In recent years, a number of non-Japanese have bought properties in Hakuba for both private and commercial reasons. Many buyers are amazed at the low prices of land and buildings compared to other international ski areas.
As general background, Japan land and building prices have fallen significantly in both urban and rural areas during the last fifteen years. Land prices in Hakuba peaked in the 1990s and have since fallen to 30% of their level during the 1998 Nagano Winter Olympics.
Unlike the West, buildings in Japan are like cars in that they gradually depreciate until only the value of the land remains. This is mainly due to Japan’s humid climate and the widespread belief that houses will only last twenty-five to thirty years. This contrasts starkly to the West where buildings can be hundreds of years old. In recent years, improvements in materials and building practices mean that more recent structures in Japan should last longer than their post-war predecessors. Many of the homes and lodges built in Hakuba during the Japanese ski boom (i.e., the 1980s or thereabouts) were built with quality materials and should only need minor work to reach acceptable Western standards.
The Hakuba Valley itself is home to over seven hundred hotels, lodges, and inns. Since peaking in the early 1990s, the number of domestic skiers has plummeted, leaving a massive oversupply of beds – both mid-week and during the off-season. Many owners bought during the boom and paid inflated prices for land. Some are still burdened with debt on properties that are only worth a fraction of their original value.
The combination of low prices and increasing international interest in Japan as a ski destination has encouraged a number of non-Japanese to buy lodges and homes in Hakuba. While this new demand is yet to cause a large across-the-board increase in prices, many of Hakuba’s new residents have successfully established businesses and are enjoying the lifestyle gains that come with living in this lovely area. Though we urge caution to those wishing to invest for capital gain, we think some good deals have been made.
Here’s a short FAQ for those thinking of buying.
1. Are foreigners and non-residents able to buy real estate in Japan?
Yes, any non-Japanese can buy real estate in Japan.
2. What is the general sales procedure in Japan
The buyer first signs a Commitment to Purchase document. This assures the real estate agent that they can take the property off the market and prepare the necessary documentation. It takes about one week for the agent to draw up the statement of important matters and real estate contract. Upon signing (or stamping) the contract, a deposit of 10% or 20% is payable. In Japan, the deposit is paid directly to the seller. The remaining balance is paid about four weeks later. At this time, the solicitor registers the transfer of title and creates the title deed.
3. I’m not here all year round. Who will clear the snow?
There are property and snow management companies in Hakuba who can take care of everyday running and upkeep.
4. Will I be able to get a mortgage from a Japanese bank?
It is virtually impossible for non-resident foreigners to obtain financing through a Japanese bank.
5. What taxes are involved in real estate purchases?
At purchase, a buyer will need to pay acquisition tax. This is 3% of the council’s evaluation of the real estate in question, and will also be levied on any registered building subsequently constructed on purchased land. From January 1st of the year following the purchase, the buyer will be eligible to pay fixed asset tax. This is 1.4% of the council’s evaluation and is payable in May of the same year. For individuals selling on for a profit within five years, a capital gains tax is levied in the region of 40%.
6. What is the role of the solicitor in Japan?
The solicitor is responsible for checking the real estate contract and statement of important matters. They prepare the necessary information, register the title transfer and create the title deed. They also check that the real estate in question is free of debt. Strictly speaking, the “solicitor” involved during a real estate transaction is actually a judicial scrivener. The legal responsibility of ensuring all the information regarding the property is correct lies with the real estate agent and their transaction manager. They can be held legally responsible for providing false information, intentionally or negligently.