As a long-term resident of a country where buying a new mobile phone or opening a bank account can take up to 3 hours, I’m surprised to be the bearer of good news about purchasing an apartment in Japan: it’s fairly easy!
At the start of this year, we picked up the keys for a little 40m2 apartment by the sea, after four years of viewing places along the Miura coastline, from A to Z (Akiya to Zushi). In the end, we came across a small place just around the bend from one of our favourite spots, Isshiki Kaigan, in Chojyagasaki.
From our first on-site viewing of the apartment (Sep 2018) to actually getting the keys (Jan 2019), there was an unusual delay. The previous owner, Mrs H, a lovely, elegant octogenarian, wanted to sell up and move into a retirement flat, which she had not yet found. So we waited.
Since we weren’t in a big hurry to buy, and I quite enjoyed soaking up each part of the process (at least, that’s how I remember it; my husband might disagree!), this situation did not deter us.
Had Mrs H moved out immediately, I imagine that the entire buying process, including the securing of a mortgage, would have taken about a month. If we’d been in a position to pay cash, we could’ve had the keys to the apartment in just 2 weeks!
Looking back, here’s my basic advice for purchasing an apartment in Japan: Preparation, Purchase, Paperwork, and Purse-strings. Even if you’re not planning to take out a mortgage, I imagine that many of these steps will still be relevant.
I should preface this advice by stating that I’ve been a Permanent Resident of Japan since 2015.
STEP I: Preparation
Whether you’re just thinking about buying, or have a solid plan to buy somewhere: get your ducks in a row!
If you don’t already have a Shinsei Power Smart Bank account, I’d recommend setting one up. You can apply really easily HERE.
Luckily, I’d banked with Shinsei for a number of years. This meant that we subsequently received not only great customer service throughout the mortgage process – all in English – but also a cash discount on that process when the time came. Bonus! Yaegashi-san at Shinsei was a god-send.
If you’ve not yet purchased and registered a hanko / inkan (personal seal) for Japanese admin, you can buy one or have one made and then register it at your local ward office. Luckily, this was something I already had in pocket. You will need it for your home-owning journey. You can find out about this Japanese / Asian custom HERE.
Again, to get a head start on the purchasing journey, it’s a good idea to begin compiling your financial history for the past three years, including tax statements or gensenchoshucho. Shinsei Bank (and indeed any large, reputable mortgage provider in Japan) will ask for copies of your past three years of gensenchoshuhyo. Again, if you have these little bits of paper lined up, your life and mortgage application will be much smoother.
(You can possibly ignore this step if you’re lucky enough to be in a position to pay cash for your property.)
STEP II: Purchase (and People!)
If you’re purchasing an apartment in Japan with a loan / mortgage, you will need:
I really cannot say enough good things about Shinsei Bank and their PowerSmart Home Mortgage processes. All communication was done with the PowerSmart manager, Yaegashi-san, in English. All forms had English translations attached, and our manager called me regularly (in English!) to ensure that I was understanding the process. As a first step to securing a mortgage from Shinsei, you will have to complete a simple pre-approval form, which is HERE.
In order to be granted pre-approval for your mortgage, you must live in Japan, be able to show that you have earned over JPY3m each year for the previous three years.
I was a little bit nervous about this latter point as I’d taken maternity leave for almost a year in 2016-2017, which had left a significant hole in my annual income. But it turned out that there was no need to worry, since current and projected income is also taken into account by Shinsei Bank. Along with my gensenchoshuhyo I could show my past and current employment contracts with the same employer, which confirmed I’d reliably be earning more than the JPY3m per year threshold.
A real estate agent
We worked with Coco House (EN / JP), based in Kamakura. We’d actually engaged the Coco House team a few years ago, during a previous search of the Miura coast, but at that time our purchase fell through when we were gazumped on the purchase of a house by a cash buyer.
Since we wanted to re-start the search for a place by the sea, we contacted Coco House’s Kubota-san to arrange some viewings. She speaks great English, is very flexible, really responsive to emails and texts, and all in all just super easy to work with. In addition to supporting our search (we began by seeing 10 apartments in one day!) and communicating with the ‘sell side agent’, Kubota-san struck up regular contact with Shinsei Bank’s Yaegashi-san, and over the course of 4 months definitely earned her agent’s fee!
At a first glance, it might seem strange to non-Japanese that you have to PAY an agent in order to buy a property. Surely that should be the other way round?! But in Japan your agent does much more than just set up viewings and hand you the keys to a new place. I was so appreciative of Kubota-san’s genuine support throughout the process and even afterwards too – reminding me of deadlines, missed bits of admin, expectations of our apartment building’s management company, notes from our renovation vendor, etc.
A judicial scrivener
The bank / real estate agent will arrange for this person to appear at two points during the process: when you sign the mortgage papers (at the bank) and when you are finally handed the keys to your new place (at the real estate agent office).
STEP III: Paperwork
In order to buy a house or apartment in Japan, you will need to complete 4 main pieces of admin.
Because our chosen property is in Kanagawa-ken, we had to make regular trips from Tokyo (about 2-hours door-to-door) to have these face-to-face admin meetings. If you’re currently living in the same area in which you’re planning to buy an apartment, these steps would be a lot quicker and easier to manage.
- Sign “bai-bai” contract
(LOCATION: Hayama, sell-side agent’s office)
This piece of admin took the longest as the sell-side has a legal obligation to talk you through the entire apartment purchasing contract, line by line, all in Japanese (including the disclosure of land restrictions, any and all previous repairs, threat of natural disasters, and details of current tenants of your building, if you’re buying an apartment). Thankfully, our estate agent from Coco House prepared English translations for us, which was marvelous. Still, this process took a full 2 hours and there was no way around it. We did our ‘bai-bai’ contract on a Sunday afternoon, accompanied by a rambunctuous toddler.
Time spent: 2 hours
- Sign mortgage papers
(LOCATION: Tokyo, Shinsei Bank Tokyo branch office)
Surprisingly, this process was performed very quickly by our manager Yaegashi-san and a judicial scrivener. Needs to be done on a weekday when the mortgage team are on-site.
Time spent: 1 hour
- Pick up keys
(LOCATION: Kamakura, our estate agent’s office and Mizuho Bank)
The key pick-up was coupled with a ceremonial visit to the bank with the seller, Mrs H, the sell-side agent, and the judicial scrivener. I was unsure what to expect when our group of six departed the estate agent’s office and walked solemly to the local Mizuho Bank. We took our seats in the main area of the bank, and then within 10 minutes the sell-side agent was bowing very deeply and passing me receipts of payment; the money that Shinsei Bank had just put into my bank account classified as ‘mortgage’ had been immediately wired to Mrs H’s Mizuho bank account. The outing was all quite thrilling and not without a sense of theatre! This part of the process also needs to be done on a weekday, as you have to visit the current owner’s bank.
Time spent: 30 minutes
- Sign insurance papers
(LOCATION: Kamakura, our estate agent’s office)
We could have arranged fire insurance with a Tokyo provider, and therefore skipped this extra visit to Kamakura. But we felt it appropriate and courteous to use a domestic and local insurer, recommended by our estate agent, Coco House. We did this on a Saturday morning and it was painless.
Time spent: 45 minutes
STEP IV: Purse strings
I shall keep the finances part simple and to the point. Here goes . . .
JPY13m (originally on the market for JPY13.8m and we negotiated a modest discount – not usually the done thing in Japan)
JPY2m (had to pay this cash to Mrs H early in the process – it could not be covered by our mortgage from Shinsei)
Agent fee, Coco House:
JPY486,000 (not sure if this is a flat fee or based on property price)
Shinsei Bank mortgage processing fee:
JPY92,000 (should be JPY192,000 but Shinsei customers receive a JPY100,000 discount)
Management fees for building:
JPY246,240 (needed to pay in advance for the year, and our building is quite old, so the fees are higher apparently)
Property taxes for that current year:
JPY49,946 (again, needed to pay in advance for the year)
JPY89,480 (legally, you must arrange to have the property insured as soon as you are handed the keys)
Judicial scrivener fee
Inspection of property:
JPY36,000 (optional, seems not to be the usual way in Japan, but we would never buy a property in Scotland without having it surveyed for structural damage)
JPY3.2m (completely optional, however our little apartment needed a complete overhaul and the bank allowed us to include about JPY2.4m of the reform costs in our mortgage)
With all this said, if you are going to purchase a little apartment in Japan, I’d humbly suggest it’s wise to have around JPY4m in the bank to begin with, as you’re going to be presented with a variety of estimates and invoices that will need immediate attention along the way.
Overall, I was really surprised at how simple and smooth the entire process was. With no blood, sweat or tears, and with two guardian angels – Yaegashi-san (Shinsei) and Kubota-san (Coco House) I could quite easily become a coastal homeowner in Japan. Mount Fuji even popped out to say hello on our first visit with keys!
The renovation is another matter entirely . . . (perhaps a story for another blog post!).
I hope this information is helpful for you and your property journey in Japan. Best of luck and please do share your thoughts and questions below!