Buying a Ryokan in Japan

Key points

• Foreigners can buy. There is no nationality restriction on owning a ryokan or hotel building and land. What you cannot simply “buy” is the right to operate it.
• The licence belongs to the operator, not the building. A hotel-business licence (旅館業許可) is issued to a person or company for a specific facility.
• Since Dec 2023Licences can now pass on a business transfer (事業譲渡) if seller and buyer obtain the governor's (or city's) approval before the transfer. Transfer first and you must apply for a new licence.
• The onsen permit does not pass on a business transfer. Under the Hot Springs Act, a permit to use hot-spring water for public bathing passes only by corporate merger/split or inheritance. An asset buyer applies afresh, and piped-supply contracts usually need the supplier's consent and a fee.
• Buying the operating company (share deal) keeps every licence and permit in place, but you inherit its liabilities, staff and history.
• Older buildings are the biggest cost risk: fire-safety upgrades, pre-1981 seismic design, and “existing non-conforming” status that bites when you extend or convert.
• A property is not a visa. Since 16 October 2025 the Business Manager visa needs ¥30 million capital, a full-time local employee, Japanese ability (B2) and management experience, and fully outsourced operation may not count as “managing”.
• Plan on cash. Japanese lenders rarely fund non-resident hotel purchases.

What licence does a ryokan need?

The Hotel Business Act (旅館業法) defines three types of lodging business. Any of them needs a licence from the prefectural governor, or the mayor where the city (or Tokyo ward) runs its own public-health centre (Art. 3).

A licence has no nightly cap, unlike home-sharing under the Private Lodging Business Act (180 nights a year at most, often less locally; see minpaku rules by city). The licence can be refused if the applicant (or, for a company, any executive officer) falls within the disqualification list, for example a recent criminal sentence or organised-crime links (Art. 3(2)), and near schools and child-welfare facilities the authority consults them first (Art. 3(3)–(4)).

Local ordinances add a lot on top: staffed front desks or “rush-to-site” rules, minimum room sizes, bans in residential zones. Several Tokyo wards and Osaka City tightened simple-lodging rules in 2025–26; our rules-by-city page tracks the main ones.

Licence succession: what changed in December 2023

Until 12 December 2023, a licence could pass to a new operator only through a corporate merger or split, or inheritance. A buyer taking over a ryokan through a business transfer (buying the building, equipment and business from the operating company) had to apply for a brand-new licence, which meant meeting today's standards and a gap in operation.

The amendment in force from 13 December 2023 (Act No. 52 of 2023) added Article 3-2:

• Approval must come first. Oita Prefecture's guidance, for example, states that if the business is transferred before approval, the buyer cannot succeed and must apply for a new licence. Build the approval into the contract timetable as a condition precedent.
• Joint application by seller and buyer to the public-health centre, with the transfer agreement and (for a company) articles, officer list and certificate of registration. Oita quotes a fee of ¥7,550 and roughly 2–3 weeks; other authorities differ.
• The buyer is screened against the same disqualification list as a new applicant (Art. 3-2(2)).
• Follow-up inspection: for the time being, the authority must inspect the business at least once within six months of the succession (MHLW).
• Succession by merger/split (Art. 3-3) and inheritance (Art. 3-4, within 60 days) still exist.

Onsen rights: the part buyers most often get wrong

“With onsen” can mean very different things legally and financially. Establish which of these applies:

• Own source (自家源泉): the ryokan owns the well on its land, or a separately held hot-spring right (温泉権・湯口権). Hot-spring rights are a customary right recognised by the courts, often not recorded in the land register, so ownership has to be traced through contracts, local registers and the prefecture's records.
• Shared source: co-owned with neighbours or a local association, with rules on volume, cost-sharing and transfer.
• Piped supply (引湯・給湯) from a municipality, cooperative or company, under a supply contract. Municipal examples: Atami City charges a hot-spring maintenance fee when the supply-contract holder changes by sale; Kusatsu Town's ordinance levies a contribution when a hot-spring supply permit is transferred.

Permits under the Hot Springs Act (温泉法)

Unlike the Hotel Business Act, the Hot Springs Act was not amended to allow succession on a business transfer. In an asset deal, the buyer needs its own Article 15 use permit before opening the baths; in a share deal, the permit stays with the company. The operator must also display the water's composition, based on a registered laboratory's analysis that is repeated periodically (Art. 18).

Ask for: the source location and ownership, flow rate and temperature history, the latest analysis report, pump and pipe condition, supply contracts and fees (and whether they can be assigned), and any disputes with neighbours or the local onsen association.

Fire safety and the building code

Fire Service Act (消防法)

• Hotels and ryokan are category (5)-i fire-protection properties. Automatic fire alarms are required regardless of size (Fire Service Act Enforcement Order Art. 21). Buildings under 300 ㎡ may use the simplified wireless “specified small-facility” system, following the 2015 extension prompted by the 2012 Fukuyama hotel fire (FDMA).
• Sprinklers are required for hotels with 11+ storeys, or non-single-storey hotels of 6,000 ㎡+ (Order Art. 12), plus certain basement/windowless and upper floors.
• Hotels with 30+ capacity and 3+ storeys can hold the fire department's compliance mark (適マーク, silver, then gold after three years). A missing mark on such a building is worth a question.
• Ask for the most recent fire-inspection reports and any outstanding violation notices.

Building Standards Act (建築基準法)

• Change of use: converting a house, dormitory or company retreat (保養所) into a hotel or ryokan with more than 200 ㎡ used as such requires a building confirmation, as for new building (Art. 87 with Art. 6(1)(i)). Below 200 ㎡ no confirmation is needed, but the building must still comply.
• Existing non-conforming (既存不適格): many ryokan were legal when built but no longer meet current rules. They may continue as they are, but extensions, major renovation or a change of use can require bringing the whole building up to date. Check this before planning a renovation.
• Unauthorised additions are common in old onsen inns (annexes, covered corridors, outdoor baths). Compare the building on site with the building confirmation, completion certificate (検査済証) and register.
• Seismic: buildings designed before 1 June 1981 used the old seismic standard. Large pre-1981 hotels and ryokan (3+ storeys and 5,000 ㎡+) had to have a seismic diagnosis whose results are published by the local authority under the Seismic Retrofit Promotion Act, so check that list for bigger properties.

Zoning: where a hotel may stand

The Building Standards Act (Appended Table 2) limits hotels and ryokan by use zone (用途地域):

Many onsen and ski areas have no use zone, sit in an urbanisation control area (市街化調整区域, where new building and changes of use are tightly restricted), or lie inside a national or quasi-national park with its own permit rules and landscape ordinances. An existing ryokan may be fine to operate yet impossible to rebuild at the same size. Ask the broker to confirm the zone, planning area, park designation and any local landscape or hot-spring protection rules in the statement of important matters.

Deal structure: asset deal vs share deal

Many small ryokan are family businesses where the owner, the operating company and the onsen right-holder are different people. Map who owns what before agreeing a price. Share purchases of Japanese companies by foreign investors are also an inward direct investment under the Foreign Exchange Act, which usually needs a post-transaction report within 45 days via the Bank of Japan (prior notification in designated sectors). Legal and tax structuring is for your lawyer and tax adviser; we do not give that advice.

Staffing and choosing an operator

A ryokan is labour-intensive: front desk, housekeeping, kitchen (kaiseki dinners are the biggest cost and the hardest to staff), bath cleaning and maintenance. Rural onsen towns have acute staff shortages. The common set-ups are:

• Owner-operated, with a local manager and team. Maximum control, maximum workload; usually needs someone on site.
• Management contract (運営委託・マネジメント契約): a hotel operator runs it in your name (your licence) for a base fee plus incentive fee. You keep the operating risk.
• Lease (賃貸借): an operator leases the building, holds its own licence and pays fixed and/or variable rent. You become a landlord; the licence and onsen permit are the operator's.
• Simplified model: dropping dinner (room-only or breakfast only), self check-in where the local ordinance allows it, or converting to whole-house rental under a simple-lodging licence.

Ask for current staff numbers, contracts, wage levels, who holds key know-how (the head chef, the boiler and source maintenance), and whether key people will stay. Which licence holder and which set-up you choose also affects the visa question below.

Visa: owning a ryokan does not give you residency

Buying property gives no right to live in Japan. Buyers who want to run the ryokan themselves usually look at the Business Manager status (経営・管理), whose criteria were tightened from 16 October 2025 (Immigration Services Agency):

• Capital of ¥30 million or more (paid-in capital of the company; for a sole proprietor, the total invested in the business).
• At least one full-time employee who is Japanese, a special permanent resident, or a foreign resident with permanent resident, spouse or long-term resident status.
• Japanese ability at CEFR B2 level (e.g. JLPT N2 or BJT 400+) held by the applicant or a full-time employee.
• A relevant master's/doctoral/professional degree, or 3+ years' management experience.
• A business plan checked by an expert (SME management consultant, CPA or tax accountant).
• ISA states that where management is effectively outsourced and the applicant's activity as a manager is not substantial, the status will not be granted, and a home generally cannot double as the office.

Existing holders have a transition period to 16 October 2028 for renewals. A property bought purely to be leased to an operator will not support this visa. Get immigration advice from a licensed 行政書士 or lawyer before you commit.

Financing realities

• Most foreign buyers pay cash. Japanese home loans exclude hotels, and non-resident business lending is rare. See mortgages for foreigners by residency status for what exists (a few products for Taiwanese and Hong Kong residents, mostly for residential property).
• Regional banks and the Japan Finance Corporation do lend to operating hotel companies, typically to Japanese-resident companies with a track record, local guarantors and a business plan. A share deal can sometimes keep the seller's existing loans if the bank agrees to the change of control.
• Many buyers borrow at home against other assets, or bring in a Japanese operating partner.
• Budget for capital expenditure on top of the price: fire, seismic, boiler/source and bathroom work in an older ryokan can be a large share of the purchase price. Get contractor quotes during due diligence.

Taxes: business property is taxed differently

• Estimate acquisition tax, registration tax, stamp duty, brokerage and annual fixed asset tax with our tax & cost calculator, then adjust for business use:
• No residential reliefs. A ryokan is neither a home nor a holiday home (別荘). The building pays 4% acquisition tax (the 3% reduced rate is for land and housing), land gets no 1/6 residential-land reduction for fixed asset tax, and the housing deductions do not apply. The same is true of a holiday home, but for a different reason: a 別荘 is excluded from “housing”, whereas a ryokan is a business asset.
• Consumption tax (10%) is charged on the building, equipment and other taxable assets when the seller is a business; land is exempt. A business owner registered for consumption tax may be able to recover it.
• Depreciation and business losses are available to a business owner, but old buildings, goodwill and equipment allocation need a Japanese tax adviser.
• Guests may pay local accommodation taxes (宿泊税) and bathing tax (入湯税) that the operator collects and pays; several resort areas introduced or raised accommodation taxes in 2025–26 (see rules by city).
• A non-resident owner needs a tax representative in Japan (see the buyer's guide).

FEFTA reporting

A non-resident who acquires Japanese real estate must report it to the Minister of Finance via the Bank of Japan within 20 days, whatever the price. Buying the shares of a Japanese operating company is instead an inward direct investment with its own reporting. See the FEFTA section of our buyer's guide for the property report and the 2026 changes.

Due-diligence checklist

Your broker, lawyer, tax adviser, architect and fire-safety engineer each cover parts of this. Use it to make sure nothing falls between them.

Licences and permits

• Hotel-business licence: type, holder, facility, date, conditions; any guidance or orders from the health centre.
• Route: succession (business transfer, prior approval), share deal, or new licence. Timetable and conditions precedent in the contract.
• Onsen: source ownership, Article 15 use permit, analysis report date, supply contracts, transfer fees and consent.
• Other permits: restaurant/food business, alcohol sales, public bath (if day visitors use the baths), septic tank, lifts, boilers.

Building and land

• Building confirmation and completion certificate; unauthorised extensions; existing non-conforming items.
• Build date (pre-/post-June 1981), seismic diagnosis, published results for large buildings.
• Fire inspection reports, violation notices, compliance mark.
• Zone, urbanisation control area, national park, landscape ordinance; road access; boundaries.
• Hazards: flood, landslide, tsunami and volcanic hazard maps (many onsen towns sit on steep slopes or near volcanoes). Compare areas on our earthquake & flood risk page and check the national hazard map portal.
• Plant and equipment: boilers, source pumps, pipes (onsen water is corrosive), kitchen, heating and snow-melting in ski areas.

Business

• At least 3 years of actual P&L, occupancy and average daily rate by month, not projections. Check seasonality (ski areas can take most revenue in winter; onsen towns peak at weekends and holidays).
• Booking mix: OTAs, travel agents, direct, groups; share of foreign guests.
• OTA reviews and ratings trend; complaints about baths, food, cleanliness.
• Staff list, contracts, wages, unpaid overtime, key people.
• Share deal only: tax filings, debts and guarantees, litigation, related-party contracts.
• Area demand: see occupancy and foreign-guest trends.

What do ryokan and small hotels cost? Honest price bands

Rough patterns from these listings: tired rural onsen inns can list below ¥100m but usually need heavy capex; operating onsen ryokan in well-known areas (Hakone, Atami, Izu) and ski-resort lodges and small hotels commonly list at ¥100m–¥300m; urban small hotels and ryokan in Tokyo and Kyoto list in a similar ¥100m–¥500m band on much smaller buildings. Larger resort hotels run into billions of yen and are usually sold off-market. (Our reading of listing snapshots; small samples.)

For land-value context around resort areas see official land prices and our Hakuba and Niseko price pages.

Occupancy & foreign-guest trends by prefecture

Use it to sense-check a seller's figures: an inn reporting occupancy far above its prefecture's ryokan average deserves a closer look at the numbers behind it.

FAQ

Sources

1. Hotel Business Act (Act No. 138 of 1948), Arts. 2, 3, 3-2 to 3-4, e-Gov: laws.e-gov.go.jp/law/323AC0000000138
2. Hotel Business Act Enforcement Order, Art. 1 (structural standards), e-Gov: laws.e-gov.go.jp/law/332CO0000000152
3. MHLW, 2023 amendment (in force 13 Dec 2023, Act No. 52 of 2023), special site and pamphlet: mhlw.go.jp/kaiseiryokangyohou; pamphlet (PDF)
4. Oita Prefecture, succession approval on business transfer (timing, joint application, fee): pref.oita.jp; Chiba Prefecture summary: pref.chiba.lg.jp
5. Hot Springs Act (Act No. 125 of 1948), Arts. 3, 6, 7, 14-2 to 14-6, 15 to 18, e-Gov: laws.e-gov.go.jp/law/323AC0000000125
6. Atami City, hot-spring supply fees (fee on change of holder by sale): city.atami.lg.jp; Kusatsu Town hot-spring use ordinance: town.kusatsu.gunma.jp
7. Fire Service Act Enforcement Order, Arts. 12 and 21, e-Gov: laws.e-gov.go.jp/law/336CO0000000037; FDMA, small lodging facilities and fire alarms: fdma.go.jp PDF; FDMA compliance-mark system: fdma.go.jp
8. Building Standards Act, Arts. 6, 87 and Appended Tables 1–2, e-Gov: laws.e-gov.go.jp/law/325AC0000000201
9. MLIT, buildings subject to mandatory seismic diagnosis: mlit.go.jp PDF
10. Immigration Services Agency, revised Business Manager criteria from 16 Oct 2025: moj.go.jp/isa; summary (PDF)
11. Bank of Japan, FEFTA inward direct investment FAQ: boj.or.jp; MOF, real estate acquisition reports: mof.go.jp
12. Listing snapshots (asking prices, retrieved 27 Sept 2026): urihotel.jp; reyado.jp
13. GSI hazard map portal: disaportal.gsi.go.jp