Land Registration – Purchasing Japanese Real Estate by Foreigner
1. Foreigners can purchase a Japanese house (an apartment and a house on land)
In general, there are no limitations for a foreigner in the purchase real estate in Japan. As a general rule, it is an after the fact report system. Only in the case of certain conditions must the name and purchase price of the property be reported to the Minister of Finance (via the Bank of Japan) within 20 days of acquisition. There are also cases where reporting is not necessary.
2. How to verify identity in the case where the purchaser is a foreigner.
A foreigner will need to provide their certificate of alien registration with photograph. In addition, a copy of their passport will be required. Because an official copy of alien registration is required to attach to the purchase documents, a certified document will need to be obtained from the municipal office (city hall).
3. Is it possible to use a loan?
When it is not possible to pay the purchase price with a lump sum, it is possible for a foreigner to use a home loan. There are, however, several conditions which are considered.
・Do you live in Japan?
・Do you have permanent residence status?
・How many years have you lived in Japan?
・How many years have you worked in Japan?
・Do you have a Japanese spouse or a Japanese child?
・Can you communicate in Japanese?
The most important item on the list is that you live in Japan. There is a limitation that the funds for a home loan be used for you and your family to live in Japan. A very difficult point for loan providers is the question of how long will you be living in Japan. It is necessary to address this point as you prepare the documents for the loan so it can be clearly dealt with when the application is submitted.
4. Is a signature acceptable for the application of the registration, the contract, and other documents?
Because the registration application is done based on Japanese real estate registration system, it is not necessary to use a “signature stamp” or inkan, on the application when a foreigner entrusts an agent with the application procedure. But because an inkan is necessary in registration and needs to be certified, an inkan needs to be prepared. In Japan, when buying or renting a home, it is necessary to have an inkan that is certified, or registered, at your local city hall or municipal office. In order to obtain this inkan certification, it is necessary to also have a certificate confirming current address, so it is a top priority to obtain alien registration.
5. Is it necessary for a foreign buyer to have a seal (inkan)? Is it necessary to have a resident’s card?
Generally Westerners use a “signature” on legal documents, but in this case it is desirable to use a seal (inkan) that has a certificate issued by the local municipal office. It is possible to obtain a katakana inkan and have it registered while you live in Japan. In addition, it is possible to use a resident’s card or one of two certifications of residency available from the municipal office (外国人登録原票記載事項証明書gaikokujin touroku genpyou kisaijikou or外国人登録原票の写しgaikokujin touroku genpyou utsushi). In both cases the municipal offices uses your foreign resident registration to issue an official certificate confirming your residency.
6. Are the sales contract and other pertinent documents in Japanese?
Because the transaction comes under Building Lots and Buildings Transaction Business Law, which is in Japanese, the official documents of the transaction are in Japanese. If it is the case however, that the buyer does not understand the documents, then there should be an attachment with the translated contract and other documents in the language of the buyer.
In addition, to avoid future disputes, when an interpreter is used to help a foreign buyer understand the contract and other documents, the interpreter must also sign or stamp the documents (in addition to the buyer).
Moreover, it is important to make the letter of proxy by a foreign buyer when an interpreter is used about the contents of the sales contract and other important points of explanation.
7. Are there taxes involved with a real estate purchase?
Various taxes are imposed, as is the case with Japanese.
For example, there is "Stamp duty" (Stamp charges) when you make a sales contract, "Real estate acquisition tax" when you obtain real estate, "Registration and license tax" when you register it, and "Property tax" and “Urban planning tax" while you own it. When you sell real estate, there is a "Transfer income tax".
In the case of purchasing an apartment, we recommend that you rent an apartment beforehand and then look slowly and carefully for a place that is suitable to buy. Alien registration and seal registration is necessary for both renting and purchasing an apartment. Since real estate purchase is very expensive, it is wise to clearly consider the desired environment and available budget, and take your time in looking for just the right place.
