AirBnB in Japan

Why the Japanese Government Was Right to Regulate AirBnB in Japan

By Jeff Wynkoop

Recently some commentators have been taking the Japanese authorities to task for how they dealt with implementation of the June 15th Minpaku law. They say poor planning and heavy-handed regulation led to thousands of foreigners losing their room reservations with very little advance notice. Further, they say home sharing businesses operated in a gray zone prior to the new law, and that the government should have allowed for a grace period for the new rules to come into effect. This “fiasco”, they contend, was wholly avoidable and is just another example of how the Japanese are behind the times (or not really welcoming of the ‘foreign’ tourism boom, take your pick).

However, what was coming was foreseeable to everyone operating a minpaku business in Japan.

As has been detailed here and elsewhere over the last five years, the Japanese authorities faced a dilemma when dealing with the new home sharing phenomenon. On the one hand, in 2013 there was an acute lack of suitable accommodations for visitors to Japanese cities, and any new tourists finding a place to stay provided a shot in the arm to the Japanese economy. On the other hand, however, room sharing as a business aimed at the general public was illegal unless the business was licensed as a short-term accommodation under the Hotel Business Law. Because the Hotel Business Law was not created with home sharing in mind, it contains several legal conditions to licensing that are ill-suited for operating a minpaku. Accordingly, in April 2014 a new ordinance was created to authorize minpaku located in a special designated zone (特区民泊 or tokku minpaku), generally in Ota-ku in Tokyo or in Osaka-shi.

This new exception to the Hotel Business Law did little to stop the rising number of illegal minpaku outside of the special designated zones. That was the tricky part. The rapid growth made it harder for the authorities to respond in force, since no one wanted to move too quickly and risk killing the golden goose of new tourist dollars. Almost all new minpaku were illegal, but the authorities didn’t have the resources to shut them all down one-by-one, and certainly didn’t want to act too heavy-handedly. There were however several examples of illegal minpaku being shut down in Kyoto and in a few other places around Japan.  

On June 9th, 2017, the Japanese Diet passed a new Minpaku law, authorizing the leasing out of private residences for short-term accommodations. Details of the new law were already being discussed in the press by autumn 2016, and in December 2017, it was widely reported that many local authorities were enacting their own rules to limit home sharing in their areas once the new law came into effect in 2018.

How can anyone say with a straight face that it was a surprise when the Minpaku law finally came into effect on June 15th, 2018? There were no room cancellations this year due to any changes in the Japan home sharing rules. The rules have been consistent for years, and the companies subverting them have been as well. However, over the last five years the number of new tourists to Japan has increased dramatically, and in step investment in Japanese hotels has skyrocketed. There are many new hotels springing up all around the country, and at this point finding a room when visiting Japan is not so dire.

The underlying question in all of this is whether the Japanese authorities should be regulating home sharing. Living in an apartment in Tokyo or Osaka is not like owning a house in the US. When I rent an apartment in Tokyo, an important criteria in picking the building is whether the building has an autolock (オートロック). An autolock in an apartment building or condominium refers to an electronic intercom/viewing monitor/unlocking device that is installed in each separate unit in the building. Visitors can come into the entrance area of the building, but there is a separate locked door that prevents them from accessing the elevator and actually going to the front door of each individual apartment. In order to go through this second entrance, it is necessary to use a metal key, card key, etc. to unlock the autolocked door, or to have someone in the apartment open the autolocked door for you. Security is enhanced by having an autolock because it takes at least two keys to actually get inside a specific unit (one for the autolock for the building and one for the individual apartment).

I don’t want anyone and everyone from the street to have access to the door of my apartment 24 hours a day. I like the security in knowing that only my neighbors in the building have access to inside the building, the storage room, the garbage room, etc. There are plenty of residential buildings in Tokyo without autolocks to choose from, but they tend to be in less desirable locations.

One day coming home late from work, I had my own home sharing episode. There were two young tourists wandering around in the building, but for me it was suspicious, what were they doing there? They said they were looking for a room, but the apartments were numbered, and they were on the wrong floor. What were they looking for? I have a young daughter, and this is not the sort of thing I want to deal with in my personal residence. Surely the situation would have been even more distressing if I had been facing a significant language barrier in dealing with the two young men.

Thankfully my building made home sharing illegal a short time thereafter, and many other buildings around town have been doing the same. Regardless of the new law, no one in my building will be allowed to operate a minpaku business.

All of this begs the question: is it legitimate to regulate minpaku? Do the new laws create more problems than they solve? Was the law written merely for anti-competitive reasons to help hotel developers and big business? Is the government sticking its nose where it doesn’t belong???

I believe hotels and those that hold out rooms to the general public should be regulated. In my opinion, anyone holding out a room to the general public should be subject to certain basic rules on cleanliness, noise pollution, garbage disposal, etc., just like a hotel. Further, I believe it is completely legitimate for Japanese neighborhoods and building managers to regulate minpaku in the interests of all residents in the building or neighborhood, not just property owners with a spare room. It is said that home sharing can be a good way to foster international ties among people all over the world, but it should be self-evident that there can be deleterious effects to unleashing minpaku businesses everywhere in a country that is steadily becoming one of the most elderly in the world.

Editor’s note: The opinions of the writer do not necessarily reflect those of Real Estate Japan Inc.

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