So you're thinking of buying a house in Japan? As I and my family have recently completed this process, I though it might be useful to someone out there if I wrote a summary of my experience on this blog. In this section, I summarize the minimum requirements you'll need before you take the plunge:
Terms used in this article
頭金 Atama Kin: Deposit
諸費用 Shohiyou: Misc. expenses
永住権 Eijuuken: Permanent residency
Money
- They say you'll need 20% of the property in cash for the "atamakin". This means, for example, if you were looking to buy a 40 million yen property, you will need 8 million yen in cash to put down as a deposit.
- In addition, there are 諸費用, or misc. expenses that you will have to cough up at various stages of the transaction. The amount depends on whether you go for a new house or an old house. For a new house, you can expect these misc. expenses to be between 3-5%. For and old house, the expenses will be around 10%. To return to our 40 million house example, you will need between 1.2 to 4 million yen for the misc. expenses
- This means your your total up front burden for a 40 million yen house will be between 9.2 and 12 million yen.
- In our case, we only had 4 million in savings, yet the cost of our desired property was around 26 million yen. 2 million was for atamakin, and 2 million was said to be for expenses. This means our expenses were around 7% (Which on reflection seem pretty high, as our house was new) and our atamakin was less than 10%, again at 7%. So your millage may vary.
- Not included in the above: Moving expenses, furniture, air conditioning units, TV antenna, curtain rails, lighting. Again, this was our experience, so your deal may vary.
Needed for the loan
- As a foreigner looking to borrow money in Japan, it will help if you have permenant residency or 永住権 eijuuken. For eijuuken, as a rule you'll need to have lived in Japan continuously for 10 years. (5 years if you have been married for 5 years or over, to a Japanese national.) However, I was able to secure a loan and do not have PR. I have been living in Japan continuously for 5 years, which I believe was what tipped the balance in my favor. For those who have not been here that long, it may be worth waiting and saving a little longer before you formally apply for a loan.
- You will also need a sponser, 保証人 hoshounin, who is a Japanese national. In my case, my wife was able to act as my guarantour. If you are not married, then it might be time to get friendly with the neighbors/people at work.
- You should have been working at the same place of employment, for 3 years minimum. In my case, 2 years 3 months proved to be enough, but I was told that people failing to satisfy the 3 year rule of thumb was a frequent cause of being rejected finance.
Summary
If you satisfy the above conditions, then it can be surprisingly simple for you to buy a house in Japan. You should have a good level of Japanese if you want to be involved in the process at all level of details; if you struggle with Japanese reading and writing then you will almost certainly struggle as the range of forms to read and sign is mind boggling. However, with a supportive spouse or close friend (Who you really trust!), the process can be smooth and painless.
In subsequent articles I will talk more about choosing an agent, the merits of new vs second hand, the merits of houses vs mansions, city vs county, constructing a house, details of finance including interest and a breakdown of fees, the quality of Japanese houses as well as other related topics.
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