Renting vs Buying in Tokyo (2025 Analysis for Foreign Residents)

Overview of Tokyo’s Real Estate Market

If you live in Japan and are trying to decide whether to rent or buy a house in Tokyo, you're not alone. In 2025, the real estate market in Tokyo is more competitive than ever. With both rent and purchase prices reaching historic highs, many foreigners are wondering whether renting or buying a home is the smarter move.

For expats, long-term residents, and anyone holding a valid visa, understanding the cost of renting, monthly mortgage payments, property tax, and the value of the building is essential before choosing between renting or buying in Tokyo. This guide breaks down the difference between renting and buying in Tokyo and helps you decide what’s financially better based on your situation.

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Renting in Tokyo: Cost and Flexibility

Renting a Property in Tokyo in 2025

Tokyo’s rent levels continue to climb, especially in central areas like Minato, Shibuya, and Chiyoda. Monthly rent for a studio apartment (~25m²) in central Tokyo averages around ¥120,000, while a family-sized rental property (~2–3BR) can cost ¥250,000 to ¥300,000. In outer areas like Adachi or Saitama, the same apartments may cost half as much.

Pros and Cons of Renting

Advantages of Renting in Tokyo:

• Lower upfront costs compared to buying (4–5 months’ rent upfront).
• Flexibility of renting – move out with little hassle.
• No responsibility for property depreciation or maintenance.
• Renting allows easier mobility for short-term residents or those hesitant to buy property.

Disadvantages:

• You continue paying rent with no return.
• Rent increases can happen upon lease renewal.
• Renting typically means stricter rules (e.g. no pets, no renovations).
• Rent hikes are becoming more common in central Tokyo due to low housing supply.

Why Renting Makes Sense for Many Foreigners

If your stay in Japan is temporary or your future plans in Tokyo are uncertain, renting offers flexibility and lower risk. Renting might also be more cost-effective for students, short-term assignees, or anyone not ready for a long-term commitment.

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Buying in Tokyo: Costs and Long-Term Investment

Buying Property in Tokyo: 2025 Prices

The purchase price of property in Tokyo depends on location and type. As of 2025:

• Average used condominium in the 23 wards (~70m²): ~¥90 million.
• In Chiyoda or Minato, the price can exceed ¥190 million.
• In Adachi or Katsushika, prices fall to around ¥50 million.
• New single-family homes in suburban areas: ¥40–60 million.

Buying a home requires a large upfront investment, including:

• Down payment (typically 20–30%)
• Closing fees (5–8% of the purchase price)
• Property tax and insurance
• Renovation costs (if applicable)

Despite high values in Tokyo, buying property can make sense financially—especially for those who plan to stay in Japan for the long term.

Mortgage and Financing for Foreigners

Foreigners can buy property in Tokyo and get a mortgage from Japanese banks, though conditions apply:

• Valid visa and stable income required
• Permanent residents (or spouses of Japanese citizens) are preferred
• Some banks require a Japanese guarantor
• Interest rates in 2025: ~0.8% (variable), ~2.0% (fixed)

A monthly mortgage for a ¥50 million loan at 1% interest is around ¥130,000. That’s often cheaper than renting a similar apartment.

Foreign buyers can also qualify for group credit life insurance, which covers the mortgage balance in case of death, providing financial security for families.

Buying vs Renting: 10-Year Financial Comparison

Scenario	Renting	Buying
Monthly Payment	¥200,000 in rent	¥135,000 mortgage + ¥30k expenses
Total in 10 Years	¥24 million (gone)	~¥15–16 million (net cost)
Final Equity	None	~¥22 million in property equity
Flexibility	High	Medium
Risk	Low	Property depreciation possible

Buying becomes financially better after 5–10 years, depending on the property value trend. If the value of the property appreciates, your return improves. If it depreciates, you might lose money. That’s the key opportunity cost of buying versus renting.

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Renting vs Buying in Tokyo: Lifestyle and Legal Considerations

Flexibility and Life in Japan

The flexibility of renting is ideal for people who don’t plan to stay in Japan permanently. Foreigners often start with renting to learn about Tokyo neighborhoods and the Japanese real estate market. However, those who plan to stay long-term and seek more control over their living space often end up buying.

Owning a home lets you:

• Renovate your space freely.
• Have pets (in most properties).
• Avoid rent hikes.
• Build long-term equity.

Legal Rights for Foreign Buyers

Foreigners can legally buy property in Tokyo. You don’t need to be a permanent resident, but owning a home does not grant you a visa. Whether you buy a house or a condo, you’ll need:

• A valid visa to reside in Japan
• Proof of income for mortgage applications
• A registered seal (inkan) for signing contracts
• Help from a real estate agent and judicial scrivener

Japan imposes no special restrictions on foreign ownership. However, if you buy and leave Japan, you'll need a property manager, and taxes may differ for non-residents.

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Buying Property in Tokyo: Taxes and Ongoing Costs

Initial Costs When You Buy a Property in Japan:

• Stamp duty
• Real estate agent commission
• Registration tax
• Real estate acquisition tax
• Mortgage registration fees

These costs total roughly 5–8% of the purchase price.

Ongoing Costs of Owning a Home:

• Fixed asset and city planning taxes (~1.7% per year)
• Monthly condo fees and repair reserves (¥10,000–40,000)
• Home insurance
• Renovation and repairs (over time)

Understanding these costs is crucial before buying a home in Tokyo. Work closely with a Japanese real estate agent and tax advisor to estimate your full financial responsibility.

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Conclusion: Should You Rent or Buy in Tokyo?

Whether to rent or buy in Tokyo depends on your personal and financial situation. There’s no one-size-fits-all answer, but here are some key points:

Buying a Home May Be Better If You:

• Plan to stay in Japan 7+ years
• Want to stop paying rent and build equity
• Have upfront cash and stable income
• Want control over your home (renovate, own pets, etc.)

Renting May Be Better If You:

• Plan to stay short-term or are unsure
• Need lower upfront costs
• Want maximum flexibility
• Are new to the Japanese real estate market

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Final Thoughts for Foreigners in Japan

Foreigners and Japanese people alike face the same core question: rent or buy in Tokyo? Renting offers flexibility and lower risk. Buying a property in Tokyo means long-term commitment, higher upfront costs—but potentially better financial outcomes over time.

Whether renting or buying, Tokyo is a world-class city with diverse neighborhoods, and your decision should reflect your financial goals, career plans, and lifestyle preferences. Talk to a real estate agent, check mortgage options, and think carefully about your plans in Japan. And remember—the difference between renting and buying is not just math. It’s about how you want to live.