How to Buy a House in Japan

Even without permanent residence

Said house. Photo by author. 

The garlic stench was filling the bathroom, gagging me to death. 

“Where is this coming from?”

Every summer, without fail, this smell invaded my apartment in Kyoto. And with it came the seasonal mold. 

At night, as I tried to sleep, I could hear the next-door family screaming at each other; even slamming things into the wall. 

I wanted my Valhalla, my castle where life could be lived on my terms. In one word, a house. 

What follows is how I got it. 

This story is inspired by Iain Stanley’s recent article on whether buying is better than renting in Japan. Check it out for a great analysis of that question. 

Here, I’m going to take you through my journey. From having a dream to the many rejections I faced in trying to get a loan, to even getting scammed on a property, to finally purchasing my home. 

Getting the loan

As Iain stated in his article, foreigners don’t get housing loans without permanent residency (PR). In most cases. 

I don’t have PR yet I did get a loan. 

One bank, SMBC Prestia, said sure come by our office and we can get you that loan! My gf and I walk into the bank to an assault of ten suited employees shouting irashaimase!

We ascended the elevator to the eleventh floor and were seated before a slick, fancy suit-wearing guy who probably handles multi-billion dollar companies. I was “slightly” nervous. 

Now, my gf at the time (now wife) had explicitly said on the phone that we were not married, is that OK? Guy on the phone said yes. About twenty minutes into our loan interview the slick guy said something about us being a married couple so I corrected him. The look of death came over his face as he scowled at his underling beside him (I’m assuming he was the phone guy). 

“You said they were married,” yelled the slick guy.

“Yes, because they told me they were!” he lied bold-facedly. 

We had to walk out of the office to a heavy cloud of embarrassment. Good start. 

After that, I applied for loans from ten different banks. A few of them rejected me outright because I didn’t PR. Three of them said yes IF I got married. My gf and I didn’t really see the point of marriage at the time even though we were going in on a house together.

One bank said sure you can get the loan without getting married, but the interest rate is going to be 4.5%. If you’re from a country with a situation similar to America, you might think “damn that’s a good deal.” The average rate for a 30-year fixed mortgage in the States is currently 7.42%. Getting 4.5% is a deal. That is until you compare it to the average Japanese rate of 1.3%. If I accepted that deal I’d be paying nearly four times as much on interest as the average person in Japan. Still, this one bank did show that you can get a loan without PR and without being married. 

My gf and I wanted a better interest rate. And we loved each other. So we got married, naturally. Because of that, we scored a 2% interest rate, only that high because we got various types of insurance such as writing off the loan if I get cancer. Still, though, the bank told me it was 1% higher than it would have been otherwise if I had PR. So is PR necessary? No. Will it make life easier for you, get you a lower interest rate, and make you more attractive to more banks? Yes. 

What do you need to get a loan then?

• Have a stable, permanent job. If not, at least a good-paying and reputable one. 

• Have a Japanese person willing to co-sign with you. 

• If you want a better interest rate, be married to a Japanese person. 

• Having PR makes everything easier. 

That’s pretty much it. They never checked my criminal background and didn’t care that I was on a three-year visa. All that mattered to them was that I was financially OK and I had a reason to be tied to Japan, i.e., be married. 

Sunrise from my backyard. Photo by author. 

Getting scammed on land

After a few failed tries, my gf and I chose the land we wanted. It was small but could fit a backyard big enough for a small gathering. It also had a view of the lake from where the second floor would go. And it was cheap! Almost too good to be true right? Yep.

The man who was going to sell us the land, Akira, showed up to the meeting. With orange hair, a gold chain around his neck, and gold rings adorning his fingers, he looked more like a host than a real estate agent. 

“So we can get you the approval on this land in three months and you’re ready to go,” Akira assured us. 

Three months later we had another meeting, expecting to officially sign the lease on the land and buy it. 

“Sorry, the original owner of the land has been difficult to reach, it’s gonna take another three months,” Akira assured us once again. 

“Well, we do want the land, so I guess we could wait. But for sure you’ll have it all ready for us by then?” I asked.

“No problem.” 

Three more months passed, and you already know where this is going, the landowner was still unreachable. 

Now we were getting pissed off. 

We decided to have a meeting with Akira, the house-making company, and their lawyer. The lawyer, who had been silent but present at all other previous meetings, finally decided to press Akira.

“You need to tell us exactly when they can get this land or we will nullify the contract” 

Yeah, we had a contract with the guy and already gave him the equivalent of $10,000 as a down payment on the land. 

“Well, you see, it’s kinda a difficult situation. The guy who owned the land is in a hospital and is so old he doesn't remember who he is, so he can’t legally sign off his land yet. Give me three more months and I’ll go to the hospital every day and I’ll get him to sign!”

This was the first we had heard this. I was blown away by the insanity of my situation. 

“I’ll give you one week. Go talk to the guy and if he isn’t lucid enough to sign over the land we are going to have to break the contract,” I said. 

Akira accepted the challenge and went to that hospital every day….I think. At least he said he did. But after a week the land owner hadn't shown any signs of coherency that the doctor was willing to accept as “being aware of the situation.” So, we broke the contract. Thankfully, we also got all of our money back from the downpayment.

This shattered our dreams for a bit. We had found the perfect land, the homemaker was ready to go, and we were pre-approved for a loan. Now what? 

Getting the land

With our dream plot of land now gone, I set out like a madman to find another. I discovered two different properties that were decent. Put in a bid to buy them and missed out on both by just a few days. Someone else had gotten there before me. 

The homemaker guy we were working with also helped me out by finding potential plots and driving me to them. He had been working with us for an entire year now and was desperate to actually make a sale. I’m sure he would have burned down a house or two to get us some land. 

We struck gold eventually and found a space that was perfect. The funny thing is that I had seen it before but put it out of my mind when I was going to get a better option. By “better” I mean cheaper This land, which I did end up buying and building my house on, was more than double the price of Akira’s land. That hurt my pocket…well, hurt future me’s pockets. The good thing, though, is that this more expensive land was also bigger, closer to a station, and had a view of Lake Biwa. Now that I’ve been living in this house for two years, I can’t imagine living in Akira’s scam land. Everything works out. 

Things to consider when buying a home in Japan

I’m not going to give a list of general knowledge you should have when buying a house. Things like “Fixed rate mortgages are better than variable,” or “Make sure you pay off 20% of the house before getting a loan.” That’s all good advice, but not Japan-specific. Not that they don’t apply to Japan, not at all. Rather, if these types of information are more generic and can be applied to all housing markets/found on better blogs than this one. 

Here’s a list of some practical information to keep in mind if you want to buy a house, specifically in Japan:

• PR is not necessary but will make it much easier to get a loan.

• If you don’t have PR, you’ll need to either be married to a Japanese national or have a stable, good-paying, job. There may be some exceptions to this but for most people, there are not. 

• If you want to buy a new house, be prepared to spend hours upon hours in meetings with the housemaker (but also the bank, lawyers, etc.) deciding every detail; such as, “Exactly how high do you want your kitchen counter to be?” My wife and I are extremely casual people and didn’t care at all about these details and the meetings STILL went for at least three hours each time we had them (and we had at least a dozen meetings). 

• These meetings (unless you find a rare English speaker) will be in Japanese. Not only will this max out your Japanese, no matter how good, but you will also need to be careful to be extra nice to your Japanese spouse (if applicable) and not expect them to understand everything.

• If married, you will need to decide whose name goes on the property as the “head.” You will also need to decide what percentage of the land/house is owned by you vs. your spouse. For example, my name is listed as head on the property and I own 60% of everything with my wife having the rest. I’m not sure if this would translate into her getting 40% of everything in the event of divorce exactly but I imagine it is possible. 

• You will need to decide about insurance. Earthquake and other disaster insurance is mandatory but you can choose between plans. The types of insurance not required are cancer, death, disability, heart attack, and many more. Basically, if these things happen to you or your partner, all or a portion of the loan can be forgiven. Banks hand out information for their insurance plans. Of course, they raise the amount of interest owed if you choose them. 

• Be prepared for your house’s value to decline over the years. Unlike in the States, where your home can be an appreciating asset that grows over time, in Japan homes typically fall drastically in what you can sell them for after they’ve been lived in. Regardless of quality. 

• Do you want a Shinto priest to bless your land, exorcise evil spirits, and invite good kami (gods) to watch over it? Your house-maker will ask you. We declined because it was ¥50,000. We may or may not have ghosts haunting our backyard because of this. 

Conclusion

This advice is by no means exhaustive. But I hope that it sets you on the right course, armed with useful knowledge. 

If you want to make Japan your forever home, or at least just have a home that you own for a little while, you can do it. Even without PR and without being married it is possible if you don’t give up. I was rejected dozens of times for loans and I missed out on many ideal pieces of land. But in the end, I succeeded and got the house I’d been wanting for years. A place to not just house my body while I sleep. A place where my life can be built.