Steps to purchase your land or property
Step 1: Search on Uchi!
Uchi lists multiple agents from around Japan, allowing potential investors to compare many properties from different agents. Once you have found what you are interested in, we connect you directly to the agent who represents the property you are interested in.
You can contact multiple agents about multiple properties and we suggest you do so.
Step 2: Contact real estate agents
When investing in property, particularly overseas, you must rely on trusted guidance from local real estate professionals. There are many reasons for this, including:
- legal safety
- documentation translations
- professional advisory regarding prices and market trends
- property viewing assistance
- market standards and price advisory
- negotiations and formal processes with the seller
Your first step should always be to consult an agent and outline your preferred location, property requirements and budget. Uchi does not recommend private purchases due to the risk of such contracts.
You may consult multiple agents in order to find your ideal home.
The statutory brokerage commission in Japan is 3%, see below for more information on fees.
All real estate agents listed on Uchi are licensed in Japan.
Step 3: Make an offer
Once you have settled on your preferred property, your agent will help you to negotiate with the seller. Your agent will be able to give you advice on starting offers, where you might expect to settle and suggestions for payment timings.
A successful offer will include:
- Purchase price acceptable to the seller
- Timing of payment
- Agreement over any time required for due diligence, if applicable
Once you have agreed a price with the seller, you will sign a Commitment to Purchase and the seller signs a Commitment of Sale. At this stage, the property will be taken off the market while contract documents are prepared.
Step 4: Contract – preparing documents
Once the offer and terms of purchase are accepted by the seller, your agent will work with the seller’s agent to draw up contracts.
Your agent should provide a “Sales Contract” and “Statement of Important Matters Regarding the Property and Transaction”. This is a set of documents that includes owner title registration, ownership type, property legal description and any provisions in case of contract cancellation.
Note that documents will be provided in Japanese. Any English documents are for translation purposes only, although most real estate agents will provide these at no extra cost.
Estimated timeframe: 1 week
Step 5: Executing the Contract
Once the documents have been signed by buyer and seller, you will make the first payment. This is usually paid to your agent and will consist of:
- Deposit amount
- Solicitor fees
- 50% of the agent commission fee
Your real estate agent will then make the payments on your behalf to the solicitor and release the deposit the seller at this time, once you have provided written authorisation to do so.
The deposit should be paid to the seller as per the contract. Generally speaking this is usually approximately 10% of the purchase price, but can be adjusted during negotiations.
In Japan, the deposit is not usually paid to a third party such as an escrow. The idea behind this is that Japan is a trust-based society, and paying part of the cost up-front is a sign of commitment and solidifies trust. This is the same process for Japanese residents and non-residents.
Estimated timeframe: 1 week
Step 6: Final Settlement
After the contracts are signed you will need to prepare a Statutory Declaration and a Power of Attorney for the solicitor to register the title change, and send all remaining funds to the agent’s holding account at least one week prior to settlement.
Your real estate agent should provide an introduction to a solicitor and they will prepare all the registration documents. Many areas of Japan have solicitors who will do this in English. Your sales agent will consult and guide you through this process.
On the settlement day, as per the contract, the solicitor will pay the remaining amount due to the seller and register the transfer of title to you at the appropriate prefectural Bureau of Legal Affairs.
A few days later the title deed is ready and your real estate agent will courier the new title deed to you.
Estimated timeframe: as per the contract, but generally expect to be within two months of contract signing.
General Costs of Purchase
Real Estate Agent Fees
Your real estate agent will charge fees based on the price of the property. Fees are 3% of the purchase price plus 60,000 yen, with both fees being subject to consumption tax (currently 10%)
Relating to the purchase of your property, there are two taxes to pay after the purchase:
1. Property Acquisition Tax (PAT) which is a one-time payment. Generally speaking, this is calculated as 4% of the taxable value of the property. Your real estate agent can confirm what the taxable value is - depending on the area where you are buying it is usually significantly less than the amount you pay.
2. Fixed Asset Tax (FAT) which is an annual payment. Note that initial fixed asset tax will be calculated from the date of settlement until December 31st of the same year. This is usually 1.4% of the taxable value.
The local town or city council is responsible for calculating the amount of the tax. This tax is calculated based on a 365 day year. Your real estate agent will usually let you know the amounts due and you can ask them to settle any payments due on your behalf at the completion of the purchase process.
PLEASE NOTE: If you do not reside in Japan, you are required to have a ‘tax manager’ to coordinate the payment of fixed asset tax. Your real estate agent or property manager should be able to introduce you to a tax manager.
You will need to pay
- solicitor registration fees
- pro-rata fixed asset tax for the year of purchase, based on the settlement date
- any bank charges associated with money transfers