendlove, 2021). If looking at pdfs of documents in Japanese for property info, try using the photo option in the google translate app. It won't be perfectly accurate but should allow you to see if there is anything about the property that may be a red flag.
Renovation:
Now that you’ve acquired a property, depending on the condition it is in it may require maintenance and renovation, which can vary in price and depth. Minor renovations can be expected for any new move, but some properties may require more extensive repair work. Even for apartments, the maintenance fee only covers outside and common areas, so if your stove breaks or the floor is cracked/peeling you will have to cover the cost. Also, Japanese construction can be good sometimes, but especially in older homes major construction beyond what you may be capable of spending may be needed. The opposite, however, can also be true in that what might look dilapidated and horrible may be hiding good bones. In general, it is a good idea to look into hiring a building inspector.
When looking at hiring a building inspector in Japan, a good rule of thumb is that they should not be someone not affiliated with one of Japan's major real estate agencies or the real estate company your realtor is from. This inherently introduces a conflict of interest and they may try to offer shady coverage for supposedly damage-free homes with misleading fine print. Inspections are particularly good for identifying potentially unfixable problems as well as getting an idea of what needs repaired and how much it will cost before buying the property.
However, hiring or looking at hiring a building inspector for a property is not without drawbacks. The seller will need to provide permission to do so and may reject the request especially if there are other interested buyers. Considering inspections have to be done before purchasing, this can be frustrating. Very few companies provide English assistance as well and inspections may be more general and less thorough than you might expect in that they can only inspect what is visible with the naked eye. Although they do typically have special tools to determine if issues are present without being invasive, which still makes them a good resource to use. Inspections and reports can also take several weeks, during which time the property may be sold. The fees are solely on the buyer as well, and inspections do not warranty against future defects (Ward, 2016), but sometimes can be used to meet the criteria of "building defects" insurance when buying preowned. Inspector fees can vary depending on the house size and company involved, but typically are around 50,000 to 60,000 yen or $372-$447 (as of 4/23), and websites such as Plaza Homes can help foreigners find an inspector and arrange an inspection (Plaza Homes Ltd., 2018)
Regardless of paying for a building inspector or not, when looking at Akiya or preowned homes in Japan in general some things will need renovated. Some Akiya may even contain items and trash from the previous tenant or owner for a number of reasons and will require cleaning before renovating. Waste is separated usually into three piles instead of two, burnable, non-burnable, and recycling. Disposal of larger items, or oversized garbage (sodai gomi), will require a special collection service to come pick up for a fee on an appointment-basis (Japan-guide.com, 2023) Oversized garbage is typically metal longer than 30 cm or anything else longer than 50 cm (City of Yokohama, 2023) Typically each city will have its own service for this and may have online applications for it.
After disposing of any unwanted leftover materials, then comes the actual renovation costs. Renovation of course varies depending on what needs done and who does it, but here are some preliminary figures for what different levels of renovation should cost, assuming you hire someone to do it for you instead of DIY-ing it. Japan did upgrade building codes in 1981 to require stricter standards for earthquake resistance, making any building older than it considered a kyu-taishin building that will need seismic retrofitting. Minor renovations such as new wallpaper/drywall, new lights, and minor amenity updates should cost around 500,000-3,000,000 yen. Cheaper fixtures and smaller homes should be closer to the 500,000 yen mark or $3,727 (as of 4/23). Mid-Level renovations such as new carpets and new kitchens(which often come in a full set instead of piece by piece like in the US) or bathrooms in addition to the minor renovation should cost around 3 mil to 5 mil yen, or $22k-37k. Major Renovations including everything above along with fixes such as serious structural repairs will require a budget of around 10 mil yen or $74.5k (as of 4/23). You will also have to oversee the project personally and be very precise with instructions as otherwise the renovations may be done not up to par or for people of the average Japanese height which is much shorter than American or European heights (Allen, 2021)
However, if you want to travel the path of DIY renovations, you can purchase much of what you may need from US providers on websites such as Amazon, especially if you want paint instead of wallpaper which is common in Japan. Something to keep in mind is if you want something like an American ceiling fan, it will need to be supported with a joist or special bracket as they are too heavy to place anywhere or on anything else (Allen, 2021). Other items may also require special work, such as if there is only a squat toilet in the house. If done by someone moderately experienced who is ok with spending more than a year on renovations, costs can be as little as $40k (Goh, 2023). There are plenty of blogs and YouTube videos out there on renovating Akiya and other Japanese homes that can help you with the step-by-step process of renovating an Akiya yourself as well, so I suggest watching a few before deciding if you want to go this route yourself.
Conclusion:
In this blog we have gone over how to find a realtor and a property to purchase, the costs and fees/taxes involved in the purchasing and owning process, and what renovation involves. Of course, each individual buyer is going to experience slightly different things, but the overall process should be the same regardless of what you find and buy and where you do so in Japan. Feel free to check out the resources I used as they will provide more in-depth information about the specific topics I mentioned. I hope this helped you in helping you consider or buy a new home in Japan as a foreigner and don’t forget to comment on your experiences below if you used this guide or experienced something contrary to what I’ve said above. Until next time!
Japanese Words:
National Land Act- kokudo hou todoke de・国土法届出
I’ll take/buy it- kaimasu・買います
Auction- Keibai・競売
Property- bukken・物件
Prefecture- ken・県
City- (city)-chi・市
Availability- kyushitsujoukyou・空室状況
Available- 空 (mistranslates as sky)
Dirt floor- doma・土間 (lowered section by front door similar to a mud room for shoes)
Recruiting- boshuu-chuu・募集中 (used for showing intent to hire or looking for buyers)
Management fees-kanrihi・管理費
Common Area Maintenance Fee (more common name for Management fee for smaller buildings)- kyōekihi・共益費
Repair/Reserve Fund Fees- tsumitateshūzenhi・積立修繕費
Fixed Asset Tax- kotei shisan zei・固定資産税
City Planning Tax- toshi keikaku zei・都市計画税
Insurance Fees- songai hoken・損害保険
Utility Fees- konosetsuhi・光熱費
Real Estate Agent Commission- fudosan gyosha no tesuryo・不動産業者の手数
Oversized garbage- sodai gomi(gomi is the word for trash)・粗大ごみ
Building built before 1981- kyu-taishin・旧耐震
Japanese countryside- inaka・
Large apartment blocks of small apartments available for low prices- danchi・
Auction Websites:
Pre-Renovated Akiya: https://katitas.jp/
Works Cited:
Allen, Parker. “Renovation & Rural Japan: Building Your Dream House.” Akiya &
Inaka, June 22, 2021. https://www.akiyainaka.com/2021/04/20/renovation-rural-japan/.
Goh, Amanda. “A Couple Found an Abandoned, 96-Year-Old Home in the
Japanese Countryside and Turned It into an Airbnb. It's Available for Rent from $113 a Night - Check It out.” Insider. Insider, March 20, 2023. https://www.insider.com/diy-old-home-renovation-abandoned-japanese-guesthouse-before-after-photos-2023-3#interested-guests-can-also-attend-a-bamboo-weaving-workshop-that-kajiyama-hosts-next-door-12.
“Guide to Buying Property in Japan：the Cost of Buying and Owning Property in
Japan: Japan-Property.” Japan-Property, 2017. https://www.japan-property.jp/guide-to-buying-properties4.
“Home Inspections in Japan.” Plaza Homes. Plaza Homes Ltd., March 26, 2018.
https://www.realestate-tokyo.com/news/home-inspections-in-japan/.
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https://tokyoportfolio.com/property-taxes-and-real-estate-fees-in-japan/.
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Spendlove, Nicola. “A Guide for Buying a House in Japan.” Japanjunky.
Japanjunky, June 27, 2021. https://japanjunky.com/buying-a-house-in-japan/.
Wahlin, Willhelmina. “Buying a Property in Japan:” Buying a Home in Japanno. 66,
2006.
Ward, Zoe. “Beware of Agency-Arranged Building Inspections.” JAPAN
PROPERTY CENTRAL K.K., August 18, 2016. https://japanpropertycentral.com/2016/08/beware-of-agency-arranged-building-inspections/.
“Waste Disposal.” Japan-guide.com. Accessed April 22, 2023. https://www.japan-
guide.com/e/e2222.html.
Wetzel, Charles. “Guide to Management and Repair Fees: Housekey
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“What Is a 'Jiko Bukken' Property?” JAPAN PROPERTY CENTRAL K.K., January 7,
2022. https://japanpropertycentral.com/real-estate-faq/what-is-a-jiko-bukken-property/.
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Japan | Yen Loan Calculator for Buying a House in Japan. Housing Japan K.K., September 20, 2022. https://housingjapan.com/buy/yen-mortgage-calculator/.
“ Real Estate-Related Taxes and Fees in Japan.” International Interface, March 31,
2020. https://www.i-interface.com/en/services/real_estate/tips/taxes.html.
“国土法の届出とは こくどほうのとどけで.” 国土法の届出とは｜不動産用語を調べ
る【アットホーム】. Real Estate Distribution Research Institute. Accessed April 22, 2023. https://www.athome.co.jp/contents/words/term_248/.
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