Quick Fact: Japan has a tax treaty with British, which may prevent double taxation.
If you’re a British citizen considering buying property in Japan, you’re looking at one of the world’s most accessible real estate markets for foreign investors. Unlike many countries that impose restrictions or additional taxes on overseas buyers, Japan welcomes British investors with the same ownership rights as Japanese citizens.
This guide covers everything UK buyers need to know: HMRC reporting obligations, the UK-Japan Double Taxation Convention, currency transfer strategies, and the complete step-by-step purchasing process.
Last Updated: February 2026
Can British Citizens Buy Property in Japan?
Yes. British citizens can purchase property in Japan with virtually no restrictions. Japan grants full freehold ownership rights to foreign nationals—you have identical legal rights to Japanese citizens when it comes to property ownership.
What this means for British buyers:
- No visa or residency requirement to purchase
- Full freehold ownership of land and buildings
- No limit on the number of properties you can own
- No government approval required for most residential purchases
- No additional foreign buyer stamp duty (unlike the UK’s surcharge for overseas buyers)
The only exceptions involve properties near military installations and certain strategic locations, which face restrictions under Japan’s national security laws. These restrictions affect a tiny minority of properties and your agent will verify status during due diligence.
What property ownership does NOT give you:
- Residency rights or visa status
- Work permission in Japan
- Path to permanent residency
You can own multiple properties in Tokyo and still need a tourist visa to visit them. For long-term stays, you’ll need a separate work visa, spouse visa, or investor visa with its own substantial requirements.
Pro Tip: Many British investors buy Japanese property while living in the UK, then rent it out through a local property management company. The entire purchase can be completed remotely using a notarised power of attorney.
UK-Japan Double Taxation Convention
The UK-Japan Double Taxation Convention is crucial for British property investors. Originally signed in 1969 and substantially updated in 2006, this treaty prevents you from paying full taxes to both countries on the same income.
How the Treaty Works for Property
| Income Type | Where Taxed First | UK Treatment |
|---|---|---|
| Rental Income | Japan (source country) | Taxable in UK with Foreign Tax Relief |
| Capital Gains | Japan (primary right) | Taxable in UK with Foreign Tax Relief |
| Property Taxes | Japan only | Deductible as expense |
Under Article 6 of the convention, income from immovable property (including rental income) may be taxed in the country where the property is situated. This means Japan has primary taxing rights on your Japanese property income.
Foreign Tax Credit Relief
When you pay tax in Japan on rental income or capital gains, you can claim relief against your UK tax liability. This works as follows:
- Calculate your UK tax liability on the Japanese income
- Deduct the Japanese tax already paid (up to the UK liability amount)
- Pay only the difference (if any) to HMRC
Example: You earn £8,000 in rental income from your Tokyo apartment. Japan’s effective tax rate on this income is 20%, so you pay £1,600 to Japan. Your UK marginal rate is 40%, so UK tax would be £3,200. You claim £1,600 foreign tax relief, paying only £1,600 to HMRC.
Important: You cannot claim relief exceeding the UK tax due on that specific income. If Japanese tax exceeds UK tax (rare with rental income), you lose the excess credit.
HMRC Tax Obligations on Japanese Property
As a UK tax resident, you must declare worldwide income to HMRC. This is non-negotiable and applies regardless of whether you bring the money back to the UK.
Self Assessment Requirements
If you earn income from Japanese property, you’ll need to file a Self Assessment tax return. Key points:
| Requirement | Details |
|---|---|
| Filing Threshold | Foreign income over £1,000 requires Self Assessment |
| Form Required | SA106 (Foreign Income) attached to main return |
| Filing Deadline | 31 January (online) or 31 October (paper) following tax year |
| Late Filing Penalty | £100 initial penalty, increasing over time |
What to Report
On your Self Assessment, you must report:
- Gross rental income converted to GBP using HMRC’s approved exchange rates
- Allowable deductions including management fees, repairs, insurance, and Japanese property taxes
- Japanese tax paid to claim Foreign Tax Credit Relief
- Capital gains when you sell (on separate CGT pages)
Pro Tip: Keep meticulous records in both currencies. HMRC may request documentation years later, and you’ll need evidence of Japanese taxes paid to claim relief.
Capital Gains Tax: UK vs Japan
Selling Japanese property triggers potential CGT in both countries. Understanding both systems helps you plan effectively.
Japan Capital Gains Tax
Japan taxes non-residents on gains from Japanese property:
| Holding Period | Total Rate | Breakdown |
|---|---|---|
| Under 5 years | 39.63% | 30.63% national + 9% local |
| Over 5 years | 20.315% | 15.315% national + 5% local |
The 5-year rule is calculated from 1 January of the year following purchase to 1 January of the year of sale. Plan your exit timing carefully—this can nearly halve your tax bill.
UK Capital Gains Tax
For UK residents, Japanese property gains are taxable as residential property:
| Rate Band | CGT Rate (2024-25) |
|---|---|
| Basic rate | 18% |
| Higher rate | 24% |
The annual exempt amount for 2024-25 is £3,000.
Avoiding Double Taxation
The treaty prevents double taxation through Foreign Tax Credit Relief:
- Calculate UK CGT liability on the gain
- Deduct Japanese CGT already paid
- Pay only the difference to HMRC (if UK rate exceeds Japan rate)
Practical outcome: If you hold for over 5 years, Japan’s 20.315% rate often exceeds the UK basic rate (18%), meaning basic-rate taxpayers may owe nothing additional to HMRC. Higher-rate taxpayers (24%) will owe the differential.
Rental Income: Reporting to HMRC
Japanese rental income requires careful handling for UK tax purposes.
Japan Withholding Tax
Non-resident landlords in Japan face a 20.42% withholding tax on rental income when renting to corporate tenants. The tenant withholds this amount and remits it directly to Japan’s tax office.
This withholding:
- Applies automatically to corporate tenants
- Does not apply when renting to individuals for residential use
- Can be adjusted by filing an annual Japanese tax return
- Counts as “Japanese tax paid” for UK Foreign Tax Credit Relief
Reporting to HMRC
On your UK return, report:
- Gross rental income before Japanese tax deduction
- Allowable expenses (management fees, repairs, insurance, Japanese property taxes, depreciation)
- Net rental profit after expenses
- Japanese tax paid (claim relief)
Pro Tip: UK and Japan have different depreciation rules. Calculate UK capital allowances separately from any Japanese depreciation claims. The UK has restricted finance cost relief for residential lettings since 2020.
Currency Considerations: GBP to JPY
Exchange rates significantly impact your total investment. The current weak yen creates opportunities for British buyers.
Current Exchange Rate Context
| Period | Approximate Rate |
|---|---|
| Late 2025 | 188-192 JPY/GBP |
| 5-year average | ~155 JPY/GBP |
| 10-year average | ~150 JPY/GBP |
This means British buyers currently get approximately 20-25% more yen for their pounds compared to historical averages—potentially significant purchasing power advantage.
Smart Transfer Strategies
Never use your UK high street bank for large international transfers. Bank wire transfers typically charge 2-4% above the mid-market rate. For a ¥40 million property (approximately £210,000), that’s £4,200-8,400 in hidden fees.
Better options:
- Wise - Transparent fees, mid-market rates
- OFX - Competitive rates for transfers over £10,000
- Currency brokers - Often best for very large transfers
- Forward contracts - Lock in rates for future transfers
Pro Tip: For property purchases, consider transferring in stages if the exchange rate is volatile, or use a forward contract to lock in a favorable rate once you’ve found your property.
Step-by-Step Property Buying Process
The process typically takes 3-6 months from initial research to receiving keys.
Step 1: Research and Budget Planning (1-3 months)
- Research Japanese markets (Tokyo, Osaka, Kyoto are most popular with British buyers)
- Establish budget in GBP, accounting for exchange rate fluctuations
- Calculate total costs including 8-12% transaction fees
- Consult a UK tax adviser on implications
- Research property management options for rental investment
Step 2: Engage Professionals (2-4 weeks)
- Find an English-speaking real estate agent in Japan
- Consider UK-based firms with Japan expertise
- Consult cross-border tax adviser if planning to rent
- Prepare notarised documentation
Step 3: Property Search and Viewing (1-2 months)
- View properties in person or via video tours
- Check building age—post-1981 construction uses modern earthquake codes
- Assess location, transport access, and neighbourhood quality
- For investments, evaluate rental potential and management options
Step 4: Offer and Contract (2-4 weeks)
- Submit purchase offer (買付申込書 / kaitsuke moushikomisho)
- Negotiate price and terms
- Receive and review Important Matters Disclosure (重要事項説明書)
- Sign purchase agreement
- Pay deposit (typically 5-10% of purchase price)
Step 5: Completion and Registration (1-2 weeks)
- Transfer funds from UK to Japan
- Pay remaining balance plus transaction costs
- Judicial scrivener (司法書士) handles ownership registration
- Pay stamp duty and registration fees
- Receive keys and documentation
- Appoint tax representative if required
Pro Tip: Starting April 2026, Japan requires nationality disclosure during property registration. This won’t affect your ability to buy but adds one more document to prepare.
Required Documents for British Buyers
Non-resident British buyers need:
| Document | Purpose | How to Obtain |
|---|---|---|
| Passport | Identity verification | Already have |
| Notarised Affidavit | Certifies identity and address | UK notary or British Embassy/Consulate |
| Proof of Address | Verify UK residence | Utility bill, bank statement (within 3 months) |
| Bank Statements | Prove source of funds | Your UK bank |
| Power of Attorney | If completing remotely | Notarised and apostilled |
| Tax Representative Form | Appoint Japan tax agent | Provided by agent/scrivener |
The notarised affidavit must include your full legal name, date of birth, current address, and signature matching your passport. A UK notary public or British consular official can certify this.
Mortgage Options for British Citizens in Japan
Getting a mortgage as a British citizen in Japan is challenging but not impossible.
Japanese Bank Requirements
Most Japanese banks require:
- Permanent residency in Japan, OR
- Japanese spouse willing to guarantee, OR
- Substantial assets held with the bank
Realistic Options for British Buyers
| Option | Requirements | Down Payment | Notes |
|---|---|---|---|
| Cash purchase | None | 100% | Most common for non-residents |
| SMBC Prestia | High net worth, bank relationship | 30-50% | For clients with substantial deposits |
| UK equity release | UK property equity | N/A | Remortgage UK property to fund Japan purchase |
| Bridging finance | UK property security | Varies | Short-term option, higher rates |
Practical reality: Most British non-residents purchase with cash or release equity from UK property. Japanese mortgage rates are remarkably low (0.5-1.5%), but access requires residency or exceptional circumstances.
Total Costs: Purchase Fees and Ongoing Taxes
Budget 8-12% above the property price for transaction costs.
One-Time Purchase Costs
For a ¥40,000,000 (approximately £210,000) property:
| Cost | Calculation | JPY | GBP (approx) |
|---|---|---|---|
| Agent Commission | 3% + ¥60,000 + 10% tax | ¥1,386,000 | £7,300 |
| Registration Tax | ~1.5% of assessed value | ~¥600,000 | £3,150 |
| Acquisition Tax | 1.5% land + 2% building | ~¥800,000 | £4,200 |
| Stamp Duty | Per contract value | ~¥30,000 | £160 |
| Judicial Scrivener | Document preparation | ~¥150,000 | £790 |
| Other Fees | Various | ~¥120,000 | £630 |
| TOTAL | ~¥3,086,000 | ~£16,230 (8%) |
Annual Property Taxes
| Tax | Rate | Notes |
|---|---|---|
| Fixed Asset Tax | 1.4% of assessed value | Paid annually in April |
| City Planning Tax | Up to 0.3% of assessed value | Urban areas only |
Note: “Assessed value” (固定資産税評価額) is typically 50-70% of market value, so effective annual tax runs closer to 0.85-1.2% of what you paid.
Common Mistakes British Buyers Should Avoid
1. Forgetting Self Assessment obligations HMRC expects worldwide income reporting. Penalties for non-compliance are significant and HMRC has information-sharing agreements with Japan.
2. Using bank transfers for large sums High street banks charge 2-4% above mid-market rates. On a £200,000 purchase, that’s potentially £8,000 wasted.
3. Ignoring building age and earthquake standards Pre-1981 buildings lack modern earthquake resistance. The 1981 building code revision was crucial—verify construction date during due diligence.
4. Underestimating ongoing management needs If investing for rental income, professional property management (5-10% of rent) is essential for non-residents who can’t handle tenant issues directly.
5. Missing the tax representative appointment Non-residents must appoint a Japan-based tax representative. Failure to do so creates complications with tax notices and filings.
6. Overlooking the 5-year CGT threshold in Japan Holding for over 5 years nearly halves your Japanese CGT rate. Plan your exit timing accordingly.
7. Assuming property gives visa rights Property ownership provides zero immigration benefits in Japan. You’ll still need appropriate visas to stay long-term.
Property Management for Non-Resident British Owners
Professional property management is essential for British investors who can’t be on the ground in Japan.
Expect to pay 5-10% of rental income for full-service management including:
- Tenant finding and screening
- Rent collection
- Maintenance coordination
- Tax filing assistance
- English communication and reporting
Several agencies in Tokyo and Osaka specialise in serving overseas investors with bilingual staff and regular reporting.
Pro Tip: Choose a management company that can also serve as your tax representative and provide detailed annual income statements for HMRC reporting.
FAQ: British Citizens Buying Property in Japan
Do British citizens need a visa to buy property in Japan?
No. British citizens can purchase Japanese property without any visa. You can buy while visiting on a 90-day visa-free entry or even without entering Japan at all using power of attorney. However, property ownership provides no visa benefits—you’ll still need an appropriate visa to live in Japan long-term.
How do I report Japanese rental income to HMRC?
Report Japanese rental income on your Self Assessment tax return using form SA106 (Foreign Income). Convert income to GBP using HMRC-approved exchange rates, deduct allowable expenses, and claim Foreign Tax Credit Relief for Japanese taxes paid. Keep records of all Japanese tax payments as HMRC may request evidence.
What is the capital gains tax on selling Japanese property?
Both Japan and the UK tax capital gains on Japanese property. Japan charges 39.63% for properties held under 5 years, or 20.315% for over 5 years. The UK then applies its CGT rates (18% basic, 24% higher) but provides relief for Japanese tax already paid. In practice, if you hold over 5 years, you may owe little or nothing additional to HMRC if you’re a basic-rate taxpayer.
Can British citizens get a mortgage in Japan?
It’s difficult. Most Japanese banks require permanent residency or a Japanese spouse as guarantor. Non-resident British buyers typically purchase with cash or use equity release from UK property. SMBC Prestia offers loans to some high-net-worth foreign nationals but requires substantial deposits and typically 30-50% down payment.
Is now a good time for British buyers to invest in Japan?
The weak yen currently gives British buyers approximately 20-25% more purchasing power compared to the 5-year average exchange rate. Combined with Japan’s stable property market, no foreign buyer restrictions, and attractive rental yields in major cities, many British investors find current conditions favourable. However, currency rates can shift, so consider your long-term strategy rather than timing the market.
Ready to explore Japanese property? Use our ROI Calculator to estimate returns, or read the Complete Guide to Buying Property in Japan for the full step-by-step process.
This guide provides general information and should not be construed as tax or legal advice. Consult qualified UK and Japanese tax professionals for advice specific to your situation.