With the dollar currently so strong against the yen, many people abroad are looking at the Japanese real estate market as an attractive investment.
But understanding the basics of buying a home in Japan is important before making a decision. Prospective buyers living overseas need to be aware of real estate market trends, interest rates, financing options based on their visa status, consulting with banks to find out how much they can borrow, tax benefits and tax deductions.
One company which provides assistance to people living overseas and foreign residents in Japan, who are interested in buying a home in Japan is LINC Inc which has partnerships with various professionals such as architects, lawyers, judicial and administrative scriveners.
Japan Today hears more from LINC CEO and founder Shinichi Kawamura.
What is your background?
My background is primarily in business consulting and real estate. I have also worked for marketing firms abroad. After graduating from Japanese university, I worked for Sekisui House, the largest construction company in Japan. Then I went to the UK to study for an MBA.
After coming back to Japan, I worked for a consulting company providing consulting services mainly to construction and real estate companies. I established LINC in February 2018.
What services does LINC offer?
Real estate is our main business. We provide support for registration and basically all other services related to real estate. In addition, we offer architectural design and remodeling services.
How many in your team? Are they bilingual?
We are a team of four. And all four of us can speak English.
How do you market the company?
Basically, the online seminars held by GPlusMedia are opportunities for us to get in touch with our clients. We only target foreigners who are living or planning to live in Japan. Therefore, since our target population is not that large, we do not engage in mass marketing. Referrals and word of mouth are our other major marketing tools.
How has the pandemic affected LINC’s business?
The pandemic very much affected our business. For the past three years, property owners were reluctant to sell their own properties, and there was a period of time when prospective buyers wanted to buy property but could not. Then, demand was there but supply was not, and real estate prices continued to rise.
Unfortunately, in addition to the pandemic, there was another factor that made the real estate market even more challenging. In Japan, there was what we call the "wood shock," a sharp rise in the price of lumber. This increased the value of buildings, including detached homes.
This period was a very difficult time for prospective buyers, as there were few properties on the market that they wanted to buy, and even if there were, they were too expensive to purchase.
Do you get a lot of inquiries from foreigners overseas and in Japan who wish to buy property?
Yes, we do get a lot of inquiries. Recently, we have been receiving more inquiries from foreigners living in Japan. Perhaps this is because COVID-19 has settled down and Japan has become more accepting of foreigners.
What are prospective buyers' main concerns?
One of the most frequent inquiries is whether they can get a bank loan. Currently, Japanese bank loan interest rates are very low, in the low 0.5% range for variable interest rates, for example. Many foreigners are thinking of taking out a loan at this time.
However, in order to obtain a loan from a Japanese bank, you must have a permanent residence or working visa in Japan. You must also have lived in Japan for at least one year (there are exceptions). You have a high probability of getting a loan if you have worked and lived in Japan for at least three years and at least five years, respectively.
With the dollar strong, is now a good time for foreigners overseas to buy property in Japan?
Of course. It is a prerequisite that you buy a place where the real estate you are buying is of high value, but now is a good time for foreigners to buy real estate in Japan, especially if they have cash abroad.
One thing to note is that foreigners who do not have permanent residency status are basically required to pay 20% of the real estate value in cash when taking out a loan in Japan. Therefore, many people pay this 20% in cash with their savings abroad.
What are some things that surprise foreigners wanting to buy property in Japan, that they didn’t know before you told them?
One thing in particular that surprises them is the lack of price negotiation. Occasionally, they may make an offer at a very low price relative to the indicated price. However, this rarely works in Japan. There is no culture of repeatedly haggling over the price, as in auctions. In many cases in Japan, if you offer a very low amount against the indicated price, the property owner will refrain from selling to you. I believe this is because Japan has a tradition of valuing civility and wabisabi more than business. Japanese people may feel that they do not want people who are not like themselves to live in the house they are selling.
This is gradually changing these days, but the tendency still remains.
In webinars you have spoken about **akiya (abandoned vacant homes). What are the main risks that potential buyers need to consider before such properties?**
Buying an akiya is very difficult. In some cases, it is more expensive than buying a regular house because of the maintenance and remodeling that is needed. In addition, the average real estate agent will not deal with the house because of the special skills required to survey the house.
Another point is that since most vacant houses are older, loans cannot be used. Therefore, it is necessary to pay in cash. Because of this need for special information, it is necessary to consult with a company that offers services such as "vacation rentals".
For more information on LINC, visit https://lincon.co.jp/© Japan Today