By Jeff Wynkoop
The Japanese government has been unable to verify the legality of 53% of the 15,000 properties it surveyed and 30% of properties were found to be unlicensed. This is according to a recent government survey meant to ascertain the current market conditions for Airbnb-style short-term accommodations in Japan. The survey also revealed the big differences in size, price, and length of stay at licensed versus unlicensed rooms.
These were the key findings of a survey by Japan’s Ministry of Health, Labour, and Welfare on the actual status of Airbnb-style leasing of private homes and apartments in Japan, known as minpaku (民泊) in Japanese.
Editor’s note: Since this article was originally published, the Japanese Diet passed a law fully legalizing Airbnb rentals in Japan on June 9, 2017. Please see: Japan legalizes Airbnb rentals in Japan: Diet passes law
Not Enough Hotel Rooms for Growing Number of Tourists
Airbnb-style rentals are increasingly popular in both major cities and less travelled provincial areas, as there are not enough hotel rooms to accommodate the growing number of inbound tourists. A record 24 million tourists visited Japan in 2016, nearly double the figure two years ago.
In response to these growing numbers, there has been a surge in recent years in the number of properties being leased out by private individuals as Airbnb-style accommodations.
The Development Bank of Japan has also estimated that in the event visitors to Japan reach the government targeted number of 40 million per year by 2020 (when Tokyo will be hosting the summer Olympic games), the supply of accommodations in Tokyo alone will be over 18 million short.
The government hopes that Airbnb-style rentals will help bridge this gap. However, it also has to play a delicate balancing act between facilitating the letting out of private short-term accommodations that meet health and safety regulations, the interests of private individuals operating these rentals versus hotel operators, and the attitudes of residents and condominium owners living nearby.
Currently, minpaku in Japan are only allowed in Osaka and in Ota-ku in Tokyo, or by special permission to operate as a ‘simple accommodation’ (簡易宿所) under the Hotel Business Law. However, the ‘simple accommodation’ conditions of the Hotel Business Law are rather strict, and this has spawned many illegal minpaku operations around the country, with several thriving online websites dealing in short-term accommodations.
On March 10, 2017, the Japanese Cabinet agreed to the contents of the draft law to be submitted to the Diet to legalize minpaku (Airbnb-style) private stay accommodations for all of Japan. The government plans to have the draft law passed in this year’s regular Diet session, with implementation in 2018.
One of the main purposes of the draft law is to give the Diet a way to authorize these existing illegal businesses. Details on the law can be found here: Legality of Airbnb in Japan.
The survey conducted by the Ministry was meant to shed some light on the actual status of this opaque market, even as the new law has not been made official.
The Ministry surveyed 15,000 properties advertised online in locations across the country from major metropolitans areas to rural regions, and was conducted from October to December 2016.
Properties in Rural Areas More Likely to be Licensed
According to the Ministry’s report, 30.6% of the advertised properties were confirmed to be operating without the appropriate business license.
In the main metropolitan areas where there are special economic zones and designated administrative zones enabling licensure of Airbnb-style businesses, out of over 8200 properties, only 150 properties (1.8%) were found to be properly licensed.
In contrast, properties located in rural areas were licensed at a much higher rate (2355 out of 6927, or 34% were licensed); 54.2% of the unlicensed properties were found to be located in condominiums, whereas only 35.9% were found in a detached house.
Average Size, Stay and Price
The average size of unlicensed properties was roughly 2/3 the size of licensed properties. The average minimum stay at a licensed property (1.3 nights) was also much shorter than for unlicensed properties (an average of 2 nights).
The average stay at a licensed property costs 16,571 JPY per night, versus 7,659 JPY per night to stay at an unlicensed property.
Legality of 53% of Properties Unverifiable
In 52.9% of the properties advertised, the Ministry was unable to verify conclusively whether the property was licensed.
This means that the Ministry was unable to verify the legality of over 80% of the properties it found advertised on the web. The main reason for this difficulty, according to the Ministry, is because the entire booking process for unlicensed properties, including the actual physical guidance to properties, is done online and/or by mobile phone. In addition, many websites are specifically designed to make it impossible to verify the exact location of properties from the map on the online advertiser’s website.
Of the 16.5% verified licensed minpaku properties, 67.9% were licensed as simple accommodations (簡易宿所営業) under a special category in the Hotel Business Law. However, this category still contains inflexible legal conditions such minimum size of each room for guests, etc., making it impractical to try to qualify under for many would-be minpaku operators.
You may also be interested in: Operating an Airbnb-Style Vacation Rental in Japan