Land ownership in Japan

In Japan, land is classified into different categories based on various laws and regulations. The regulatory organizations are as follows:

• National Land Use Planning Law,
• the Building Standards Law,
• the Agricultural Land Law, and
• local ordinances set by municipal governments.

Types of land 

1. Urban Land: This includes areas designated for urban development, such as residential, commercial, industrial, or mixed-use purposes.
2. Agricultural Land: Land designated for agricultural use, including farming and forestry. Special regulations often apply to this type of land to protect agricultural activities.
3. Forest Land: Areas covered by forests, which are regulated to preserve Japan’s natural environment and biodiversity.
4. Natural Parks: Land designated as national or local parks, preserved for conservation and recreational purposes.
5. Conservation Areas: Areas designated for the protection of natural habitats, endangered species, or cultural heritage sites.
6. Residential Land: Specifically designated for residential purposes, including single-family homes, apartment complexes, or condominiums.
7. Commercial and Industrial Land: Zoned for commercial or industrial activities, such as office buildings, factories, warehouses, or retail stores.
8. Special Use Zones: These are areas with specific regulations or restrictions due to factors such as historical significance, environmental concerns, or disaster prevention measures.
9. Public Land: Land owned by the government or public institutions, including parks, roads, and infrastructure.

Types of land ownership

Basically there are two types of ownerships, vis freehold and leasehold.

Freehold ownership

Freehold Ownership, known as “shoyuken” in Japanese, grants absolute ownership rights over both the land and any structures erected upon it. In the case of apartment complexes, each unit includes a proportionate share of the land beneath the building. Freehold ownership is widely favored due to its complete control and possession of property assets.

Buying Process:

1. Application: Submit a preliminary application (known as “Kaitsuke-Shomeisho”) to express interest in the property.
2. Explanation of Important Matters: Upon approval, a real estate agent provides guidance through the remaining purchasing steps.
3. Contract: Both parties sign a Sales Agreement Contract, with the buyer making a deposit (“tetsukekin”) and setting transfer dates.
4. Transfer of Ownership: Complete payment of remaining fees, including real estate agency commissions and insurance, while registering as the new landowner with the assistance of a judicial scrivener.

Leasehold ownership

Leasehold Ownership, or “shakuchiken,” entails ownership of property without full control over the underlying land. Instead, leaseholders possess the property while the land remains owned by another party. Leasehold properties are less common but may offer cost-saving opportunities, particularly in urban centers like Tokyo, with prices potentially 30% lower than freehold equivalents.

Types of Leasehold:

1. Old Leasehold: Governed by older laws with varying lease terms, often subject to landlord renewal discretion.
2. New Leasehold: Introduced in 1992, mandates a 30-year initial term with subsequent automatic renewals, though landlords retain the right to refuse renewal for valid reasons.

Buying Process: Acquiring leasehold property involves negotiation with the landowner, often requiring approval and payment of transfer fees. Real estate agencies can facilitate negotiations, guiding buyers through lease agreements and associated fees.