This is the second entry in a three-part series on housing for foreign residents in Japan.

Anyone staying in Japan on a short- or long-term basis needs a roof over their head. Residents have two basic options — rent accommodation or purchase property, with the latter option offering the possibility of renovating an older home to bring it up to the standards of modern living, especially in terms of insulation.

Obviously, a lot can be said about any of these choices. Just remember that all three options mentioned below have pitfalls associated with them, and how well you navigate your final decision may ultimately determine how well you enjoy your time in Japan.

Renting accommodation

Japan’s housing market is flooded with an abundance of small, one-bedroom apartments. On the plus side, this means that prices are low, and there’s no need to share with a roommate. On the flip side, however, this also means there’s a shortage of the more spacious, multiroom apartments foreign residents tend to prefer.

“With the number of expats increasing and the number of properties decreasing, foreigners have now been going into the suburbs because they cannot find homes in their favorite areas,” says Alex Toyoda at Tokyo-based real estate company Plaza Homes.

Many of these single-bedroom apartments can be found in central neighborhoods. However, those looking for larger family homes will be faced with a much smaller, more limited market, located farther away from their offices and favorite weekend haunts. Many will be tempted to downsize their living expectations in order to save a little money on rent and live in the best possible location.

One of the biggest differences when renting in Japan compared to other countries is that the government has passed a number of strict laws that protect tenants. For the most part, owners essentially cannot kick tenants out and, as a result, anyone renting accommodation will probably have to go through a very stringent screening process before being offered a tenancy contract. Some owners have used this system to discriminate against foreign tenants (which I’ll discuss in more detail in the next installment).

Many experts recommend using an agency that specializes in renting to foreign tenants, as they know which properties do and do not accept non-Japanese.

“You’ll have to submit all kinds of documents when applying,” Toyoda says. “It’s difficult to get in, but once you’re in your apartment, you’re protected by law.”

There are several factors to consider when looking for an apartment.

Orientation is critical and south-facing apartments are by far the most in-demand, offering space to dry futons all year round as well as savings on electricity for heating, laundry, lighting and more.

Construction materials also make a big difference in sound insulation in apartment complexes with a lot of people living in them. Concrete is much better for noise insulation compared to wood or steel. Experts also recommend checking for mold, which can become a serious threat during Japan’s humid summers.

Building a house

Japan’s large construction market provides foreign residents with sizable budgets plenty of opportunity to build a home.

This begins with a search for land, which Ryoma Katsura, CEO and founder of Titel, a company that specializes in connecting foreign buyers with Japanese architects, says can often be the most challenging part of the process.

“It’s important to get a professional involved early, because you never know when the land you want pops up,” Katsura says. “Things get sold really quickly.”

Three types of people can design your homes: individual architects, large construction companies and local builders.

The latter two can have faster timelines and offer some level of cost-savings, but invariably provide less customization.

By comparison, individual architects can offer more flexibility and have a better understanding of what non-Japanese clients are looking for in their homes.

“If Japanese people have space, they tend to build a wall and turn it into another room to prioritize functionality,” Katsura says. “That doesn’t necessarily fit other culture’s priorities.”

Katsura says many of his firm’s non-Japanese clients tend to be satisfied with their Japanese architects. For example, Japanese houses often use wood in ways that aren’t common in many other countries, while rooftop balconies have become a popular solution for those seeking open space within the confines of a Japanese home.

“Japanese architecture and design tends to be very modern, but simple, and sophisticated,” Katsura says. “Architects are also very knowledgeable about the seasons, designing houses to maximize heating and cooling with various approaches, including choosing the right materials and structures or placing windows and eaves in the most optimal way.”

It’s important to note that financing and mortgage options will depend on your residency status. In addition, having to navigate language barriers can pose issues, but that’s where professionals can assist as facilitators.

Renovating an older house

Japan is believed to have more than 8 million empty homes (akiya) nationwide.

While you might come across empty homes in your neighborhood that pique your interest, they’re actually very difficult to acquire in the first place as it’s often hard to track down the owner.

Keeping an eye on established portals such as the Akiya Bank Program is probably the best approach and, as more companies start to specialize in selling empty homes, the number of options can only increase.

Parker Allen, co-founder of Akiya & Inaka, a real estate company specializing in empty homes, sees long-term potential in the marketplace.

“Just last year it was announced that UNESCO would recognize Japanese architectural craftsmanship as an intangible heritage, and for good reason,” Allen says. “The zairai kōhō technique, which is Japan’s traditional and primary building technique for wooden structures, is extremely solid and can stand the test of time.”

On the downside, such engineering techniques mean that possibilities for design are more limited.

“We advise clients that they need to be comfortable with the current floor plan and overall design,” Allen says.

What empty homes lack in design possibilities, they often make up for in craftsmanship — not to mention the huge cost-savings compared to custom builds.

One of the most important factors to consider when looking for an empty home to renovate is a desire to relocate to a more rural location. And once the renovation work on the home has been completed, more work is still needed to ensure foreign residents are able to live in these communities according to Matt Ketchum, co-founder of Akiya & Inaka.

“It starts with removing barriers to entry from curious, creative individuals from all walks of life,” he says, “encouraging them to experiment as they see fit and with the support of local communities.”

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