How To Buy Land In Japan: What To Know To Build Your Home

Building a dream home always starts with the right piece of land.

Whether you are an expat or hold permanent residency status in Japan, anyone can buy a piece of land here.

If you are thinking about building your dream home in Japan, you’ve come to the right place as we go through how to buy land in Japan and the key processes to do once you’ve made the purchase. 

Can foreigners buy land in Japan?

Foreigners can buy land in Japan as it does not require a specific visa, citizenship, or nationality status. So, anyone can buy land and property in Japan. 

Here are two key things to know when buying land in Japan:

• No visa requirements: You do not need to be a resident of Japan to buy land.

• No additional taxes: Foreigners who buy land in Japan are subjected to the same taxes and fees as Japanese nationals.

Step-by-step to buying land in Japan

Step 1: The right location

Many factors affect the total local property market cost. Here are some key factors to consider:

• Proximity to amenities: See how close amenities such as schools, hospitals, supermarkets, and transportation hubs are to your property land.

• Zoning laws: Japanese zoning laws are different from your home country. There are three ways to categorize zones in Japan, each with specific regulations governing the type and size of structures that can be built, the maximum height of buildings, and how land can be used.

• Natural disaster risks: Japan is prone to earthquakes and typhoons, so research the area’s history with natural disasters.

• Future development: Investigate if any planned developments, such as train lines or commercial centers, could affect property value.

Additionally, under the Foreign Exchange and Foreign Trade Act (FEFTA), foreigners can not purchase land that is designated as “forest” or “agricultural” without permission.

These factors vary from person to person. So consider the ones that best suit your needs.

Step 2: Understand Japanese land categories

When you purchase property in Japan, it's essential to know the three main land categories:

• 住宅地 (Residential Land): Ideal for building homes or small apartments.

• 商業地 (Commercial Land): Suitable for business ventures, shops, or commercial buildings.

• 農地 (Agricultural Land): Primarily for farming; purchasing this type of land may require additional permissions.

Double check with your real estate agent that the land you will buy is marked as 住宅地 (residential land) so you can build your property.

Step 3: Know your budget and total costs

Buying land in Japan is more than the price of the land. Here are other things to consider: 

• Real estate agent fees: the fee is around 3% of the property price, plus tax.

• Legal fees: Hiring a lawyer or judicial scrivener is crucial to handling contracts, real estate transactions, and title transfers.

• Taxes: You must pay the real estate acquisition tax (1.5-3%) and annual fixed asset taxes (varies by location).

• Group credit life insurance: called 団体信用生命保険, dantai shinyō seimei hoken in Japanese. It is a type of life insurance available for home loans.

You'll also need to determine the home building and development cost, including construction, permits, and utilities such as electricity and water connections.

Step 4: The buying process

The buying property process can be condensed into these steps:

1. Find a Japanese real estate company: Many real estate companies exist in Japan. Find someone you trust, preferably bilingual, to help you navigate the Japanese market. You can also look at akiya banks if you want to buy an akiya and renovate it. 

2. Research the land: Conduct a land survey to determine the properties’ boundaries and see if the land can support the property structure. 

3. Sign the sales agreement: A sales agreement will be drawn up after agreeing on the price. Fully understand the terms, the payment schedule, and any contingencies.

4. Pay the Deposit: You’ll need to pay the deposit to secure the land, as it is standard when you purchase real estate in Japan. The deposit is usually non-refundable. 

5. Final payments and land transfer: The remaining balance will be paid later, set up by the sales agreement. You'll need to go to the local government and notify them that you own the land.

From then on, you officially own that piece of land in Japan. 

Step 5: Prepare paperwork and documents

Here are some important documents you’ll need to help you navigate through Japanese paperwork:

• ID Verification: A passport or residence card (for those living in Japan) will be required.

• Bank account: Double-check if your bank account can oversee transactions.

• Inkan (Personal seal): An inkan is used as a notarized signature to sign official documents for those living in Japan. 

Additionally, hiring a legal representative, such as a judicial scrivener, is highly recommended, as they can assist with registering your property in Japan if you are outside the country. 

Step 6: Building your home

Now that you have your land in Japan, the next is to build your home, which will require careful planning and coordination. 

Here are a couple of things to be aware of:

• Building permits: After you purchase Japanese real estate, you need to apply for permits to start any construction. Your local real estate agent or a contractor can help with this process.

• Hiring a contractor: Hiring a reputable and bilingual contractor will help you understand Japanese construction standards and allow you to communicate your needs and wants for the house. 

• Utility setup: You’ll want water, electricity, and gas connections set up to avoid delays.

Step 7: Taxes obligations

When you own land or property in Japan, there are a couple of ongoing property taxes and fees that you will need to pay:

• Fixed Asset Tax: Paid annually and calculated based on the value of the land and any buildings. About 1.4% of the property’s value.

• City Planning Tax: In certain areas, this tax helps fund city infrastructure projects and varies by location. It is 0.2%-0.4% of the property's value.

MailMate Mail & Tax Representative 

Managing taxes and paperwork while owning property in Japan can be complex, especially if you're a non-resident.

That's where MailMate can step in to make things easier. MailMate offers services designed specifically for property owners living abroad or away from their Japanese properties for extended periods.

• Tax Representative Services: Non-residents must appoint a tax representative to handle tax-related matters, including paying property taxes and receiving tax documents from local agencies. MailMate provides this service, ensuring that all tax payments and official communications are handled seamlessly on your behalf.

• Mail Handling: MailMate can receive and manage your important mail, including tax documents, utility bills, and other official correspondence related to your property.

You can ensure that your property and taxes are well-managed, allowing you to enjoy the benefits of owning land and a house in Japan without the administrative burden.

Step 8: After-purchase tips

Once you have your property in Japan, you must register with the local government to notify them that you are the land's new owner.

• Register the property: You must register your property with the Japanese government to notify them that you are the new owner. This process is to prove ownership and protect your property rights.

• Insurance: While there is no obligation to take insurance when you own land or property in Japan, it's better to be prepared in case of natural disasters. As such, the top insurance people take for their property is fire and earthquake insurance.

• Keep track of legal requirements: You'll receive any important notices and tax obligations you have, such as Fixed Asset Tax and City Planning Tax.

If you want to turn your land property into an Airbnb location, you'll have to apply for a minpaku license and a private lodging business certificate. But if you plan to make it into your vacation home, be aware of your visa status and how long you are legally allowed to stay in Japan.

MailMate will help with your property while you are away.

Do you own land or property in Japan but live abroad? MailMate is here to help you manage your property seamlessly, even when you're not in the country.

MailMate’s Akiya Service lets you know that all important documents, mail, and property communication are handled efficiently. 

Virtual mailbox

You can view all Japanese mail from your property via your online dashboard.

You can open and read important mail and notices on this dashboard. If any mail is unimportant, click on the “Shred” icon, and it'll be shredded physically.

Plus, if you physically need any item, request a forwarding, input the address, and you'll receive a tracking number for it.

Bilingual support

As a foreign property owner in Japan, the language barrier can be challenging to understand all necessary processes and obligations.

If you need a gas or water leak check, obtain internet, or want to get solar panels, MailMate is here to be that communication bridge so that nothing is lost in the translation that comes with your property-related matters.

Frequently asked questions

How much does land cost in Japan?

Land cost varies throughout Japan. The Tokyo Prefecture has the highest average value at almost 1.2 million Japanese yen per square meter. Compared to more rural areas where land prices are about 100 thousand yen per square meter or less.

How long can I live in Japan if I buy a house?

Buying a house in Japan is not directly tied to how long you can live here. That is based on your residency or visa status. For example, you can live in Japan indefinitely if you have PR or live in Japan as long as your visa status is valid. The other method is staying in Japan while on a tourist visa, though you are not considered a resident.

How much is land tax in Japan?

Land tax in Japan, called fixed asset tax (固定資産税, kotei shisan zei), is about 1.4% of the property’s value, which is based on the location, size, condition, and property market trends. The amount is recalculated every 3 years.

In closing

Knowing how to buy land in Japan, its related taxes and fees, and the steps to build your house helps alleviate the stress of the overall process so that you can confidently purchase and build your dream real estate in Japan.

As always, if you need additional property management support, MailMare is here to help you.