Owning Property in Japan: Responsibilities and Insurance Essentials

You have now acquired your first property in Japan, so what’s next? 

Whether you plan to live there full-time, use it as a holiday home, or rent it out, owning property in Japan comes with a set of responsibilities that you must adhere to. Here’s a comprehensive guide to help you navigate the necessary steps and ensure you’re fully prepared.

Taxes and Ownership Transfer

Ownership Transfer Application

The transfer of property ownership in Japan typically involves a Legal Scrivener, who processes the necessary registrations. They will ensure that all required documents are in order before the Seller and Buyer sign and seal the registration application forms.

Payment of the Remaining Sum

The buyer must pay the remaining balance of the property sales price to the seller. This transaction is generally conducted via bank transfer. Upon receiving the payment, the seller issues a receipt to the buyer. If the Buyer is using a housing loan, the payment process usually takes place at the financial institution that provided the mortgage.

Settlement of Fixed Asset Tax and Other Expenses

From the delivery date of the property, the buyer is responsible for the fixed asset tax and management fees. These amounts are calculated on a pro-rata basis.

Receipt of Keys and Documents

After paying the remaining sum and other expenses, the buyer receives the keys and necessary documents for the property, including warranty documents, instruction manuals, and management rules of the facilities and equipment.

Payment of Miscellaneous Expenses

The buyer is also responsible for the following costs upon final payment:

  • Remaining Sum of the Sales Price
  • Agent Commission
  • Settlement Money for Fixed Asset Tax, City Planning Tax, and Management Fees
  • Registration Expenses (Registry License Tax, Commission for the Legal Scrivener)

Insurance

Property Insurance

While property insurance in Japan isn’t compulsory, it is highly advisable due to the country’s susceptibility to natural disasters. Many mortgage lenders also require home insurance.

Coverage

Property insurance, commonly known as fire insurance, typically covers:

  • Fire 
  • Storm Damage 
  • Water Damage 
  • Burglary or Break-in Damage 
  • Damage from Riots or Terror Attacks
 

You can choose to insure both the building and its contents or opt for separate contents insurance, which is ideal for rental properties. Contents insurance covers theft during a break-in.

Earthquake Insurance

To protect against earthquake damage, you need earthquake insurance, which cannot be purchased separately from fire insurance but can be added to your policy. Earthquake insurance also covers tsunamis and volcanic eruptions. The Japanese government part-covers any payout costs and provides a guarantee if companies cannot pay. For example, following the 2011 Tohoku earthquake , there were approximately ¥1.2 trillion in claims payouts.

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Additional Coverage

Liability insurance may be included in your policy but can also be added. It covers accidents in your home or damage to property if you are renting. Other common exclusions, such as coverage for antique valuables and glass, may need to be added separately.

Premiums

Premiums for fire insurance range from ¥10,000 to ¥20,000 a year. Contents insurance can cost as little as ¥2,500 a year. Annual earthquake insurance premiums range from ¥7,300 to ¥27,500, depending on the region and other factors.

Short-term Rentals

If you are considering using your property for short-term rentals, more information can be found in the relevant article here!

By understanding these responsibilities and securing the necessary insurance, you can enjoy peace of mind and make the most of your property in Japan.

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