What Will Actually Change in Real Estate Transactions, and What Overseas Buyers Should Be Aware Of

Recently, there has been increasing discussion in overseas real estate communities and on social media suggesting that “Japan is making it harder for foreigners to buy property” or that “regulations are being tightened.”

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To be clear, the measures announced on December 16 are not intended to restrict property purchases. Their purpose is simply to improve the government’s ability to accurately identify who owns what real estate in Japan.

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Concerns have also been raised about land purchase regulations. Japan already has systems such as Designated Monitoring Areas and Special Monitoring Areas, which are intended to monitor land use in specific locations for security or public-interest reasons. At present, these systems do not impose blanket restrictions on all real estate transactions or ordinary residential purchases. While discussions continue about possible future tightening of operations, it is important to understand that general residential property purchases are not being broadly restricted at this stage.

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Below is a brief summary of the announced changes.

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Foreign Exchange and Foreign Trade Act (FEFTA)

Under the current system, non-residents purchasing real estate are required to report the transaction only if they self-declare the purpose as “investment.” Residential purchases have generally not required reporting.

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From April 2026, all real estate acquisitions by non-residents will, in principle, become subject to reporting, regardless of purpose.

This change reflects the fact that a self-declared, purpose-based system was considered ineffective. Both before and after the amendment, “non-residents” include Japanese nationals residing outside Japan.

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Registration System (Property Registration)

Under the current system, nationality information is not required in property registrations.

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From fiscal year 2026 onward, nationality information is expected to be required when registering property ownership. Whether this information will be publicly visible has not yet been determined.

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At first glance, these changes may appear to be nothing more than additional paperwork. For registration matters, judicial scriveners (shiho shoshi) handle the process, and issues such as missing nationality information are unlikely to become a practical problem.

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The real risk lies with FEFTA reporting.

In Japanese real estate transactions, there is no professional whose core role includes handling FEFTA reporting as part of the transaction process. As a result, reporting omissions are more likely to occur.

FEFTA is not within the professional scope of real estate brokers, and there is no disclosure obligation under the Real Estate Brokerage Act. Brokers who are unfamiliar with non-resident or overseas buyers may not fully understand the amendment, or may provide no explanation at all. Judicial scriveners are also outside FEFTA’s scope and have no obligation to explain or handle FEFTA filings. While some brokers or scrivener offices provide explanations voluntarily, such support is entirely discretionary.

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FEFTA reporting is the buyer’s responsibility. Reports must be submitted within 20 days of the transfer (closing) date, in Japanese, and penalties apply for non-compliance or false reporting. After the amendment, this obligation will no longer depend on how the buyer categorizes the purpose of purchase. All non-residents will be required to report.

For non-Japanese-speaking overseas buyers, this creates a high compliance hurdle. However, since FEFTA reporting falls outside the formal responsibilities of brokers and judicial scriveners, it may be difficult to hold them accountable even if no explanation was provided. This makes proactive information gathering and preparation by the buyer essential.

 

Who should handle FEFTA reporting?

For non-resident overseas buyers, appointing an agent is the most realistic approach. In my view, judicial scriveners who handle the property registration are often the most suitable option.

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Judicial scriveners already manage identity verification, powers of attorney, and affidavits as part of the registration process. Technically, FEFTA filings fall under the expertise of administrative scriveners (gyosei shoshi), but involving a separate professional can increase coordination complexity. Using the same judicial scrivener as an agent often allows for a smoother process.

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While real estate brokers may also act as agents, judicial scriveners are frequently familiar with FEFTA reporting through cases such as inheritance by non-resident Japanese nationals. That said, not all scriveners accept this work, and fees apply, so this should be confirmed early.

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For high-value properties, investment transactions, or corporate purchases, buyers often engage bilingual lawyers to review contracts. In such cases, having the lawyer handle FEFTA reporting may be the most secure approach, despite the higher cost.

Ultimately, buyers should choose a solution that balances risk management and cost.

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For non-Japanese-speaking overseas buyers, challenges extend beyond these legal updates. Differences in language, business practices, and cultural expectations arise throughout the transaction process.

The depth and quality of understanding provided by brokers vary significantly, which directly affects transaction risk. Many brokers simply conduct Japanese domestic transactions in English without adjusting for international compliance needs. As a result, active and informed risk management by the buyer is essential.