An owner-change property (ōnā chenji bukken) is one sold with a tenant still living in it. To live there yourself, you'd need that tenant to move out, but you can't demand they leave just because it suits the landlord. Below we cover how an owner-change sale works, why you can't just move in, the pitfall of a promised move-out date, and how mortgages are treated.
- An owner-change property is sold with the tenant still living in it.
- A tenant under an ordinary building lease (futsū shakuya keiyaku) is protected by the Land and House Lease Act (shakuchi shakuya hō), and the landlord can't demand they leave just because it suits the landlord.
- A verbally promised move-out date can't be relied on — you need to confirm it in writing.
- As long as the tenant is living there, the loan is treated in principle as an investment loan, not a mortgage.
In short
An owner-change property is one where ownership is transferred while the tenant is still living there. To live there yourself, you'd need that tenant to move out, but you generally can't demand they leave simply because it suits the landlord. If you're drawn to consider one for your own use because of the lower price, it's essential to understand this point first. Proceeding on the strength of "it's cheap" alone can leave you discovering later that you can't move in on your intended timeline, badly disrupting your funding plan and schedule.
What "owner-change" means
An owner-change sale transfers ownership of a property along with its existing lease. Such properties are basically traded as investment properties meant to generate rental income, so their price can look lower than an equivalent property sold vacant for occupancy. It's important to understand that this price gap reflects the constraint of whether you can actually move in right away. It's a reasonable choice to consider as an investment, but if you're considering it for your own use, it's important not to overlook what's behind that price gap.
Why you can't just move in
Among Japan's various leases, a tenant living under an ordinary building lease is heavily protected by the Land and House Lease Act. A landlord needs justifiable grounds (seitō jiyū) to refuse to renew the lease, and in practice, "the buyer wants to live there themselves" is rarely accepted as justifiable grounds on its own. So unless the tenant agrees to leave, the buyer generally can't move in themselves. Whether justifiable grounds exist is decided by weighing multiple factors together — the circumstances of both landlord and tenant, whether relocation compensation is offered, and more — so it's not something you can easily predict.
The pitfall of a "planned move-out"
You may be told at the time of sale that "the tenant plans to move out soon," but be careful — a plan mentioned only verbally can't be relied on. To judge whether you can actually move in, it's essential to confirm, based on the contract itself, whether the move-out date is clearly fixed in writing, or whether the lease is a fixed-term building lease (teiki shakuya) with a clear expiration. Deciding to buy on hearsay alone — "I've heard they'll be moving out soon" — risks not being able to move in on your intended timeline, disrupting your funding plan.
The problem of not being able to use a mortgage
As long as the tenant is living there, the property doesn't count as owner-occupied, so the loan is treated in principle as an investment loan rather than a mortgage. An investment loan generally carries a different interest rate and screening standards than a mortgage, and you need to factor this in from the funding-planning stage. In some cases, you'd later consider refinancing into a mortgage once the tenant's move-out is confirmed, so it's worth planning your finances with that later stage in mind from the time you buy.
If you still want to consider one
Considering an owner-change property for your own use really only makes sense in cases where the lease is a fixed-term building lease with a clear move-out timing, or where the move-out date is confirmed in writing. We recommend weighing the lower price carefully, with these constraints behind it in mind. Always confirm the paperwork around the move-out, and don't let a verbal explanation alone drive your decision — that's what leads to a choice you won't regret.
Frequently asked questions
Can I buy an owner-change property and live there myself?
Not unless the tenant moves out. A tenant under an ordinary building lease is protected by law, and you can't demand they leave simply because it suits you as the buyer.
Why are owner-change properties cheaper?
Because of the constraint that you can't live there yourself, and because pricing is based on rental yield, they can look cheaper than the going rate for owner-occupied properties. There's a reason behind the lower price.
Can I buy one with a mortgage?
In principle, no, as long as the tenant is living there. It's generally treated as an investment loan rather than a mortgage, since a mortgage assumes you'll live there yourself.
Summary
It's easy to focus on an owner-change property's lower price, but buying one for your own use means clearing the high hurdle of the tenant moving out. Confirm the move-out status in writing and how the loan will be treated, and weigh your decision carefully.