There are no specific laws or regulations restricting foreigners from purchasing real estate in Japan. Foreign individuals and corporations can acquire property in the same manner as Japanese individuals or corporations. However, non-residents acquiring real estate in Japan should be aware of the following two regulations:
1. Ex-Post Reporting Requirements under the Foreign Exchange and Foreign Trade Act
If a non-resident acquires real estate or rights related to it (such as leasehold rights or mortgages, including cases of inheritance), they must submit a report (Form 22: Report on Acquisition of Real Estate in Japan or Rights Relating to It) to the Ministry of Finance via the Bank of Japan within 20 days of acquisition.
For this purpose, a “non-resident” is defined as any individual or entity that is not considered a “resident” of Japan.
[Individuals] Foreigners are treated as residents if they are working in an office in Japan or six months has passed since they entered into Japan.
[Corporations] A corporation is considered a resident if its principal place of business is in Japan. However, a foreign branch of such a corporation is treated as a non-resident, whereas a Japanese branch of a non-resident corporation is considered a resident.
The report must include the following details:
1. Type of acquisition (e.g., purchase)
2. Square measure of the real estate
3. Location of the real estate
4. Date of acquisition
5. Consideration for the purchase
A non-resident’s Japanese agent, such as a real estate agent, may submit this report on their behalf.
Exemptions: This reporting requirement does not apply if the acquisition falls under any of the following categories:
(a) The property is acquired as a residence for the non-resident, their relatives, or employees (Note: Vacation homes or second homes do not qualify for this exemption).
(b) The non-resident operating non-profit business in Japan acquires the property for such business.
(c) The non-resident acquires the property for use as their own office.
(d) The non-resident acquires the property from another non-resident.
2. Regulations under the Act on the Review and Regulation of the Use of Real Estate Surrounding Important Facilities and on Remote Territorial Islands
Foreign buyers must also be aware of the “Act on the Review and Regulation of the Use of Real Estate Surrounding Important Facilities and on Remote Territorial Islands” (Act No. 84 of 2021). Regulation under this Act applies to all property users, regardless of nationality. Under this Act, areas within approximately 1,000 meters of important facilities (such as defense installations) or within remote territorial islands may be designated as “monitored areas” to prevent their use for activities that could disturb the function of these facilities or islands (“Disturbing Activities”).
Additionally, if the functions of these facilities or islands are deemed particularly important or vulnerable, and irreplaceable, the government may classify them as “special monitored areas” where stricter regulations apply.
Key provisions include:
– The Prime Minister reviews the use of real estate in monitored and special monitored areas to prevent Disturbing Activities.
– In special monitored areas, certain transactions involving or relating to the transfer of ownership must be reported in advance.
– If real estate in a monitored or special monitored area is used for Disturbing Activities, the Prime Minister may issue recommendations or orders to take corrective actions.
Disclaimer: This column intends to provide a high-level summary of the subject matter, and it does not aim to provide exhaustive information. Also, this column is for informational purposes only and does not constitute legal advice. For specific issues, we recommend consulting an expert. If you have any query, please contact us via inquiry form in this homepage.