Japanese Property Acquisition Challenges

Challenges of property acquisition from overseas

How to successfully deal with viewings while overseas, challenges, and limitations.

If you are here, it means you are interested in acquiring a property in Japan, whether for investment, a holiday house, or a place to call home – and you are currently unable to be physically present to go through the tedious process involved in getting said property.

 

When entering the market, there are many challenges to be faced, some due to the physical presence mentioned above, others may be cultural misunderstandings, and very often the administrative-heavy process that can seem very daunting (and most of the time all official documents will be in Japanese).

 

Sapporo City Scape on a clear sky

The first step – and challenge – is the one that would get the very process started: getting to work with a real estate agent. Almost all property acquisitions in Japan are facilitated through agents, necessitating effective communication and collaboration throughout the process.


This is a challenge for people currently not “physically” in Japan as some questions will arise from the agent side: is the process worth the time and the risk (of being suddenly dropped or ghosted)? Trust is an important factor in Japan, and for starters meeting face to face is a great support to building said trust and engaging communication. Which often leads to the need for a proxy to meet and get the process started on your behalf.

 

Why a proxy? Apart from the fact mentioned above, there is a reassurance for the real estate agents to be able to meet in person, and discuss details and expectations, from size, budget, environment, and surroundings… Of course, in the 21st century, all these seem like details that can be easily discussed via email or online calls, but major business-related discussions are traditionally handled in person, and show an additional willingness and seriousness about becoming part of the community you may be planning to make the move to.

 

What are the requirements when wanting to buy a property in Japan? Although this is an obvious point, it comes down to the payment and ensuring that the funds necessary are available. Even more so when potential buyers are located overseas, as local entities in Japan will almost all not allow such a loan, and the possible ones are not for individuals and entities looking to buy properties for personal use. Therefore, this specific point needs to be taken care of in the location/country where you reside, to then prove the availability of the funds before signing the contract.

 

Now that the major requirements are out of the way, how do you actually start, and what timeline should you be looking at, if you are planning to come to Japan and visit the properties in person?

 

The market is full of houses, units, and properties that could correspond to what you are looking for, but each one of them will come with its specificities. Considering this, the time it may take to list up and filter a final – reasonably filled – list of potential properties may take from a few days (if you have already specific houses and properties in mind) to several weeks if there is a lot of back and forth, and further need of contacts and communication on the local level to organize any viewing. So considering all this, getting started early and giving it a few weeks ahead if you are planning to visit Japan is highly recommended to avoid any unpleasant surprises such as unavailability or slow responses that could hinder the property viewings, for example.

 

Once this is done and you managed to organize and go through all the viewings appropriately, let’s take it forward a bit. Now our focus is on the concrete challenges and what to be on the lookout for, as you have now found your dream house and want to start the process. The first thing you would consider is the condition, all looks great, but is it really?


Traditionally, unlike many other markets, houses in Japan were built to last an average of 30, maybe up to 40 years, and anything more than this length is considered an old property. This is because of the natural conditions and risks brought with them, which prompted the country to have strict regulations to ensure the safety of the building, such as the most obvious one: anti-seismic regulations.

An old house does not mean a damaged one, but it is suggested to always make an in-depth full inspection before proceeding with the acquisition. It will cost some extra time (and money) but it is worth it considering what is at stake.

 

Next comes the price, a question that is often asked is whether the prices are negotiable.
Although it is not impossible, the prices in Japan are usually set up based on the house location, condition, age and any other factor that can be taken into account, so normally this is not really the case and may sometimes even be considered slightly rude (we’ll get back to this point when covering business manners in Japan). So, unless there are major factors discovered during the inspection or the necessity of major works involving considerable extra expenses on top of the acquisition, this is not the norm.

 

These are some of the major challenges that often come up and take some potential buyers by surprise, other factors can change case by case, and keeping yourself informed will always do you good and support you in your property acquisition experience.

 

Now, we looked here at the main challenges one has to face to get to the buying phase of the property and finalize the contract, and although this always seems scary at first, there are also many ways in which Japan is making it easier than other countries to own property within it, here are some of the major examples.

 

The first one is that Japan is – unlike some neighboring countries in the region – allowing non-Japanese citizens to own land as well, increasing the opportunities for investment in the long term. And the majority of the houses or buildings are sold with land ownership, obviously, this always needs to be checked.

 

Secondly, taxes. A non-Japanese and a Japanese citizen will pay the same amount for the same property, there is no change based on citizenship.

 

The last point in this list is also probably one of the most important in our case: it is not necessary to have residency in Japan to proceed with a purchase, which is another step where NTI can come into play and can act as a proxy, facilitating all the requirements that take place in-person within Japan that we have covered above and making it possible to have a smooth process as possible without the need to be constantly physically present. 

 

Some of the ones taking place before the acquisition are answers to all the challenges listed above. Additionally, we offer post-settlement property management services, including utility bill management, cleaning, maintenance, and more.

 

Reach out if you want to know more about which services are available! Contact Us

Related Articles

General
Information
Foreigners are increasingly buying property in Japan, but it involves complexities. Key points include choosing buildings constructed post-1981, low property taxes, and favorable mortgage rates. However, obtaining mortgages without permanent residency is tough. Condos might have hidden high maintenance costs, and older homes often require significant repairs. Buyers should be well-informed to navigate Japan's buyer-friendly yet nuanced market.
Investors/Business, General
Information, News
Tokyo's office market faced challenges during the pandemic, experiencing reduced foot traffic and increased vacancies. To adapt to shifting tenant needs and diversify income, upcoming developments are increasingly incorporating mixed-use elements. Projects like Tokyo Torch and Jingu Gaien reflect this trend, integrating sustainability and community amenities to attract and retain talent in Japan's competitive labor market.
Investors/Business, General
Information, News
Higher fuel prices drove up Tokyo’s cost of living at the fastest pace in 16 months, although the increases were still tiny compared with those confronting consumers in other economies, where central banks are pulling back stimulus.
Investors/Business, General
Information, News
Rising labor costs in service sectors like machine repair and industrial renovation have led to the fastest annual increase in Japan's business service prices since 2015. Policymakers view wage growth as essential for sustained demand-led inflation and further rate hikes. Recent significant pay hikes reflect a shift in BOJ's policy amid Japan's fragile economy.