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Buying Property

Japan - Buying Property

Migrants are legally allowed to buy land and buildings in Japan without restriction. You do not need permission to make a property purchase even if you continue to live abroad.

Japan is famed for its law and order, and particularly for its low crime rates. Property buyers whose paperwork is completed by a notary can be confident that their ownership is secure.

Finding A Cheap House In Japan

Like just about every other country, Japan has experienced housing market bubbles and contractions. It is an expensive country, so isn’t a bargain hunter’s dream, but if you catch the market at the right time, your investment can be a good one.

The old adage location, location, location applies in Japan. The large, successful cities are where the best paid jobs exist, so that is where people with money want to live, including the majority of expats. In contrast, an isolated, small home with little land will not generate much interest from those who need a well-paid job and an active social life.

Therefore, if you plan to purchase property solely on the basis of its price tag, you could end up beyond a comfortable work commute and without the social community or infrastructure you may be used to.

However, if you like old houses, you may be able to make your budget stretch further. Back in the 1970s, houses that were approaching 100 years old in Western cities such as London and Denver were seen as cold, old-fashioned and unsuitable for modern life. Over the past thirty years, these same period properties have become highly desirable and expensive. In Japan, however, this change of attitude has not occurred.

As the Financial Times reported, traditional ‘machiya’ houses are fast disappearing in Japan as new apartment blocks are preferred, not least because they are designed to withstand earthquakes. International buyers are increasingly buying these properties, often in a poor state, to renovate them as holiday homes or even as a place to live. Some people are even able to access a renovation grant.

On the flipside, if old houses continue to be unfashionable, you may struggle to maintain the property’s value.

If you are buying a brand-new house, try to buy it direct from the developer rather than through an estate agent. This will save you a large sum of money.

Housing Loans In Japan For Expats

Mortgage companies need to know that they will get their money back over the long term. Most people who end up in financial trouble do so after divorce or bereavement, illness or redundancy. It isn’t possible for a mortgage lender to see the future, so they have to exercise caution with every loan.

Migrants who do not live in Japan or have done so for less than two years are seen as a high risk of defaulting on their loan. These people may not be settled with a long-term job and family, and if they decide to head back overseas, there will be few consequences of default beyond losing ownership of a property they aren’t living in.

As a result, any lender will ask to see proof that you have legally lived in Japan for a minimum of two years, that you have permission to stay for the long term and have a stable job to support yourself. Your credit history must be clean and free of any problems.

If your application is successful, the deposit required and the interest rate levied will be dependent on your individual circumstances and the mortgage lender’s policies.

You will have to pay stamp duty. The bank will also charge commission, as well as guarantor insurance. While wealthy family members would traditionally act as a guarantor, today this is purchased as an insurance. You must also secure fire insurance.

Viewing A Property In Japan

If you can’t speak Japanese, it is possible to find a small number of estate agencies who have training that is tailored for the expat market.

They can arrange viewings, which are essential because you should never make a property purchase without seeing the property and ensuring that reality lives up to the brochure. Apartments and homes in Japan are much smaller than in the west, which can be hard to appreciate unless you see the space in person.

Alternatively, if you are buying a new-build home, you can do so direct from the developer to save some money. However, make sure you understand what you are buying and what is included in the sale. It’s harder to visualise the space if it only exists on paper.

Once you have found the perfect property and agreed your offer with the seller, you are required to put a deposit down with your notary and pay stamp duty. This will be 10 or 20 percent of the sales price. If you withdraw from the purchase without good cause, you will lose your deposit.

The Purchasing Process

Your notary should check your new home’s registration to identify the legal owner and any debts held against the property, along with any plans or local obligations which affect it. They will also hold your money in a client account and pay it across to the appropriate parties when required.

Therefore, identifying a good notary is the first step. Try asking on the ExpatFocus forum or Facebook group to receive recommendations from other expats who have received a good service from a notary in your area.

The estate agency fee will typically be three percent of the purchase value and may add other charges. Make sure you agree this clearly in writing before making an offer on the property so you don’t receive unexpected bills when you are already trying to cover the cost of a house, moving costs and taxes.

A fee is charged to register your ownership of the property, which the notary will undertake. Stamp duty is also levied.

The fee you pay your notary should have been agreed in writing before they started any work for you.

Apartments will have a management fee levied to keep communal areas clean and the roof in good condition, for example. You will also have to pay local community taxes based on the value of your property.

About three months after your purchase, all the paperwork related to the transaction is sent to the tax office and a real estate acquisition tax charge will be due.

Nearly all taxes and charges are based on the price of the property. If you want to get an accurate idea of the costs and charges involved with buying your own property in Japan, have a look at the detailed tables on Realestate-Tokyo.com.

Property Surveys In Japan

The traditional principles which dictate Japanese life have led to a strong reliance on trust. Moreover, people prefer to buy somewhere new; period properties are typically unwanted. As a result, surveys to check the condition of a property during the purchase process are the exception rather than the rule.

A valuation survey is undertaken to ensure a mortgage lender will get their money back in case of default, but does not look for problems that could end up costing you a lot of money to fix. Therefore, find a professional to undertake this thorough survey for you.

In a country frequently rocked by earthquakes, and whose humid summers encourage termites to chew away at property foundations, this is an investment that you must not overlook.

Read more about this country

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