Real Estate : owning
Financial discussions around buying or investing in real estate
When is it a good idea to buy for your own use ?
2022-07-13 Scam targeting 'tax saving' real estate investments
Real estate FAQ / guides and resources
The MLIT offers an english explanation of the key urbanization concepts.
The Building Center of Japan offers a quite extensive 2013 presentation in english of the main concepts for buildings, from zoning to shades, fire, what architect class can build what etc. Some 2019 updates are published over at the International Institute for Construction and Housing.
Japan Property Central (Tokyo real estate agent) FAQ
Cat Forehead's Real-estate focused blog
Facebook group Building and renovating a house in Japan is fairly active and has covered a lot of practical topics and is usually worth a search.
Books : Legal Issues in Japanese Real Estate Investment is from 2012 and unfortunately available at high prices.
In Japanese :
Towntv has several older articles (including some comparison per cost or insulation perf between builders) and an active blog
Buying existing properties
Browsing the market
Properties on the market are available to all real estate professionals through a shared database called REINS, for both renting and selling.
Several companies offer tools to search available properties/rentals, such as Homes.co.jp, Suumo, and at home, by map, train line/station etc.
Specific market niches
Future new developments and specialty products might need to reach out to specific actors, such as :
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Foreclosed properties are sold through the local courts and are advertised on the official BIT website. Blind binding with minimum amounts can be submitted by individuals, and follows a specific process driven by the local court.
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Hachise co. sells/rents renovated traditional homes in Kyoto
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Inaka.net specialize in countryside/remote properties
Identifying a property owner
Records are normally available [source/details needed] but can also be purchased
Buying Process
Prices
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The MLIT offers a view of market prices via the Land General Information System, an open database in english of anonymized, past transactions. However, submission is not mandatory so the data does not fully reflect the market.
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Statistics on prices per areas are available, and can be drilled down by neighborhood.
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Official assessment of property prices, mostly for tax purposes, can be found at the National Land Price map, however it must be noted that these differ from actual market prices.
Note there are different types of land valuation. Also discussed in this comment.
Japan population is dropping sharply and this is why house prices are going down and will go down in most of the country. However, there are places where population is projected to increase, as people are predicted to continue to move into desirable cities with jobs, amenities and growth prospects.
MLIT has done a very detailed study on this, and one of the reports shows population projections in 2050 with a 1km x 1km granularity. Those areas projected to increase or remain steady in population probably won't see property values fall too much because there's going to be sustained demand (and they're also likely more desirable areas to live in in the first place.)
Brokerage fee
Real estate agencies charge a brokerage fee (仲介手数料) for facilitating real estate deals. The law (宅地建物取引業法第46条) stipulates that there is a maximum amount that brokers are allowed to charge for this. For real estate purchase transactions of 4 million JPY or higher, the legal maximum is 3% + 60,000 yen (+ consumption tax). Most brokers make this legal maximum their standard fee, and many people who are willing to search for properties themselves want to find ways to save on this fee. One way is to find a broker that charges less than the legal maximum. REDS is one such broker, and they also offer services in English.
Individual vs corporate ownership
Interview regarding the impact of purchasing real-estate through a corporate structure.
Land-specific rules
Land usage has several restrictions that are usually roughly explained by real estate companies (ex 1 - 2 - 3 ).
However the specific application to a dedicated land may need to be assessed by a professional builder or architect, as there are numerous rules to account for and some local unique rules.
- Hazard and natural disasters
Maps showing assessed natural disasters such as flooding and earthquake risks are centralized through a national portal. For example choosing Kyoto will show the different available map links on the city website, such as landslide.
The MLIT has published in 2005 a Flood Hazard Mapping Manual in English that has examples.
- Land Zoning
Different categories of zoning limit the usage and density of constructions.
The MLIT offers an english explanation of the key urbanization concepts.
City may have a dedicated page with their zoning maps (can be found by searching for city name and 都市計画図等 : example for Shibuya or Kyoto ). Those map normally provide the list of restrictions for each piece of land : max height, type of roof, style etc.
Each land comes with two main restriction, in the form of % called Kenpeiritsu and Yousekiritsu. They limit the ground and interior space of the building, for example 60/100%. There will be more restrictions as noted on the city zoning maps, and specific calculations are needed or each land (such as sunlight rules), but those two ratio give a rough idea of how much of a building can be build and how dense the area is going to be.
- Kenpeiritsu 建ぺい率 is the % of the land that can be built as seen from above, such as 60% : a 100m2 land can support a building taking up to 60m2 of land as seen from above (could be a tower with countless floors).
Kenpeiritsu source is normally calculated from a bird-view perspective, from the middle point of the external walls structure (external insulation do not count). Balcony and roof procuring from 1m or less, and temporary structures (such as a car parking roof), and foundations lower than 1 meter, are not counted (roof extending more than 1m : only the part beyond 1m is counted). Further relaxation for corner lot (+10%) or fireproof structure can sometimes be granted depending on local ordinances (limited number of areas and generally only to business properties).
In practice, a rate around 40-60% means there will be small gardens around the houses, and ratio of 60-80% means there will be little green space left once a parking spot and minimum space around the house (50cm or more, also depending on builder) is counted.
- Yousekiritsu 容積率 is interior space of the building compared to the land, such as 100% : a 100m2 land can support a building of 100 m2 interior space.
Yousekiritsu source does not includes space below a height of 1.4m meters (aka 'kura' storage space, under roofs or stairs for example), garage (with some limitations), basement (with some limitations), terrace (but terrace count for Kenpeiritsu), or elevators. It may be impacted by the size of the nearby road. Note that garage is not necessarily for cars (no minimal size), but needs to have an open access to the road (closable by shutters or simply left open).
In practice houses are often optimized to use the yousekiritsu to improve living space : garage, terrace, and storage space are popular options.
For example, a 100m2 land with 50/80% ratios could be either : (1) based on two 40m2 floors (best for insulation), or (2) have a 50m2 1F and a 30m2 2F with a 20m2 terrace, or (3) have a 50m2 1F including a 20m2 garage, plus a 50m2 2F (total 100m2 garage included)
- Building Envelope and other restrictions
Building height, volume and maximum shape is limited by regulation and local specific rules (such as 200m height limit near Haneda airport ), for example to guarantee sunlight rights to nearby properties.
Land with less than 2m wide access to public road normally cannot be rebuild, but can be renovated.
Setback area can be imposed when building if road access is insufficient.
Building your own
Overall process
Outline and tips by u/blosphere
Things I wish I knew when building a house, also in 2023-01
Sage advice regarding building ?
Great comment about valuing land and houses in Tokyo
Building experience blogs : Kichijoji Life , Osaka House Project, Tokyo House by u/lundman
In Japanese : Timeline for building a custom home
Design
Building phase
About builder and cost for properly insulated homes
2023-01 Hiring an inspector to check construction
2023-03 Home inspector experience for new house
Heating, insulation & air tightness
Low Energy Building in Japan is an english blog on efficient building.
Systems like OM Solar or ECS will give you a house that heats itself in winter and to a certain extent cools itself in summer. As well as heating your house from the sun you'll also get free hot water. They won't build the house for you but put you in touch with contractors in your area that use their system who will work with you to design and build your house. Using one of these their contractors will also use a good amount of insulation and build a house that will last well.
Solar panels
Solar panel cost comparison and financial forecast
Cost & Financing
The construction prices are generally evaluated by tsubo (3.3 sqm). Comparison of main makers costs.
Incentives
Various incentives ( MLIT ) are in place as of 2021 to encourage house purchase or remodeling, mainly following the recent consumption tax hike.
List with links to official gov pages or a simple recap.
Banks : getting a loan
PR (or spouse of a Japanese national) and stable employment (2+ years) are most important to get a loan. Next comes age, as it becomes difficult to secure long duration loan as you age. Loan amount is mostly impacted by income, typically your current salary, as accumulated assets seems less of a factor.
Kakaku.com listing of competitive housing loans
Mogecheck.jp also proposes a list of competitive housing loan
What is a Flat 35 loan ? Advantages and disadvantages of this specific type of loan
2021-06 being declined for bank loan
Variable or Fix rates ? The comparison is not straightforward as it may seem :
2023-01 Comparison between variable and fixed 2022-04 Detailed explanation on how rates are build and compared.
Banks : how much can I borrow ?
Income level of the past years is the main factor for the borrow-able amount. Savings seem to be less important.
A basic estimate would be about 7-8 times your income from the past year.
Online simulators from Shinsei and MUFG. The AtHome simulator is capped at 82M. General loan checker 1 or 2can also help get an idea.
Home loan tax credit
The home loan tax credit (住宅ローン控除) is a tax credit based on the remaining amount of your home loan each year up to a limit. Some restrictions apply based on things such as size, net income, and energy efficiency of the home. The rules that apply are the ones that were in effect when you started living in the home. The rules for recent years can be found in Japanese at the MLIT's website.
Getting funds from parents
See the Gift Tax wiki for the special gift tax exemption for house-purchase purpose.
See the Inheritance Tax wiki for the special tax exemption for anticipated inheritance.
Maintenance and running costs
Tax
Please refer to the wiki Tax section for the relevant applicable taxes: Property registration tax, Capital gain tax, yearly property tax comment, loan income tax deduction, cash bonus for home buyers (Sumai-kyufu), income from overseas real estate, obligation of declaration of overseas assets.
Selling
Renting out
Tenants have very strong rights in Japan, and owner do not have much capacity to get the building back.