Government to Centralize Management of Foreign Real Estate Ownership, Aiming for 2027 Launch with Mandatory Nationality Registration

The Japanese government is reportedly moving forward with the establishment of a database to comprehensively understand and centrally manage real estate owned by foreign nationals in Japan. The system aims to become operational in fiscal year 2027, with the goal of increasing transparency regarding foreign real estate acquisitions, which have previously been inadequately tracked, and addressing potential national security risks. Specifically, the government plans to introduce a nationality registration system for cases where nationality disclosure is not currently mandatory under existing regulations, such as in the real estate registration of condominiums.

Leveraging Real Estate Base Registry, Scrutiny Extends to Corporate Ownership

The core of this new management system will be a database utilizing the "Real Estate Base Registry," which the Digital Agency is developing. This database will enable detailed recording and management of which foreign nationals own which properties. Furthermore, adjustments are underway to require the disclosure of nationalities of major shareholders and officers of corporations based in Japan that acquire real estate using foreign funds. This is expected to reveal the actual state of indirect real estate ownership through shell companies and other intermediaries.

Public Welcomes Move, Expects Further Regulatory Reinforcement

In response to this government policy, many citizens have expressed their welcome on social media. Comments such as "It was strange that this had been neglected until now" and "Finally, a significant step forward" suggest that there have long been concerns about the lack of transparency surrounding foreign real estate ownership. On the other hand, some questions have been raised, such as "How can they manage foreign ownership when they can't even manage Japanese ownership?" There are also calls for further regulatory tightening, with suggestions like "Land purchases themselves should be restricted" or "Property taxes on investment condominiums should be doubled or tripled." The government has indicated its readiness to consider how to regulate foreign land acquisition once the reality of real estate acquisitions becomes transparent, and future developments are being closely watched.

The Context

For non-Japanese readers, this initiative by the Japanese government represents a significant shift in its approach to foreign ownership of real estate. Historically, Japan has had relatively relaxed regulations concerning foreign acquisition of land and property, with no general restrictions based on nationality, unlike some other countries. However, concerns have grown in recent years regarding potential national security implications, particularly in areas near critical infrastructure, military bases, or sensitive border regions, as well as the acquisition of vital resources like water sources by foreign entities without clear oversight. The current system lacks a comprehensive, centralized database to track such ownership effectively, leading to calls from the public and some political factions for greater transparency and control. This move towards mandatory nationality registration and database integration is aimed at addressing these concerns, ensuring that Japan can better monitor and, if necessary, regulate foreign land and property ownership, aligning its practices more closely with other developed nations that have stricter controls in place for strategic or security reasons.