If you’re considering buying property in Japan, one of the things you’ll encounter is the distinction between freehold (所有権, shoyuken) and leasehold (借地権, shakuchiken) ownership.
While many countries are familiar with these concepts, Japan’s real estate system includes some unique legal and cultural nuances that foreign buyers may not be aware of. Here’s what you need to know.
🏡 What is Freehold Ownership?
Freehold ownership means you own both the land and the building outright, giving you full and permanent control over the property. This is the most common and straightforward form of ownership in Japan. In the case of a condo or apartment unit, you typically own your individual unit along with a small fraction of the land.
Freehold properties:
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Are easier to renovate or rebuild (within zoning regulations)
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Carry no ground rent
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Tend to have stronger resale value
However, they usually come with a higher upfront cost and full responsibility for property taxes and maintenance. Freehold is best suited for long-term investors, future residents, or anyone who wants full ownership without restrictions.
📄 What is Leasehold Ownership?
Leasehold ownership means you own the building but lease the land from another party, typically for 30–50 years. These properties are usually more affordable than freehold and can offer access to prime locations at a lower upfront cost. Long-term ownership is possible, but lease terms vary, so it’s important to understand the two types of leasehold agreements:
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Ordinary Land Lease Rights (普通借地権): Typically renewable, allowing for long-term or even indefinite use if both parties agree. Lease terms often last around 30 years or more.
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Fixed-Term Land Lease Rights (定期借地権): Non-renewable; and ownership of the building ends after the agreed term. When the lease expires, you must return the land to the owner in its original condition, which usually means removing any buildings or structures you own.
⚖️ Legal Structures Behind Leasehold
Leasehold rights in Japan also fall under two main legal frameworks: surface rights and rental rights.
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Surface rights (地上権):
Offers the leaseholder greater control, including the ability to build structures and potentially transfer or sublease your rights independently. -
Rental rights (賃借権):
These are more restrictive, and typically requires the landowner’s approval for major changes such transferring the lease or making substantial renovations.
📝 Freehold vs. Leasehold: What to Keep in Mind
Whether you choose freehold or leasehold, it’s important to understand the financial and legal responsibilities involved. Freehold ownership provides full control and long-term security, usually with a higher upfront cost. Leasehold offers a lower initial investment but comes with specific lease terms and conditions to consider. In most cases, we recommend owning the land (freehold) for greater long-term stability. However, if you’re looking for a more cost-effective way to enter the market, leasehold may be a suitable option. Carefully assess your long-term goals, budget, and flexibility to decide which ownership type best suits your needs.
