Real Estate Brokerage License in Japan: Rules for Foreign Owners

Buying and selling or brokering real estate, or acting as agent or broker in leases, as a business requires a real estate brokerage license (宅地建物取引業免許, takken license). You can begin operating only after appointing a full-time licensed real estate transaction agent at each office and either lodging a business security deposit or joining a guarantee association. Foreign nationals and foreign-owned companies can obtain the license on the same requirements.

Transactions that require a real estate brokerage license

The real estate brokerage business means carrying out the following acts concerning land and buildings “as a business”, that is, repeatedly and continuously with an unspecified number of counterparties.

• Leasing property your company owns as the lessor does not require a real estate brokerage license.
• Buying a property for investment and selling it once is not normally a business. Selling many properties repeatedly, however, may require a license.
• Taking on the management of rental housing above a certain scale requires registration under the Act on the Proper Management of Rental Housing, separately from the brokerage license.

Types of license and validity period

There are two types of license, depending on where your offices are located.

• Prefectural governor’s license: offices in one prefecture only
• License from the Minister of Land, Infrastructure, Transport and Tourism: offices in two or more prefectures (applications go to the regional development bureau with jurisdiction over the head office, or similar)

If a branch carries on brokerage business, the head office is also treated as an office, even if it does not do brokerage itself.

The license is valid for five years. To continue operating, apply for renewal between 90 and 30 days before the expiry date. The license lapses on the expiry date even if it falls on a weekend or public holiday. If you applied within the deadline, the existing license remains in effect even if no decision is made by the expiry date.

License requirements

There is no minimum capital requirement for the license. You do, however, need a funding plan that covers the guarantee association contribution and admission fee, office rent, agents’ salaries and other costs.

Full-time licensed real estate transaction agents

A licensed real estate transaction agent (宅地建物取引士) is a person who has passed the examination, registered with a prefectural governor and been issued an agent’s certificate. “Full-time” means working regularly at that office and engaging exclusively in the brokerage business. Employees of other companies, and people who live too far away to commute, are in principle not accepted as full-time. If numbers fall short, for example because someone leaves, the shortfall must be filled within two weeks.

Office requirements

The office must be clearly separated from other companies and living quarters and be a place where business can be carried on continuously. Photos and a floor plan of the office are submitted with the application. If part of a home is used as an office, the entrance and room must be separate from the living area. If you share a room with another company, it must also be clearly partitioned. A virtual office with no physical substance is generally not accepted as an office. For choosing an office, see also Can you register a company at a virtual or shared office?

Business security deposit versus guarantee association

To protect counterparties, brokers either lodge a business security deposit or join a guarantee association and pay a contribution. Business cannot begin until one of these is done.

There are two guarantee associations: the Real Estate Transaction Guarantee Association of Japan (全国宅地建物取引業保証協会) and the Real Estate Guarantee Association (不動産保証協会). If you want to keep initial costs down, joining a guarantee association is an option. When you open a branch, pay the branch contribution within two weeks of opening it.

Application steps

1. Set up the company and include real estate brokerage in the business purposes of the articles of incorporation (How to draft business purposes in the articles of incorporation)
2. Secure an office and decide on the full-time licensed agents
3. Submit the application form and attachments (officers’ résumés, agents’ documents, office photos and plans, certificate of registered matters, financial documents, officers’ certificates of identity status, etc.)
4. After review, receive notice of the license
5. Lodge the business security deposit or join a guarantee association, and notify this
6. Receive the license certificate and begin operating

A fee is payable for a governor’s license, and registration and license tax for a minister’s license. If the deposit or other notification is not made within a set period after licensing, the license may be revoked.

Main obligations after licensing

• Display the broker’s sign and the commission rates at each office
• Keep an employee register and transaction ledgers, and have employees carry employee certificates
• Keep commissions within the caps set by the Minister of Land, Infrastructure, Transport and Tourism
• Notify changes to the trade name, officers, offices, full-time licensed agents and other matters within 30 days

The law also prescribes documents for transactions. When engaged to broker a sale or exchange, you issue a brokerage agreement. Before the contract, a licensed agent explains the important matters, and once the contract is concluded you issue a document stating its terms (the Article 37 document). These documents must bear the licensed agent’s name.

Points for foreign executives and foreign-owned companies

Documents for officers of foreign nationality

To confirm there are no disqualification grounds, each officer submits a certificate of identity status (身分証明書) and a certificate of non-registration (登記されていないことの証明書). The certificate of identity status is issued by the municipality of the registered domicile (honseki), so officers of foreign nationality, who have none, cannot obtain it. Alternative documents are often required, so check with the licensing authority in advance. Attach Japanese translations to foreign-language documents. Having many officers of the overseas parent also serve on the board increases the work of gathering documents for all of them, and each change of officer requires a change notification. Decide the Japanese company’s board composition with the license procedure in mind.

If the representative lives overseas

If the representative is not based in Japan and cannot work at the office, you will generally be asked to appoint a manager (statutory manager) with authority to conclude contracts at that office. Specific treatment depends on the licensing authority’s guide, so check in advance and put in place a structure that can actually manage the business in Japan.

Transactions with foreign clients

• Important matters are explained by a licensed agent. Since May 2022, the important matters statement and other documents can be delivered electronically with the counterparty’s consent.
• Real estate brokers are specified business operators under the Act on Prevention of Transfer of Criminal Proceeds. For sales, client identity verification and record keeping are required.
• When a non-resident acquires real estate in Japan, a report under the Foreign Exchange and Foreign Trade Act (FEFTA) may be required. For details, see How foreigners buy property in Japan.

Contracts and important matters statements are normally prepared in Japanese. Even when providing translations for clients, explain that the Japanese document is the authoritative version.

How TIMOA can help

To apply for a real estate brokerage license, you secure an office and full-time licensed agents and show that no disqualification grounds apply. After licensing, you lodge the business security deposit or join a guarantee association and begin operating. For foreign executives, preparing officers’ documents and a management structure in Japan is key.

Working with partner administrative scriveners (行政書士) and judicial scriveners (司法書士), TIMOA supports company setup and the design of business purposes, office selection, license application preparation and procedures for transactions with foreign clients. For details, see our Permits & Financial Licenses page.