Tokyo house

Buying a house in Tokyo

We have been thinking about buying our own place for a while, just wasn't sure where. It could be when we move back to New Zealand, or, perhaps some other country (a few offers have popped up), and maybe Tokyo itself. We have lived in an apartment in Tokyo for about 13 years, and that has been great. But it would be nice if it was *ours*.

I have been keeping an eye out on the realestate search pages, just to see what is available. We were looking for something around 4LDK, so that the boys can have separate rooms. A stand-alone house would of course be very nice, but also checked a few apartments and mansions. (Japanese mansions are not mansions!)

In March 2015 we asked to see a couple of houses, one in particular stood out to us. I had seen it on the market for a while (over a year at least), it has 131m^2 land, and 220m^s inside, so you know it is expensive! Quite a bit outside our budget, maybe if it was half price! It was full of furniture and garbage, apparently the previous owner had not managed to keep up with the payments, and the bank foreclosed the house. But that is an interesting thing, almost all places we looked at to buy, were "not clean". "Would it have killed you guys to at least vacuum?". Talking about the places that were empty. It seems the Japanese always "remodel" after they move in, so cleaning isn't paramount?

One interesting thing that popped up when discussing the financials of the very expensive property, is that they mentioned the realtors fee, and the fee to the bank, and then "you will need to give a couple of million gift to the previous owner". Wait, what? Clearly I feel for the previous owner, but that is peculiar? I, the buyer, have to give a gift of money, to the guy who could not pay his mortgage and it was foreclosed? Clearly, I know nothing about realestate.

It is also common for the realestate staff to want to pick us up in a car, to take us to the property, even if it is just in our area. I understand that the "customer is king" is important, and so that is part of the service. But sometimes, it was much more convenient for us to cycle over to the property. I also found I enjoyed the challenge of finding the Internet listed properties in an area, by just going on the images and other clues. Good way to get out in the weekends. We were quite lucky that the realtor had someone who spoke in English, this was a great benefit to our understanding.

After seeing a (incredibly cluttered) house, which apparently had to pay a fine every month for being over-sized (so you can purposely build too big and just pay a little more?), the realtor popped in to show a bit of land on the way back home...

The land

We had not really thought about looking at land at all, so initially I was not really looking seriously at it. But it had some interesting potential. Off the main road, still near the Odakyu line (as we are already used to), in the same area so the school does not change for the kids. Corner lot. Had the typical blue tarp covering it, of course, this is Japan after all. 87m^2 land for ~60M yen. This is shibuya-ku so, yeah, expensive.

Land

One thing that is interesting is the new rule about having a 4m access road to new houses. (For emergency vehicles). Since the road to this lot (or rather, the house that used to stand there) does not, there is a 2m "setback" on the land where you are not allowed to build. You own the land, but can't place any permanent buildings on the part which is for the 4m access road. So, it feels like you are buying 68m^2 for ~60M yen.

But not really. In Japan, the land comes with two percentages. With this land, those values are 60% and 300%. This means that you can build (foot print) on 60% of your land area, which is from the original 87m^2. Ie, about ~54m^2 can occupy the land area. Which is smaller than the 68m^2 (setback included). So it is more about *where* on the land you can place your building, in our case, toward the west corner (bottom left on the image). This leaves the setback area for parking our bikes and similar.

The second number, 300%, is the total size you are allowed to build. Ie, when adding floors. As it happens, 3 floors at about 54m^2 is only about half that, so that has not yet been an issue. There is also a sunlight rule, but I'll bring that up later.

When talking financials with the realtor, they explained that if I got an average mortgage for the 60M yen land, the monthly payment would be about 16man yen. (160,000) But, while there is no house on the land, you can pay just the interest on the mortgage, about 4.6man a month. Until the day you move in. You get a second "part" to the mortgage that pays for the house building, and start paying the full amount once you move in. So the system is not completely against you, if you consider buying land and building a home.

At one point we took some sticks, to make a 5m long pole, put a camera at the end of it to get a 360 of the view from 3F. A drone would have been easier, maybe.

Very much a roller-coaster ride this whole adventure, some days we are all for-buying, and others days against. A fair bit of stress involved, and you are quite aware that the easiest thing to do, is to do nothing. (not buy)

Design

I looked around for a way to design a house, and there are many tools on the Internet. Some for browsers, some free apps, others to buy etc. But the foreign tools did not really work out. It became clear that I needed to use a Japanese made design program, to get the "standard" sizes of things, like the set bathrooms, stairs, genkan, and all that. Clearly there is a monopoly going on here, as it seems there is just one software, and it was quite expensive (for my hobby level interests). So I went a bit more oldskool, and started measuring things at home to get an idea of how much space are needed. Typical Japanese apartment bath/shower room seems to fit in 2m x 2m, and so on.

Eventually, I sent a sketch to the realtor that I had made of what I thought could work on the land we were looking at. Features 2 bedrooms, bath/shower, toilet on 1F, 3 bedrooms and toilet on 2F, the LDK on 3F with small balcony, and rooftop balcony above that.

My first design

A couple of days later I received a proper (Japanese style) floorplan based on my initial sketch. Some interesting differences showed up. I figured that the top floor (3F in our case) would be the LDK area, ie, any "awake hours" we would spend here, so it should have the better "view" and sunlight. Since the bedrooms are generally only for sleeping, it would seem a waste to have those on the top floor. This doesn't appear to be the mindset here, both designer companies initially put the LDK in the middle, and bedrooms at the top. Perhaps there is a reason for it which we will learn one day...

Anyway, we arranged a meeting with the first design company. We had no idea what to expect of course. So the realtor is not really connected with the house design, and eventual, building of the house. The realtors just assist with connecting us with those companies, so we can hash out ideas. It was quite interesting and productive. We could explain the reason behind some of our ideas, and they could explain why certain things could not be done. Usually load-bearing walls required, but also, emergency access - like that of the 3F balcony - has to have room for access.

They also showed that the rooftop balcony was "too tall", and that 3F had to be made narrower. We just assumed we had reached some height limit, and could not have a rooftop balcony.

It was actually a few days later that we finally had it explained to us. There is a sunlight rule in Japan, were you draw a line from the centre of the road(s), at some angle I have yet to learn, up into the sky. Everyone using the road(s) are entitled to sunlight. This is why the North and East side of the house (since the roads are North and East) has to have angled roofs, and "come back" in a little in the design. I had placed the rooftop balcony stairs in the east corner which is the worst place for it. Had the stairs been on the South, or West sides, there would have been no issues.

We got a quick estimate at about 20M to build the house, going up to 25M including all the extras, insurance, realtor fees, and stamps. Interestingly, you have to pay a few man yen for a stamp for the land, stamp for the house, stamp for registering the land, stamp for registering the house. Just think of it as lots of small taxes.

After this, we also met with (one of?) the biggest house builders in Japan, and they showed us their design, and floorplan. Quite different to to my initial sketch, but also some neat ideas. They too placed LDK in 2F, but had no issues moving it to 3F. They had rooftop balcony already, so this is where we learnt it was possible to have one. We had a chance to visit friends, who very recently bought land, and built a house - very similar to what we had in mind. Got lots of measurements out of it, so we could better "see" what our designs would be like. Also to practise climbing 2m x 2m stairs. We really loved their rooftop balcony, which is why we started thinking that we want one too.

The second design was estimated at closer to 30M, but their pricing is based on the building area. In our case, 120m^2. So we can change anything inside and the price is the same. In Japan list the "penthouse" separately, as well as rooftop balcony as extras and are not counted towards the 300% limit. The penthouse is the "stairs and door" part that opens to the rooftop balcony.

Both (rough) house estimates, they made sure to say "before discounts". Unsure what sort of discounts we are talking about here, if it's just a few man, or something serious.

It took at least 2 meetings with the first designer before they reluctantly suggested that having the kitchen in the low-ceiling area is probably not the best. Seriously, I'm here for your advice, just tell it to me straight.

We sent back revisions to both companies, for the different floorplans. Apparently, the floorplans and companies have to be kept separate, no sharing between them.

Mortgage

We filled in the paper work for 2 of the bigger banks in Japan, it is more of a pre-application to see if they want to talk to you, and what sort of numbers we could get. There is no commitment yet. They insisted that I write my name (katekana) and address (kanji) by myself, by hand. I softly suggested that they could write the address and I just do my personal details and sign (hanko) it. That was a big nono, had to be me, writing my address. Took forever, but got there eventually. Luckily, I had practised writing my address when I applied for my Permanent Residency.

4 days later we get the news that neither bank wanted to help with a mortgage. With no reason given. I got the impression that if the banks were not happy with me, or my situation, they would give reason(s). But in this case, it seemed to be about the seller, or something external. Then the banks can not give reason(s). (liability?) At least, that was the gist of my understanding of the situation. The realtor may simply have been sparing my feelings. Who knows, we filled in another set of mortgage application forms (again, I had to write) and fired those off.

This time it went better, in that we got an offer, and lots of numbers, and stats with it.

The next step was to fill in the "purchase approval" for the land, and hanko it. This is not binding either, we can decide not to buy it without any penalty. At this point they want a 3M yen down-payment, which we get back if the mortgage fails to come through, or we decline to purchase. It has a deadline a month in the future. The realtor is now negotiating with the seller of the land, and dealing with the bank.

Land inspection

The realtor asked to meet us at the land today, they said it would be easier to explain in person. We went and found the land markers for the spot, and was surprised just how far into the road "our" land would be. It was explained that only the North side has a setback of about 30cm. The East side is not to do with the emergency access, but rather an agreement made with all the neighbours on the street. This was done before it was put on the market, and is part of the purchase contract. They wanted us aware of that. There is also a slight issue with the South-West corner house. Apparently it is built right on the edge of the land, so the roof, drain and drain pipe is "over sized". This means we have to have a survey made, and possibly shift our plans, and/or change the floor plan to accommodate it. I find it rather peculiar that is becomes the problem of the new buyers, and not the oversized house.

We received revised floorplan designs today as well, we have indicated we were interested in a shower stall on 2F and weren't sure if those could be done in Japan (since it is always shower/bath units). But that seemed to have been no issue.

I was asked if I take any medicine, or have some kind of health issue. This stems from that with a bank mortgage, you will get health insurance with it automatically. Japan is still lagging a little with gender equality, but in this case, if I happen to die, the mortgage is written off, as the wife "doesn't have any income".

Hanko

We met with the builders again. Just to talk about some changes, and they had a few questions for us. Our bathroom was slightly non-standard size (+15cm) and that would cost extra. They asked if we would be happy with the bath standard unit size. We already live in a Japanese apartment which has the standard unit size, so that is fine by us. We also learnt that we do not fully know what options there are out there. For example, the balcony doors. At our current apartment, the balcony doors are glass, and one slides behind the other. So the biggest you can ever make it, is 50% open. Either the left side is open, or the right side. The we saw a model house with a folding glass door. Folded up like a "W" and since it "sticks out" when opened, you can have close to 90% of the door completely open. So we wanted that, talked to the builders about it and hashed out a plan. Then during the same meeting, we saw another model house, which featured balcony doors where one door hides behind the other, and both slide open. Leaving a complete 100% open way. Now we wanted this door instead. Clearly we need to know what is out there, but that is why we are going to model houses I suppose.

As for the day we sign off on the land, I need to have "Identification of certification of a seal impression", for my hanko. For this I had to go to Shibuya cityhall to apply. It is a card (like credit card size) with my hanko registration on it. I want to the cityhall, guessed the application form and filled it in. Once my number was up, I was told that before I can apply for "Identification", I have to actually have my hanko registered. So a slightly different queue. I made my hanko many years ago when I first opened my bank account. At the time, I felt Hiragana looked nicer than Katakana. Today I found out that I could not register my hanko, because it is in Hiragana. Off to Tokyu Hands, and had a new hanko made, this time in Katakana. Then back to the cityhall, get the new one registered, then apply for Identification, and receive my hanko ID card.

In addition to this, I need resident card (including certificate from cityhall listing all people in my household). Record of withholding (tax) for 2 years. That other tax form thing, and proof of funds. (Our deposit funds, bank printout). I was told it is normal to just bring cash, in normal bank envelope. One million yen is apparently 1cm thick. So 3 million will be about 3 cm thick.

Quasi

We had another meeting with the house builders, they explained the 3F balcony doors need to have outside roller shutters installed. We don't have to use them but they have to be there. They don't cost us any extra so that is no big deal. When we asked what they were for, the translation comes out as "Quasi Fire Hazard". So uh what. Clearly something to do with fire prevention, but only the balcony doors on 3F. Not the windows, not 1F ground level doors. It sounded like if a neighbours house was on fire, you can close the shutters, but who knows.

In preparation of the land purchase, we are preparing for the down payment, and mortgage loan meetings. Now we know what 3 million yen in cash looks like and apparently nobody bats an eye withdrawing that from the bank. I have been practising my kanji as well, since I have to write all my details in Japanese.

Purchase

We met at the realtor's office to go through the purchase. Started at 14:00 and at first, it is the reading of the contract. The reader introduced himself and showed his ID to confirm he is qualified to read the contract to us. We had both a Japanese version as well as a version translated into English. Done in typical Japanese fashion, he reads the item number then the whole clause, out loud. One at a time. At anytime that the contract referred to anything, we were shown, and given a copy, of the official document. Started with the seller's company, then we were shown the official company registry, from the seller's cityhall. Complete with official stamps. When talking about the borders, we were shown both the 1970 geographical map, as well as the 2005 version. Followed by official Shibuya-ku water pipe maps, sewage pipes, tsunami flood area map and so on. Everything official, and stamped. Also talked about the special points about the property. That the neighbour's house is too close to our land, the setback for 4m road, the agreement with the neighbourhood that the road that leads to their houses will be left as a road. We were taught were the rubbish goes, and which owner is the community leader. The rubbish area needs to be cleaned every week and that is on a roster for the neighbourhood.

We were shown the map of the work we need to do for the water pipe, it is just from in front of the neighbour, not from the main road. The contract also listed that there are old, not used, pipes under the land. All very detailed.

After that, the representative for the seller showed up, and we could work on filling out the contracts. Mostly name, and address, leaving the hanko work to last which you do at the same time. You also hanko the backside of the contract booklet, over the spine - presumably to prevent tampering. Once that was done, we handed over the 3 million yen downpayment, in the envelope. The seller counted it, and then handed us a receipt (also hankoed and with an official post stamp). All paperwork, maps, contracts, photos showing the border-posts, was all filed into a dossier which was handed to us. Bowing and thanking the seller, that part was done.

There was a large section about OCG activity and how that was illegal. Took us a while before we worked out it meant Organised Criminal Group, ie, the yakuza and those sort of activities. We skipped over most of it, cos, I guess, they felt we were probably not connected to the "OCG".

The Dossier

We had a short 5 minute break, then the representative of the Bank arrived, and we could start on the mortgage paperwork. Since the preliminary had been filled out, it was relatively straight forward. Just going over the numbers and the various options for the type of loan we preferred. This also included the life insurance. The everything-is-paid-off-if-I-die is included for free, but there were optional extras. For example, option 1 included a list of 50 different kinds of cancers, should I get sick and be unable to work, the loan is payed off. Option 2 was for heart attack, or stroke, same deal, or option 3 which included all. The difference was maybe 5,000 yen a month or so. So you can guess what will get you, and pick that option I guess. The best outlook is to get cancer and then recover, and you have no more mortgage. Not sure that is worth having cancer though.

The whole ordeal took 4 hours and was quite draining. It is official paperwork, and in Japanese, talking about finance related topics, which is plenty hard enough to follow in English. On the way home we stopped by the land again. Sense of accomplishment follows.

Bank account

I went in on Monday to open a new bank account with the bank that we are getting the loan. Overall it went as expected, standard paperwork and options. At one point the teller called the bank representative that we dealt with on Saturday. During this conversation, she called me over and handed me the phone. The representative asked me if I could pop over once I had finished the account creation procedure. Once I received my new ATM card, and bank booklet, I walked over to the Loan Centre branch of the bank. It turns out that while filling in the forms, I had forgotten the 区 in 渋谷区 of the address. The health insurance form I had to fill in again, but the loan application it was acceptable to just correct, and hanko the correction. While I was there, they copied the new bank account details, and also my health insurance card. I will have to send in a copy of my last health insurance results as well, and one final issue. The proof of funds printout we had, was in the wife's name. This causes issues, even though we share accounts. So we will need to move the savings into an account owned by me, then do another proof of funds printout. Everything has to be exact in Japan.