Freehold Properties in Japan
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How does property or home ownership in Japan compare with other countries nearby?

PROPERTY IN JAPAN

CHINA JAPAN
In Beijing, foreigners who intend to buy a properties there need a certificate issued by the Beijing Municipal Public Security Bureau to prove that they have stayed in China for at least one year for reasons of work or study. This is to ensure that foreigners only use the property for personal reasons and not commercial purposes.  The rental yield there is about 2% return annually.Local Chinese cannot own land in China, as the land is owned by the state and local governments. They are only allowed land rights to use it. Also, even with a land usage permit, ownership is restricted up to only a maximum of 70 years. After the expiration of the 70 years validity, the land is returned to the country while the buildings on that land remain under the possession of their owners.In terms of Chinese law, home buyers are allowed to apply and obtain extensions when their land-use rights expires.  But, there are vague sections in specific clauses that provide no clear provisions on the the standards or procedures for the fees of extending land-use rights.  As to how much the price for extension of ownership is anybody’s guess. In Tokyo, the annual yield is just under 5%. Foreigners are allowed to buy property freely in Japan. There are no restrictions. There are no restrictions over residency or visa status.  Foreigners are allowed to buy freehold land.However, if you do not have the cash, you will have to make your own arrangements to get a bank loan. If you require to obtain a home loan from a Japanese Bank, you will need to be a resident of Japan with proof of income.Property titles can be registered to foreign addresses so, you can buy and sell land, forestry, homes, apartments, golf courses, private islands, apartments or entire buildings in Japan, no matter where you reside.However, purchasing and owning real estate in Japan will not make you eligible for a residence permit.Also, Japan does have inheritance tax, but this is easily resolved by owning the property through a corporation. Thanks to the weak yen, Japanese property is selling at bargain prices for fairly high quality housing. So, there is a lot of buying activity in Tokyo, Osaka, Nagoya, and Fukuoka, which will translate to higher property prices in the inner city areas. 
THAILAND TAIWAN
Thai law forbids foreigners from prohibited owning freehold land in Thailand. Foreigners cannot own land in Thailand, except in specified areas, and it has to pass the Board of Investment review. Foreigners are required to have a strata title built on Thai owned land. Foreigners in Thailand try to own property in other ways:

  • Leasehold. Although Thailand restricts foreign ownership of land, foreigners may hold total leasehold interest on a 30-year maximum lease period, with the possibility of renewing the lease for additional 30-year periods.
  • Condominiums.  Foreigners can own condominiums up to a total of 49% of the total building or development.
  • Company ownership.  Companies with majority Thai ownership are allowed to buy land in Thailand.
  • Company ownership.  Board of Investment (BOI) sponsored companies. Foreign companies with BOI privileges are permitted to own, lease land and build factories in Thailand.
  • Investment.  Thai property law has provisos to allow foreigners to buy and own a limited amount of land, based on an investment of 40 million baht for five consecutive years, and provided that the land is used for residential purposes.
  • Thai spouse. A Thai spouse of a foreigner may be allowed to buy land or property in Thailand in his or her own name. Depending on the local authorities, the married couple may be asked to sign a declaration at the Land Department to state that the funds used are the separate property of the Thai spouse. Signing this declaration could potentially waive any claim on the land or property by the non-Thai spouse. This could be problematic in divorce cases, or when settling ownership in the event of death of the Thai spouse.  A properly drafted prenuptial agreement may afford some protection but both spouses should be aware of the underlying risks.

 

Foreigners who are resident in Taiwan and hold an Alien Registration Card, are allowed to buy residential property in Taiwan.  However, they are permitted to buy only if Taiwan nationals are also entitled to buy property in the foreign individual’s home country, according to the “reciprocity rule”. They are also required to apply to the Ministry of Economic Affairs for approval of the intended purchase.
Foreigners are generally not allowed to speculate on property.  That is, they cannot buy and sell property in Taiwan for a profit, only for personal use or investment purposes. Individuals are usually only allowed to buy one piece of real estate.Also, although foreigners are allowed to buy residential land (Jian Di), they are not allowed to buy farm land, or land with a watershed. So, owning a property in Taiwan is quite easy.
INDONESIA MALAYSIA
The process for foreigners buying property is difficult and the laws that enforce foreign property purchase are unclear. If it’s residential property, A foreigner must sign a Convertible Lease Agreement to buy residential property.  In which case, the title is held in the name of the developer, and the lease is held for a certain period.The Convertible Lease Agreement states that, where prevailing laws permit foreign ownership through strata titles, both the lessor and the lessee have to sign a deed of sale and purchase, making the foreign lessee the owner of the property. Hence, foreigners do not have the right to own freehold land. They can acquire the rights to use the land but never physically own it.Foreigners are simply not allowed to have Right of Ownership (Hak Milik). This right is hereditary and restricted to Indonesian citizens. It is illegal to possess Indonesian property using a nominee ownership, through a holding company. There are significant restrictions on foreign ownership.  Foreigners are not allowed to buy low-cost properties, or land reserved strictly for Malays. As of 1st Sep 2014, a minimum of price of MYR 2 million is required for all foreign property purchases. These purchases can be made through developers only and no land purchase is allowed.Admittedly, there is a Malaysia My 2nd Home (MM2H) retirement living scheme and a corresponding land category for foreigners, but the minimum investment rules keep changing all the time. However, the scheme is becoming tighter and more expensive.For those on the MM2H scheme, as of 1st May 2014, the following minimum purchase price applies to foreigners wishing to buy properties:

  • MYR1,000,000 per unit for Kuala Lumpur, Johor, Pahang, Terengganu, Negeri Sembilan and Putrajaya
  • MYR 500,000 per unit for Perlis, Sabah and Kelantan
  • MYR 500,000 per condo unit for MalaccaMYR 1,000,000 per landed unit for Malacca
  • MYR 1,000,000 per landed unit for Malacca
  • MYR 500,000 per unit with minimum 2 units for Penang
  • MYR 350,000 per unit for Perak, Sarawak and Kedah

 

 

In relation to the property investment trends, here’s an interesting house-price index tracked by the Economist. It is an interesting chart which measures whether housing prices are at sustainable levels.

Two metrics are used:

  1. Affordability, measured by the ratio of prices to income per person after tax.
  2. Case for housing investing, based on the ratio of house prices to rents, which is similar to the stock investing metric of looking at the ratio of equity price to earning.

If these indicators rise above their historical averages, then a property is deemed overvalued. If they are lower, it is undervalued. According to their measures, property is more than 25% overvalued in Australia, Britain and Canada.

Source:
Foreigners Buying and Leasing Property in Southeast Asia, Thailand, Cambodia, Vietnam, Laos

 


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