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5 Things To Consider When Buying A House In Japan

5 Things To Consider When Buying A House In Japan

Translated by Shinji Takaramura

Written by Chu

2020.10.29 Bookmark

This article will introduce things you should know before buying a house in Japan. Some of the topics covered are understanding Japanese floor plans, the steps for purchasing property, home mortgages, real estate tax, and housing prices in Tokyo.

Buying a House in Japan

5 Things To Consider When Buying A House In Japan

Picture courtesy of PIXTA

If you plan to buy a house in Japan, you should consider a few things before your purchase.

Read on to learn about Japanese floor plans, fees, and the application procedure to obtain the house of your dreams!

Table of Contents

1. Understanding the Abbreviations Used in Floor Plans
2. Learning the Steps in the Home Buying Process
3. Can Foreign Residents Apply for a Housing Mortgage?
4. What Are the Property Taxes and Fees?
5. What Are the Housing Prices in Tokyo?

1. Understanding the Abbreviations Used in Floor Plans

7 Things to Know When Buying a House in Japan

Picture courtesy of PIXTA

First, let's become familiar with the abbreviations used in Japanese floor plans. The layout of a room commonly features the capitalized letters "L, D, and K."

The table below reveals the meaning behind this acronym. This should come in handy whether you're looking to purchase property or rent a room.

Floor Plan Abbreviations
L Living Room
D Dining Room
K Kitchen
UB Unit Bath (Bathroom)
WC Water Closet (Restroom)
CL Closet
RF Roof Floor (Loft)
SB Shoe Box (Shoe Closet)
MB Meter Box (Meter for Gas, Electricity, and Water)

The following is a list of common terms used by real estate agents.

Common Real Estate Terms
Yoshitsu Western-style Room
Washitsu Japanese-style room with tatami mats
Balcony Balcony
Sen An abbreviation for laundry room
Closet Closet
Walk-in Closet A large closet that you can walk into.
Roka Corridor
Jo The size of one tatami mat (1 tatami mat=1.6562㎡)

Keep these terms in mind when looking at Japanese floor plans. Below are some common layout abbreviations you'll encounter when searching for properties.

Layout Abbreviations Meaning Size
1R One bedroom with a kitchen in the corner. About 13㎡/Bedroom: 8 to 12㎡
1K One bedroom with a partitioned kitchen. About 13 to 25㎡/Bedroom: 8 to 12㎡
1DK One bedroom and a kitchen with a dining area./7 to 13㎡ of kitchen and dining area About 20 to 30㎡/Bedroom: 7 to 13㎡
1LDK One bedroom and a kitchen with a living-dining area./About 13㎡ of kitchen and living-dining area About 23 to 35㎡/Bedroom: 7 to 13㎡

The number of bedrooms always comes first in the layout abbreviations.

For example, "1LDK" means that the floor plan has one bedroom and a kitchen with a living-dining area. "2LDK" indicates two bedrooms and a kitchen with a living-dining area.

Please note that the common area and balcony in Japanese condominiums are not regarded as a private area.

2. Learn the Steps in the Home Buying Process

7 Things to Know When Buying a House in Japan

Picture courtesy of PIXTA

The procedure of buying a house starts after a private viewing. The details will differ depending on whether the house is newly built or a resale property.

The table below outlines the procedures of purchasing a new home or a presale condo.

The Process of Buying a New Home
Step 1: Find a property Consult with a real estate agency to begin house hunting.
Step 2: Make an offer Submit an application to make an offer on a house that appeals to you.
Step 3: Lottery held among prospective buyers If there are multiple prospective buyers, a lottery will be held.
Step 4: Sign a contract A contract will be signed after the disclosure of essential information from the real estate agent. Normally, a deposit between 5 to 10% of the property will be paid in advance.
Step 5: Take out a mortgage If you plan to take out a mortgage from a bank, an application should be submitted in advance.
Step 6: Receive the keys After paying the commission fee, you will receive the keys to your new home.

The steps in a resale property are conducted in the same way. However, there will be a transfer of ownership of the land or building as the final step. This step will be explained by the real estate agent.

Reagrding home mortages, foreign nationals can be eligible to take out a loan from a Japanese bank, depending on their visa status.

3. Can Foreign Residents Apply for a Housing Mortgage?

7 Things to Know When Buying a House in Japan

Picture courtesy of PIXTA

Foreign residents in Japan must meet one of the following criteria to apply for a mortgage from Japanese banks.

・Permanent residency status
・If the applicant does not have permanent residency, his/her spouse must either be a Japanese citizen or permanent resident. Additionally, the spouse must sign the housing contract as a joint guarantor.

The applicant must also meet these following criteria:

・Must be between 20 and 65 years old, and the mortgage must be paid off before turning 80.
・The applicant is a policyholder in a group credit life insurance.
・The applicant must either be a full-time employee or contract worker for more than two years. Additionally, the previous year's income, including tax, must be more than three million yen*.

The three conditions mentioned above also apply to Japanese nationals. Please note that the details differ according to the bank issuing the mortgage and the state of the applicant's visa.

*Excerpt from Shinsei Bank (Japanese Link)

If you don't have permanent residency status or a medium-to-long term visa, you may not be eligible for a mortgage. If this is the case, you should consider consulting with a bank in your home country for a loan.

4. What Are the Property Taxes and Fees?

7 Things to Know When Buying a House in Japan

Picture courtesy of PIXTA

There are taxes to be paid in Japan when buying a house, including payments after the housing contract is closed.

The following taxes may be imposed upon new homeowners at the time of purchase.

Real-Estate Related Taxes
Stamp Tax 10,000 yen for houses ranging from 5 to 10 million yen./20,000 yen for houses ranging from 10 to 50 million yen.
Real-Estate Acquisition Tax 3 to 4% of the market price*
Registration and License Taxes 0.15 to 0.4% of the market price
Brokerage Fee 3 to 5% of the market price plus a maximum of 60,000 yen and consumption tax

The brokerage fee in Japan is a little complicated. If the market value of a house is 40 million yen excluding tax, it will be calculated as below.

The maximum fee will consist of three percent of the market price plus 60,000 yen alongside a ten percent consumption tax.

(40,000,000x0.03+60,000) x 1.1=1,386,000 yen

*The market price consists of land value and the housing price before tax.

Taxes to Be Paid After the Purchase
Fixed Property Tax 1.4% of the appraisal value
City Planning Tax A maximum of 0.3% of the appraisal value

The taxes mentioned above will be levied according to the appraisal value set by the local government and property tax bill.

5. What Are the Housing Prices in Tokyo?

7 Things to Know When Buying a House in Japan

Picture courtesy of PIXTA
So far, we've covered information on how to purchase a home in Japan. However, many people may be more interested in learning about the housing prices here.

The average Japanese family typically consists of two parents and one or two children. Therefore, 3LDK or 4LDK floor plans tend to be popular.

The list below is a price ranking of 3 to 4LDK type houses measuring about 80 square meters that were constructed ten years ago. It does not include the land value.

Ranking Special Wards of Tokyo Price
1 Shibuya Ward 110 to 130 million yen
2 Meguro Ward 96 to 120 million yen
3 Chiyoda Ward 92 to 110 million yen
4 Minato Ward 84 to 100 million yen
5 Nakano Ward 83 to 100 million yen
6 Shinagawa Ward 78 to 95 million yen
7 Setagaya Ward 76 to 93 million yen
8 Chuo Ward 76 to 93 million yen
9 Shinjuku Ward 75 to 91 million yen
10 Suginami Ward 73 to 90 million yen

Excerpt from HowMa Magazine (Japanese Link)

There are many factors in the prices above, such the location and accessibility. Shibuya Ward takes the top slot due to the opening of new commercial buildings, including Shibuya Scramble Square.

Our writer was surprised that Setagaya Ward, considered a wealthy residential area, was placed in the seventh spot.

Don't Rush When Purchasing a Home

Many foreign residents dream of becoming a homeowner in Japan. It would help if you took the time to examine all of the housing options while considering important factors such as income, visa status, and mortgage.

Main image courtesy of PIXTA

The information presented in this article is based on the time it was written. Note that there may be changes in the merchandise, services, and prices that have occurred after this article was published. Please contact the facility or facilities in this article directly before visiting.

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