(Updated on December 1, 2023)

• Licensing system of real estate brokers
• The role of real estate brokers
• Real estate broker commissions

Japan has a licensing system for real estate brokers. Pursuant to the provisions of the Building Lots and Buildings Transaction Business Act, only brokers that are licensed by the Minister of Land, Infrastructure, Transport and Tourism or the prefectural governors, and are also recognized to have enough capital strength and expertize, are allowed to deal in real estate transactions such as sales and brokerage.

Real estate brokers that are legally licensed for real estate transactions in Japan are allowed to perform internet searches using the “Search system for information on building constructors and housing land and building dealers and others” of the Ministry of Land, Infrastructure, Transport and Tourism.

 

The search system’s site is at this link, although it is available only in Japanese

 

The role of real estate brokers (real estate transaction companies) is to provide support on issues regarding sales and leases of real estate by being positioned between both parties to reach conclusions of sales contracts and lease agreements.

The services provided by these brokers are largely divided into the three categories below:

• Services provided at the stage where the broker receives an inquiry from the party on the sale or lease of real estate up to the stage where it receives an official request.
• Services provided at the stage where it receives an official request up to the stage where a counterparty to the sale or lease of the real estate is found.
• Services provided at the stage where a counterparty is found up to the stage where the sales contract or lease agreement is entered into, the payment settled, and the property delivered.

In real estate transactions, interventions of real estate brokers are required in order to smoothly advance transactions without problems or losses, since in many cases the parties lack knowledge on business transactions.

When a real estate transaction is concluded, a brokerage commission is required to be paid to the broker. The amount of this commission, whose upper limit is regulated by the Building Lots and Buildings Transaction Business Act, can be decided by the real estate company on its own as long as it does not exceed the limit.

In the case of a, 5.4% is applied to the total amount.
In the case of b, 5.4% is applied to the amount of 2 million yen and 4.32% to the amount exceeding 2 million yen up to 4 million yen.
In the case of c, 3.24% is applied to the amount exceeding 4 million yen and the amount of commission can be calculated by the simplified calculation system of sales price ×3.24% + 64,800 yen.

Half of the brokerage commission for a sales contract is generally paid when the contract is entered into. The other half is paid when the payment is settled and the property delivered.

For lease agreements, the total sum of brokerage commissions received from both the landlord and the tenant may not exceed the rent for a month (excluding consumption tax) ×1.08, which is the sum of the rent and consumption tax. In the case where the commission is paid by either the landlord or the tenant, its upper limit is regulated to be the rent for a month×0.54. In general, the commissions for lease agreements are paid at the time of their conclusion.