Buying real estate in Tokyo?

We've created a guide to help you avoid pitfalls, save time, and make the best long-term investment possible.

What is the process to buy an apartment in Tokyo?

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Authored by the expert who managed and guided the team behind the Japan Property Pack

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Yes, the analysis of Tokyo's property market is included in our pack

If you're reading this, it's likely that Tokyo has caught your eye, and you're thinking about making it your home by purchasing an apartment there.

But what does the buying process entail? Is it straightforward or filled with hurdles? How long should you expect it to take? What challenges might you face along the way?

In this article, we'll walk you through each step of the journey.

Actually, we know this market inside and out. We keep tabs on it regularly, and all our discoveries are reflected in the most recent version of the Japan Property Pack

The Steps to Buy a Condo in Tokyo

  • 1) Research and Choose a Location

    - Understand Tokyo's unique neighborhoods and their characteristics
    - Consider proximity to public transportation, as Tokyo's train system is extensive
    - Evaluate local amenities, schools, and lifestyle preferences

  • 2) Engage a Real Estate Agent

    - Find an agent experienced with foreign buyers and fluent in English
    - Ensure the agent is registered with the Tokyo Real Estate Association
    - Discuss your budget, preferences, and any specific requirements

  • 3) Secure Financing

    - Check eligibility for a mortgage as a foreigner, which can be challenging
    - Consider Japanese banks that offer loans to non-residents
    - Prepare necessary documents, such as proof of income and residency status

  • 4) Property Viewing and Selection

    - Schedule viewings with your agent, focusing on shortlisted properties
    - Pay attention to building management fees and rules, which can vary
    - Consider the age and condition of the building, as older buildings may have higher maintenance costs

  • 5) Make an Offer and Sign a Purchase Agreement

    - Negotiate the price with the seller through your agent
    - Review the purchase agreement carefully, ensuring all terms are clear
    - Pay a deposit, typically 5-10% of the purchase price, to secure the property

  • 6) Conduct Due Diligence

    - Perform a property inspection to identify any potential issues
    - Verify the property’s legal status and any encumbrances
    - Review the building’s management regulations and financial health

  • 7) Finalize the Purchase

    - Complete the payment of the remaining balance
    - Register the property under your name at the Legal Affairs Bureau
    - Pay applicable taxes, such as the acquisition tax, and finalize any other legal requirements

Get the full checklist for your due diligence in Japan

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What You Need to Know Before Buying an Apartment in Tokyo

What are the initial costs involved in purchasing an apartment in Tokyo?

When buying an apartment in Tokyo, you should be prepared to pay a down payment, which is typically around 10% to 20% of the property's purchase price.

Additional costs include agent fees, registration fees, and taxes, which can add up to approximately 6% to 8% of the purchase price.

It's also important to budget for renovation or repair costs if the property is not new.

How does the mortgage process work for foreigners in Japan?

Foreigners can obtain a mortgage in Japan, but the process can be more complex than for Japanese citizens.

Most banks require a permanent residency status or a Japanese spouse as a guarantor, and the loan-to-value ratio is often capped at 70%.

Interest rates for mortgages in Japan are relatively low, typically ranging from 0.5% to 2% depending on the bank and loan terms.

What is the average price per square meter for an apartment in Tokyo?

The average price per square meter for an apartment in Tokyo varies significantly depending on the location and type of property.

In central areas like Shibuya or Minato, prices can reach up to 1.5 million yen per square meter.

In more suburban areas, prices may be lower, averaging around 600,000 to 800,000 yen per square meter.

Are there any restrictions on property ownership for foreigners in Tokyo?

There are no legal restrictions on property ownership for foreigners in Japan, including Tokyo.

However, purchasing land may involve additional scrutiny, especially if it's near sensitive areas like military bases.

Foreign buyers should also be aware of the language barrier and may need to hire a bilingual real estate agent or lawyer.

What taxes are associated with owning an apartment in Tokyo?

Property owners in Tokyo are subject to an annual fixed asset tax, which is approximately 1.4% of the assessed value of the property.

Additionally, there is a city planning tax, which is about 0.3% of the assessed value.

Upon purchase, buyers must also pay a real estate acquisition tax, which is generally 3% of the property's value.

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How long does the entire buying process typically take?

The process of buying an apartment in Tokyo can take anywhere from three to six months, depending on various factors.

This includes the time needed for property search, negotiation, securing a mortgage, and completing legal procedures.

Delays can occur due to paperwork, especially if translations are needed for foreign buyers.

What should I know about the building management fees?

Building management fees in Tokyo are monthly charges that cover the maintenance of common areas and facilities.

These fees can range from 10,000 to 30,000 yen per month, depending on the building's amenities and location.

It's important to factor these fees into your budget, as they are mandatory and can increase over time.

What is the role of a real estate agent in Tokyo?

A real estate agent in Tokyo assists with property searches, negotiations, and the completion of necessary paperwork.

They can provide valuable insights into market trends and help navigate the complexities of the Japanese real estate system.

Agents typically charge a commission of 3% of the property's purchase price, plus consumption tax.

How does the property inspection process work?

Property inspections in Tokyo are not mandatory but are highly recommended to identify any potential issues with the apartment.

Buyers can hire a professional inspector to assess the property's condition, which typically costs around 50,000 to 100,000 yen.

The inspection report can be used to negotiate repairs or price adjustments with the seller.

What are the common types of apartments available in Tokyo?

In Tokyo, apartments are commonly categorized as "mansions" or "apatos," with mansions being larger and more modern.

Mansions are typically reinforced concrete buildings with multiple stories, while apatos are smaller, wooden structures.

Buyers should consider their lifestyle and budget when choosing between these types of apartments.

How does the resale market for apartments in Tokyo compare to new properties?

The resale market in Tokyo can offer more affordable options compared to new properties, with prices often 10% to 20% lower.

However, new properties may come with modern amenities and better energy efficiency, which can be appealing to some buyers.

Resale properties may also have higher maintenance fees due to the age of the building.

What are the potential risks of buying an apartment in Tokyo?

One potential risk is the depreciation of property value, especially in less desirable areas or older buildings.

Natural disasters, such as earthquakes, are also a concern, so it's important to check the building's earthquake resistance standards.

Foreign buyers should also be aware of currency exchange rate fluctuations, which can affect the overall cost of the investment.