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Can foreigners buy property in Japan?

The answer to the question is yes. Foreigners, regardless of their nationality and visa status, can buy property in Japan. There is no restriction and no additional tax, which can be seen in some countries where foreigners can buy properties. In this article, I would like to highlight the difference in the legal concept of ownership in Japan and in English legal countries (or common law countries). More practical information such as the process of buying a house and investment advice is easily available online (while this kind of information is rarely found).

The legal concept of ownership

In Hong Kong in 2015/16, I attended a series of classes on English land law delivered by Prof. Martin Dixon, Professor of Law of Real Property at Queen’s College, Cambridge University. In the classes, I was surprised to know that the concept of ownership in English law is significantly different from the one under the Japanese law which is based on French and German law.

1) England and Wales

Legally speaking, the absolute owner of all land in England and Wales is the Crown (i.e. Queen Elizabeth II). So-called landlords have the right of exclusive possession and use in land for an indefinite period of time (i.e. freehold) or definite period of time (i.e. leasehold). The definite period time of leasehold is normally long such as 99 years or 125 years. Therefore, it is different from mere a lease, and leasehold can be the object of sales and purchase.

This legal structure, however, is not cared for even noticed by most landlords, and they are deemed as owners in everyday language. Scotland has a different legal system.

2) Other common law countries/regions

Hong Kong has the same structure as a former British territory except that all land is owned by the government, not the Crown since the 1997 handover. They also trade leasehold and not freehold. They invest in, say, a 99-year leasehold in a flat for a higher price and become an owner of that flat until they sell at a profit.

While I am not familiar with property systems in other common law countries (e.g. Australia, New Zealand, Canada (except Quebec), Singapore, Malaysia, India and the United States), it seems that they maintain more or less the same concepts and similar structures succeeding to English law.

3) Japan

Meanwhile, the right of ownership in Japan is absolute as the Crown’s is. If you buy property in Japan, you will become an absolute owner of that property, and intervention in the right is extremely difficult if not impossible even by the government. Therefore, it is more radical than it looks from the legal point of view to admit foreigners to buy property without any restriction in Japan.

In addition to the difference in the concept of ownership, land and buildings can be differently owned in Japan unlike above-mentioned countries. Therefore, it is legally possible that a piece of land is owned by you and the building on it is owned by another person, who is likely to be a tenant of your land. Further, as almost all properties are registered and our concepts and structures are less complex, transactions are more straightforward.

What you should do first is to choose a good real estate agency who has the know-how to handle international clients. In Japan, real estate agencies take care of buyers from the beginning till the end, during which shiho-shoshi (司法書士) lawyers affiliated with the agencies conduct registration procedures.

Market is open to the world

There is a growing concern among conservatives that foreign investors buy large forest areas near water sources, among other areas, in Hokkaido. According to the research results published by the Forestry Agency on April 18, 2017, 201 hectares of forests were bought by foreigners in Hokkaido in 2016. Most of them are Chinese investors mainly from Hong Kong, Taiwan and Singapore. Although they appear to have merely invested to develop resort areas, a concern arises in relation to national security.

Still, the government’s policy [1] is to strategically open the Japanese property market to foreign investors. Again, foreigners, regardless of their nationality and visa status, can buy property in Japan. Therefore, while we might have some regulations in relation to the national security in the near future, foreigners will remain to be able to buy property in Japan.

Note:
[1] See the Press Release dated 2 August 2013 published by the Ministry of Land, Infrastructure, Transport and Tourism.

Disclaimer: While every effort has been made to ensure that the information on this article is accurate at the time of posting, it is not intended to provide legal advice as individual situations will differ. If you do require advice or wish to find out more about the information provided and related topics, please contact the author.

Text by Atty. Atsushi Miyake of Miyake Law, Aug. 2019.
Read more installments from this series here.

Category
Others
Fukuoka City
Published: Aug 9, 2019 / Last Updated: Aug 9, 2019

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