You can finance a Japanese apartment you plan to let, or to use as a holiday home, with a YEN LOANS mortgage, while living abroad. How you plan to use it sets the loan: up to 65% of the valuation for a long-term let, and up to 50% for a second home or a short-term rental. Short-term letting is also limited by Japanese law and often by the building's own rules, so check both before you buy.
In short
- A long-term let is financed like a home you live in, at up to 65% of the valuation. A second home or a short-term rental is financed at up to 50%.
- If you let the apartment, the rent counts towards your income when YEN LOANS assesses what you can afford.
- Short-term letting (民泊, minpaku) is limited to 180 nights a year under the national rules, and many apartment buildings forbid it.
- If you may move in later, a fixed-term lease lets you plan for the tenancy to end on an agreed date.
- You need no Japanese bank account: a property manager approved in advance collects the rent and the monthly payment runs through the property's management account.
- As a non-resident, Japanese tax is generally withheld from the rent, and you file a Japanese tax return each year.
Can you buy a Japanese apartment to let while living abroad?
Yes. Eligibility is by the passport you hold, wherever you live, and the loan can be arranged and settled without traveling to Japan. Our guide on whether foreigners can get a mortgage in Japan sets out who can borrow. One of our published borrower journeys follows an American couple living in the United States who bought a renovated central Tokyo apartment as a long-term rental. They were not present at settlement and collected the keys in Tokyo the next day, and the expected rent covers their monthly payment.
How you plan to use the apartment sets the loan
A YEN LOANS mortgage is the same product and rate whatever the use. What changes with the use is the maximum loan and the payment reserve deducted at settlement.
Your home, or a long-term rental
Up to 65%
Maximum loan-to-value, against the valuation
Payment reserve at settlement: three months of principal and interest
A second home, or a short-term rental such as a holiday let
Up to 50%
Maximum loan-to-value, against the valuation
Payment reserve at settlement: six months of principal and interest
The maximum is also 50% for any loan over ¥250M, and the loan is based on an independent valuation, with the purchase price as a ceiling. A holiday home you use yourself for part of the year and let short term the rest is treated as a short-term rental: up to 50%, with a six-month payment reserve.
The loan must also pass the affordability test. If you let the apartment, the rent counts towards your income in that test, alongside your verified net income after tax and any assets we take into account. If it is already let, the rent is evidenced by the tenancy agreement between the tenant and the owner and three months of bank statements showing the rent received. If you plan to let it, we use the rental estimate in the independent third-party valuation. Our guide to the down payment for buying property in Japan works through the cash you need.
Letting long term
A long-term let to a tenant who lives in the apartment is financed like a home you live in, at up to 65% of the valuation with a three-month payment reserve, and it is the simpler route from abroad. A property manager or leasing agent finds the tenant, collects the rent and handles the tenancy for you, and the rent arrives in yen each month to meet the yen payment. Japanese residential leases commonly run for two years at a time.
Before you buy, compare the rent you expect with the monthly payment, including at a higher rate. Allow too for the yearly costs, and for gaps between tenants, when the payment comes from your own funds.
Interest-only while the rent builds
Investors letting a property most often choose an interest-only period, so that the rent covers the payment in the early years. An interest-only period can last up to five years. The rate carries a 1.00% p.a. premium during that period, and the payment steps up when it ends.
Worked example · hypothetical rates, not a forecast
After running costs, rent of about 3.6% of the price a year covers the interest-only payment
On a 65% loan at hypothetical rates. Once repayments start, it takes about 4.3%. Listings quote a gross yield (表面利回り), before running costs, so the gross yield you need is higher than these figures.
¥60M
The example: apartment price, let long term
¥39M
Loan, 65% of the price
5 years
Interest-only, then repaid to year 30
Net rent needed each year, as a share of the price
The rates are the same hypothetical rates as in our guide to variable-rate mortgages in Japan, with the 1.00% premium during the interest-only years. Payments are rounded to the nearest ¥100. The figures are not a market rent. They are what must be left after building charges, the manager's fee and yearly taxes, so the rent itself must be higher.
Buying an apartment that is already let
YEN LOANS can finance an apartment sold with a tenant in place, often listed in Japan as an owner change (オーナーチェンジ, ōnā chenji). The tenancy agreement and three months of bank statements showing the rent are the evidence of the rental income. If you do not hold a Japanese bank account, YEN LOANS onboards the property manager before settlement, so the rent and the monthly payment run through the property's management account from the start.
The existing tenancy normally continues with you as the new landlord, so check the type of lease and its terms before you buy, especially if you may want to live in the apartment later.
Choosing a lease: ordinary or fixed-term
Japanese residential leases come in two main types, and the choice matters if you may want the apartment back to live in or to sell.
Ordinary lease
普通借家契約 futsū shakuya keiyaku
The usual type.
Ending it: tenants are strongly protected, and a landlord generally needs a justifiable reason to refuse a renewal or end the lease.
Fixed-term lease
定期借家契約 teiki shakuya keiyaku
Ending it: it ends on the agreed date without renewal.
Setting it up: it must be made in writing, with a separate written explanation to the tenant before signing.
In our pre-relocation borrower journey, the borrower lets the apartment until moving in. If that is your plan, or you may sell, ask your property manager whether a fixed-term lease suits it. This is general information, not legal advice.
Short-term letting: check the rules before you buy
Short-term letting of a home in Japan, often called 民泊 (minpaku), is regulated, and the rules can decide whether a holiday-home-plus-letting plan works at all.
180 nights a year
The national cap on letting a home to guests: no more than about half the year
Up to 50%
Maximum loan-to-value for a short-term rental, with a six-month payment reserve
The income is less steady than a long-term let, and bookings are often seasonal. Your monthly loan payment continues in the months the apartment is empty or you are using it yourself.
Check all four before you buy
National rules
A home let this way must be notified to the authorities and can be let for no more than 180 nights a year. The national minpaku portal (site in Japanese) sets out the rules.
Local rules
Local ordinances can restrict short-term letting further, for example by area or by days of the week.
The building's rules
管理規約 kanri kiyaku
Many apartment buildings forbid short-term letting in their building rules. Ask the selling agent for the rules before you make an offer.
Management while you are away
住宅宿泊管理業者 jūtaku shukuhaku kanri gyōsha
If you are not in the home while guests stay, which is always the case from abroad, the law requires you to entrust its management to a registered minpaku management business. The minpaku portal (in Japanese) explains when this applies.
This is general information about Japanese rules, not legal advice.
How do you manage it from abroad?
Where the apartment is not your home, or you do not hold a Japanese bank account, a property manager (管理会社, kanri-gaisha) approved by YEN LOANS in advance is required. If you do not already have one, YEN LOANS introduces one before your first payment falls due. The manager's fee is agreed with them directly and is not a YEN LOANS charge.
Tenant and property manager
Rent comes in
The rent is paid into the property's management account.
Held by your property manager
Management account
Rent arrives here in yen, and the loan payment is collected from it.
YEN LOANS and its servicer
The loan payment goes out
Each month, the payment is collected in yen from the same account.
If the rent does not cover the payment, or the apartment is empty between tenants or guests, you top up the account from wherever you bank.
The rent is in yen, so it meets the yen payment directly, with no currency conversion. Our guide to getting a Japan mortgage from overseas covers setting this up before settlement.
Your running costs
What tax and running costs apply when you let from abroad?
Rental income from a Japanese apartment is taxable in Japan, and as an owner you also meet the running costs. Here is what you pay, and when:
When rent is paid
Withheld at source
Japanese income tax on the rent: if you are a non-resident, 20.42% of the rent is generally withheld by the tenant or agent who pays it to you, and you file a Japanese tax return each year to settle the final tax.
Every month
Set by the building
Building management and repair-reserve charges
Every year
Municipal tax and loan fee
Fixed-asset and city-planning tax: up to 1.7% a year of the municipal assessed value (固定資産税評価額), not the price. For an apartment the assessed value is usually well below what you paid, and residential land gets a further reduction. Your agent can show you the current figure on the seller's tax statement before you buy.YEN LOANS loan maintenance fee: ¥39,600 a year, collected with your monthly payments.
As agreed
With the manager directly
Property manager's fee
Where the tenant is an individual renting the apartment as their own home, they do not withhold, but the rent is still taxable. The National Tax Agency (page in Japanese) explains the withholding rules.
Non-residents who have Japanese tax to file or pay generally appoint a tax agent in Japan (納税管理人, nōzei kanrinin) to receive tax notices and handle filings. You may also have tax or reporting obligations where you live, on the rent and on any later sale, subject to any double-tax treaty between Japan and that country.
YEN LOANS does not provide tax advice. Ask a qualified adviser who knows both Japanese tax and the rules where you live.
What if your plans change?
You start letting a home you live in now
Tell us before you let it
Once it is not your residence, a property manager approved in advance is required.
You move in
Tell us when you move in
Where you hold a Japanese bank account, payments can be collected from it by arrangement.
You sell
Repay in full on sale
A sale must repay the loan in full at the same time, and the early-repayment terms apply in the first three years. Our guide to closing on a property in Japan explains how the timing of a sale affects Japanese tax on the gain.
You want to raise cash or move an existing loan
Refinance or release equity
See our guide to refinancing or releasing equity from a Japanese apartment. US service members can read our guide for SOFA status holders on what happens when you PCS.
Frequently asked questions
Can I get a mortgage on a Japanese apartment I plan to let?
Yes. YEN LOANS finances a qualifying apartment let long term at up to 65% of an independent valuation, the same as a home you live in, and a short-term rental at up to 50%. The rent counts towards your income when YEN LOANS assesses what you can afford. You can borrow while living abroad, without a Japanese bank account: a property manager approved in advance collects the rent, and the monthly payment is collected from the property's management account.
Can I use it as a holiday home and let it when I am not there?
It depends on the rules, so check them before you buy. Short-term letting (民泊, minpaku) must be notified to the authorities and is limited to 180 nights a year under the national rules, local ordinances can restrict it further, and many apartment buildings forbid it. From abroad, you must also entrust its management to a registered minpaku management business. YEN LOANS treats a holiday home that is let short term when you are not there as a short-term rental: up to 50% of the valuation, with a six-month payment reserve.
Who pays the mortgage if the apartment is empty?
You do. The monthly payment is collected from the property's management account whether or not the apartment is let, so between tenants or guests you keep the account funded from wherever you bank.
Do I pay tax in Japan on rent if I live abroad?
Yes. Rental income from Japanese property is taxable in Japan. For a non-resident, 20.42% of the rent is generally withheld at source by the tenant or agent who pays it, and you file a Japanese tax return each year to settle the final tax, often through a tax agent (納税管理人, nōzei kanrinin). This is general information, not tax advice.
Can YEN LOANS find me a property manager?
Yes. If you do not already have a property manager, YEN LOANS introduces one before your first payment falls due. The manager must be approved by YEN LOANS in advance, and the manager's fee is agreed with them directly; it is not a YEN LOANS charge.
Japanese terms in this guide
- 民泊minpaku
- Short-term letting of a home to guests. It must be notified to the authorities and is limited to 180 nights a year under the national rules.
- 住宅宿泊管理業者jūtaku shukuhaku kanri gyōsha
- A registered minpaku management business. An owner who is not in the home while guests stay must entrust its management to one.
- 管理規約kanri kiyaku
- The building rules of an apartment building, which can restrict how units are used, including for short-term letting.
- 普通借家契約futsū shakuya keiyaku
- An ordinary residential lease, under which tenants are strongly protected on renewal.
- 定期借家契約teiki shakuya keiyaku
- A fixed-term residential lease that ends on the agreed date without renewal.
- 表面利回りhyōmen rimawari
- Gross yield: a year's rent divided by the purchase price, before running costs. The yield commonly quoted on investment-property listings.
- 実質利回りjisshitsu rimawari
- Net yield: a year's rent after running costs, divided by the purchase price plus the costs of buying. Close to what US investors call a cap rate.
- 管理会社kanri-gaisha
- A property management company. For a borrower without a Japanese bank account, the monthly payment is collected from the property's management account, and rent from a let property flows into the same account.
- 納税管理人nōzei kanrinin
- A tax agent: a person or firm in Japan that a non-resident appoints to receive tax notices and handle Japanese tax filings.
Written by Kyle Steele · Reviewed by Mark T. Drabkin, Representative Director & CEO · Last reviewed .
YEN LOANS K.K. is a money lender registered with the Tokyo Metropolitan Government under the Money Lending Business Act (MLBA), license Governor of Tokyo (1) No. 31998. This article is general information, not financial advice, and is not an offer of finance. Worked examples are illustrative. Rates are indicative, reset monthly, and subject to credit assessment and security review. Effective annual rate (実質年率) within 14.6%, calculated on the principal net of fees; late-payment charge up to 20.0% p.a. All loans are full recourse to the borrower. Applications are subject to careful review and may be declined. Please check the terms of your agreement and borrow within your means. 慎重な審査の結果、お申込みの意に沿えない場合がございます。ご契約内容をご確認のうえ、ご利用は計画的に。 Full product terms are set out under Loan terms, all costs under Fees, and the approved Japanese disclosure under 貸付条件の表示.