Key Factors to Consider When Buying a Second Home in Japan

Whether you're enchanted by Japan’s serene countryside, historic towns, or bustling cities, buying a second home here has become an increasingly appealing option for many. From beautiful akiya (vacant homes) to modern city apartments, there’s a range of opportunities to explore. However, purchasing a second home in Japan comes with unique considerations. Here’s a guide to help you make an informed decision.

1. Understand Foreign Ownership Laws

The good news? Japan allows foreigners to own property and land without restrictions. This means you can purchase a home as a non-resident, whether it’s a rustic kominka in the countryside or a sleek condo in Tokyo. However, it’s important to remember that property ownership in Japan doesn’t automatically grant residency or a visa. So, if you’re planning to spend extended time in your Japanese home, you may need to explore the right visa options.

2. Location: City vs. Countryside

The location of your second home will greatly impact the buying experience and long-term enjoyment of the property. If you’re looking at a city property, be prepared for a higher initial investment and potentially greater competition.

On the other hand, rural properties can be more affordable, but might come with challenges like limited transportation, fewer amenities, and a more complex buying process. Many rural areas have stunning akiya properties available, often with local incentives or subsidies if you plan to restore and live in the home, even part-time.

3. Maintenance and Upkeep

Older homes, particularly traditional ones, may require more upkeep, especially if they’re left unoccupied for long periods. Kominka homes, for instance, often have unique features like sliding doors, tatami rooms, and wood beams, all of which need regular maintenance. Consider hiring a local property manager to check on your home periodically, especially if it’s located in a more remote area where weather and time can have a larger impact on the property.

4. Financing Options for Foreign Buyers

Japanese banks tend to be conservative with their loans, and financing can be tricky for non-residents. If you’re residing in Japan or hold a long-term visa, it’s easier to obtain financing. Otherwise, it may be worth exploring foreign lenders or paying in cash if that’s feasible. Some regional banks have begun offering loans specifically for akiya purchases, but a financial advisor can help clarify your options.

5. Property Taxes and Ongoing Costs

Japan has two primary taxes for property owners:

• Fixed Asset Tax: Roughly 1.4% of the assessed value of the land and building.

• City Planning Tax: Up to 0.3% in designated city planning zones.

These taxes are paid annually and vary by location. For instance, taxes in rural areas are often lower than those in urban centers. Be prepared for these ongoing costs in your budget, and don’t forget utility bills, insurance, and maintenance costs, particularly for older homes.

6. Cultural and Language Barriers

While Japan is welcoming to foreign buyers, language can still be a barrier in the purchasing process. Many real estate documents, local agents, and government offices communicate primarily in Japanese. Working with a bilingual real estate agent and property manager can streamline the experience and help you understand the finer points of Japanese property law.

7. Short-Term Rental Restrictions

If you’re considering renting out your second home as an Airbnb or vacation rental when you’re not using it, Japan has strict regulations for short-term rentals. Local governments have varying rules on how many days per year you can rent out your property, and many areas require that a property manager be on-site. Make sure to check the local ordinances before you plan on using your second home as an income property.

8. Renovation and Restoration Potential

Japanese akiya and older properties often come with opportunities for renovation, and many prefectures even offer financial assistance or subsidies for those willing to restore vacant homes. Before purchasing, check the structural integrity of the property, as homes in Japan are often built with traditional materials and methods. Renovation can transform an older home into a charming retreat, but be sure to budget for construction costs, which can vary significantly depending on the property’s condition and location.

9. Zoning and Land Use Regulations

Japan’s zoning laws are strict and clearly designate how land can be used. For example, residential areas have specific restrictions on commercial development. If you’re thinking of using your second home as a future business or rental property, be sure to review the zoning laws carefully. Additionally, zoning laws also cover height restrictions and building materials in specific areas, especially historic districts.

10. How Old Houses Japan Can Help

Navigating Japan’s real estate landscape as a foreigner can be a challenge, especially when it comes to finding and buying the right property. Old Houses Japan is dedicated to helping foreign buyers find unique properties, like traditional akiya homes or charming machiya townhouses, and guiding them through the entire purchase process. We’re here to help you understand the laws, manage language barriers, and connect with local experts who can assist with renovations or property management.

Closing Thoughts

Buying a second home in Japan can be a rewarding experience, offering a unique blend of tradition and modernity. From finding the right location to managing upkeep, careful planning and local expertise are key to a successful investment. By understanding the nuances of Japan’s real estate market, you can enjoy all the rewards of owning a second home in this captivating country.