As a country with excellent infrastructure, exceptional safety, a diligent citizenry, and advanced construction techniques, Japan has become one of the most attractive countries in the world for foreign real estate investment.

So how does a foreign investor living overseas go about finding and purchasing a property in Japan? In this article, we explain some important points for consideration when buying real estate in Japan while residing overseas.

No restrictions for foreigners on buying property in Japan

First and foremost, there are no restrictions on foreigners buying and owning land or buildings in Japan, even if they are not a resident of the country.

However, you should take note of the following points when buying property in Japan.

・If you decide to purchase land first and build a house on it later, you have to pass an inspection before you can build property on it.

・There may be certain restrictions on extending or structurally remodeling your property.

・Buying a property in Japan does not grant you permanent residence in the country, even if the property is intended to be used as a private residence.

【Finding a good real estate agency is more important than finding a good property】

If you are living overseas and you are looking to buy property in Japan, one important point to consider is that instead of searching online for a property by yourself, it is better to search for a Japanese real estate agency that specializes in working with foreign clients. With their support, you can easily find a property that meets your requirements.

1. Expertise in digital technology and communication

   Another important consideration for a trouble-free property purchase in Japan is whether the real estate agency has expertise in digital technology and communication. This includes expertise in online meetings and transactions.

   There has been an increasing number of foreign investors buying property in Japan without being a resident of the country. In such cases, the real estate agent and the foreign client often conclude the entire transaction online, without meeting in person.

   Note: Some transactions may require correspondence by post.

   But it is not just about being able to communicate with the client online. It is also important for the real estate agency to have a system that allows them to transfer and sign documents or conduct financial transactions online as much as possible.

   Without this kind of setup, your property purchase in Japan can take a longer time or incur higher overhead costs. This is a crucial point when there are deadlines to be met for the submission of documents to the property seller or the bank.

   A real estate agency that has high digital proficiency can also provide more information to the client about suitable properties through the use of various digital media and online services.

2. Reliable Property Management Services

   Property management services are an important factor if you are looking to buy a property as an investment.

   Many real estate agencies in Japan focus their business on a specific field, such as property rentals, property sales, and property management. If you are buying a property as an investment, you should be wary of choosing a company that focuses only on property sales. The main goal of such companies is to sell property, so they will likely put less time and effort into the leasing and management of the property after it has been sold. Furthermore, since they aim to sell at as high a price as possible, there have been many cases where property owners faced a tough financial situation after the purchase.

   When buying a property for investment, the characteristics of the property itself are definitely important, but equally important is how well the property is leased and managed. This is especially crucial if you plan to own the property as an investment for the long term, as it can greatly affect the income you generate from the property.

Property viewing and inspection can be conducted online

After you have narrowed down your property search to a few candidates, you would normally visit each property to do an inspection. But if you are living overseas, going to Japan just to view a property may be quite a hassle that costs a lot of time and money.

One easy option is to ask the real estate agency to conduct a live or recorded viewing and inspection of the property online. Note that this requires the permission of the property seller, so it may not be possible in some cases.

Through the online viewing, you can also check certain aspects of the property. For example, if the property is advertised as being close to a train station, you can ask for a live stream or recording of the actual walking route from the station to the property. If the property is touted as being in a quiet residential area, you can ask for an audible video of the surrounding area.

Of course, before making a final decision on the property you want to buy, it is highly recommended that you visit Japan to visually inspect the property and its surrounding area for yourself.

Contract procedures can be done by proxy

After deciding to buy a property, the next steps include the issuance of a purchase certificate, the Explanation of Important Matters, signing of the sale contract, and payment of the deposit (earnest money) and the remaining balance.

The purchase certificate is a document that certifies the intention of the buyer to purchase the property. Setting the details of the document and its signing can be conducted online.

The Explanation of Important Matters is a legally-required procedure where a licensed real estate transaction specialist explains important points about the purchase, such as the details of the property, the rights of the buyer and seller, the conditions for the transfer, rules regarding breach of contract, etc.

In the past, the Explanation of Important Matters was legally required to be conducted by the real estate transaction specialist face-to-face, but this requirement has been relaxed and it can now be conducted online, even if you are residing overseas.

The deposit or earnest money is a certain percentage of the full purchase price that has to be paid in advance. It also serves as a cancellation fee paid to the seller in case the buyer decides to back out of the deal.

If you are living overseas, the deposit and the remaining balance must be paid by international remittance to a specified bank account in Japan. The conditions for international remittances vary by country and financial institution, and it may take some time for the money to be transferred. To avoid any issues, it is best to consult with your financial institution regarding international money transfers to Japanese banks.

Ownership registration and report to the Ministry of Finance

After paying the purchase price of the property, there are still two procedures you have to complete. One is the Ownership Transfer Registration which is typically done by a licensed judicial scrivener, who submits the document to the Legal Affairs Bureau on your behalf. Your real estate agent can introduce a judicial scrivener for you.

Lastly, you are also required to report the acquisition of property to the Ministry of Finance within 20 days of the purchase.

Summary

As we have outlined above, foreigners can purchase property in Japan fairly easily. However, the process can be quite complicated, with a lot of documents needing to be prepared.

In order to ensure that your property investment goes smoothly, it is highly recommended that you work closely with a trustworthy real estate agency that has plenty of experience in dealing with foreign investors residing overseas.