Buying Property in Japan

Are You Buying Property In Japan?

We’d like to share a few tips with you about buying property in Japan and we hope you’ll find helpful.

Prior to searching or buying property in Japan, it is highly-recommended that you understand your loan eligibility and the terms at which the loan is offered. Consult banks and other lending institutions and expect interest rates near 3.5% and below — depending on the risk and term of the mortgage.

Unlike the recent meltdown with banks issuing loans in the United States, Japan has a more stringent underwriting policy regarding loans and may not approve you as a candidate, which can make buying property in Japan a bit more challenging.

Are You Eligible For A Loan For Buying Property In Japan?

When approaching or shopping for a home purchase loan in Japan (from a Japanese bank or lending institution), the buyer is often required to have permanent residency or be related to someone that does, such as a spouse.

Some other areas that may influence the loan request for buying property in Japan are time spent in the country (5 years or more is encouraged), language proficiency, assets and demonstrate a plan or desire to continue living in Japan for an extended period of time.

Short-term visits or investment properties may cause a lending institution to reconsider granting the loan due to current low interest rates. If you’re approved to buy a property in Japan, remember that banks want a return on investment just like an other business.

Searching For A Property To Buy In Japan

In this article about buying property in Japan we will use Tokyo, a larger mainstream city when discussing types of properties and values.

In Minato-Ku (central Tokyo), prospective buyers will find mostly apartments or multi-family housing for sale or rent. As you move away from the city, more individual single-family homes are offered for lower prices; this is especially true outside the Yamanote line.

Unlike the United States, the Japanese put a premium value on everything new.

This means land value alone is not everything, but should still be considered. The newer the housing unit, the more likely you are to see a lofty price when buying property in Japan.

Housing units that have been around for five years or less can have a dramatic price swing from similar units that are ten years old. Housing that has the best value and slowest depreciate are: new homes, second-hand apartments, new apartments and second-hand homes.

If you are looking for the most bang for your buck when buying property in Japan, take a look at second-hand apartments and homes, then renovate it to fit your needs.

If you’re looking for an new investment property — wait for prices to fall. Generally new homes on the market for at least three months without a sale offer room for negotiations.

Cost Of Buying A Home In Japan

When purchasing a new home, the cost of construction is generally 25-30% of the land value.

A property that costs ¥50,000,000 ($605,000), will probably yield a land value of ¥37,500,000 ($450,000) and a house of ¥12,500,000 ($150,000).

The expected lifetime of a home in Japan is approximately 30 years. Of course, this price valuation varies depending upon the demand and usability of the land.

Contract Terms When Buying Property In Japan

When purchasing a home or buying property in Japan, you will likely be required to fill out an application form called Kaitsuke Shomei.

Once the application the lending institution will issue a yay or nay on loan pre-approval. If the bank agrees and provides a pre-approval, the prospective buyer is given a contract to sign.

After signing the contract, the housing unit will be taken off the market and assessed in value for a period of one to two months before the bank notifies of final approval. Only upon approval is the contract valid; otherwise it is considered null and void without backed funding.

In Japan, a 10% down payment is the standard for home purchases and for buying other property in Japan.

This money is refundable if the bank opts not to lend you money, but may not be refundable if the buyer cancels the contract after approval — pending on reasons. If the seller cancels for any reason after the contract has been signed and approved by the bank, the buyer will receive double the original down payment.

When signing a contract, it is recommended to purchase an official stamp, called jitsu-in, to sign the contract.

The notary stamp can be made at a shop referred to as a Hanko and is unique one-of-a-kind for your purchase. The stamp takes a week to make and requires a registration with the ward office, who will provide a number for the stamp certificate.

Closing A Property In Japan

Upon closing, when the mortgage has been approved, keys for the home will be provided with the title. A final settlement is then issued to the sellers bank account along with a notary fee of ¥50,000 to ¥200,000.

In addition, a registration license tax will be assessed — accounting for 1% of the asset value. If purchasing from an estate agent, the fee assessed averages 3%.

Finally, property and or city tax will be split between seller and buyer pending on the date of the purchase.

If you’re looking for more information about homes in Japan or about buying property in Japan, why not start by researching the available properties at Global Escape Realty?

As always, we hope you’ve found this article about buying property in Japan useful.

 

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