The British Embassy Tokyo will reduce its size by 20% in 2014. The British Embassy Tokyo is located at Chiyoda-ku, nearest station is subway Hanzomon station, and occupies 35000 square meter of land. The British Embassy Tokyo has resided at the current location since 1872 where Japanese government owns 100% of the land and the British government has a sole right to rent the land. For 2013 the British government has paid 81 290 000 JPY (478 072 GBP) to Japanese government for land lease.

The British government has indicated to Japanese government that they wanted to reduce expense at the embassy. The British government and Japanese government came to the agreement that the British government will return 20% of the right to rent the land, in exchange Japanese government will transfer the land right of remaining 80% of the land to the British government. Both party has agreed as equal exchange.

The British government will no longer have to pay the rent for the land to Japanese government. Japanese government will gain 7000 square meter of free land, which currently valued at 14 000 000 000 JPY (823 350 00 GBP or US$ 134,531,000).

134 million dollar for 7000 square meter of land, well, sure it is on the prime land in the middle of Tokyo… British government will own the land means British government now have to pay property tax, isn’t it? I am guessing that will be lot less than what British government paid for land lease? Or foreign government exempt from paying property tax on embassy land? How does it work?