If you have ever tried to rent an apartment in Japan as a foreigner and have been rejected because of your nationality, you may be surprised to learn that Japanese landlords face serious, long-term headwinds with respect to renting out their properties.
As we’ve discussed in detail in other articles, the country is dealing with a host of demographic and macroeconomic trends that are already having a direct effect on the real estate market. These include:
- Population decline and an aging society
- 8.2 million vacant houses scattered throughout the country
- Polarization caused by the movement of young people to big cities and the hollowing out of small cities and towns.
- Mismatch between the existing housing stock and the needs of young people moving into cities, where more and more “households” consist of just a single person.
- The growing number of resident foreigners who need long-term housing.
In relation to these issues, the Japanese government, specifically the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) has identified the need to issue guidelines to encourage more landlords to rent to foreigners.
The MLIT’s guidebook is entitled: “Guidelines for Facilitating Foreigner’s Moving Into Private Rental Housing” (Japanese PDF), and it is meant to provide guidelines, practical advice, and concrete reasons for why landlords should rent to foreign tenants.
Below we summarize the key takeaways from the guidebook to give our readers insight into the “question” of “renting to a foreigner” as seen from the perspective of a Japanese landlord and the MLIT.
1. There is increasing demand for rental housing by foreigners
The introduction to the guidelines is a discussion of the growing population of resident foreigners in Japan.
The demand for rental housing by foreign residents is forecast to increase as the number of resident foreigners (people staying in Japan for more than three months and who are registered as foreigners) has continued to increase in recent years. As of the end of 2016, there were about 2.4 million registered resident foreigners in the country. This compares with about 2.03 million as of the end of 2012.
This number is expected to steadily increase as the government has loosened immigration rules to allow more blue-collar workers into the country. It has also eased the requirements for highly-skilled professionals to apply for permanent residency and implemented major urban re-development projects with foreigner-friendly elements on-site (such as international medical facilities, serviced apartments, and childcare services) to attract highly-skilled workers and their families.
About half of foreigners living in Japan live in private rental housing. According to a survey by the Ministry of Internal Affairs, as of the end of 2015, resident foreigners’ housing situation was as follows:
- Live in private rental housing: 50%
- Own their own homes: 17%
- Live in a dorm/share house: 11%
- Live in public rental housing: 10%
- Live in employer provided housing: 6%
- Rent a room/space in a house or apartment: 6%
The government guidebook also makes the argument that as more tourists come to Japan, a certain number may like the country so much they may think about actually coming to settle here.
2. Why you should rent to foreigners: Here’s the government’s advice to landlords and agents
The government guidebook gives three key reasons why Japanese landlords should consider renting to foreign tenants.
1. Target a market where there isn’t a lot of competition
Although there is increasing demand by resident foreigners for rental house, many landlords will not rent to them. (For more on the reasons why, please see: Top 5 reasons why rental applications are rejected by landlords in Japan and Survey on housing discrimination in Japan).
The government’s advice to landlords and agents is to actively target the resident foreigner market in order to differentiate yourself as someone who will rent to and work with foreigners. This way, you’ll get even more potential clients and tenants through word-of-mouth, advises the guidebook.
2. A few small things can help decrease your vacancy rate
The guidebook states that most resident foreigners don’t really demand high-grade amenities in their rental housing, as long as the room is clean. It advises landlords to offer tenants free Internet and to furnish properties with furniture and home appliances in order to make the property more attractive to foreign tenants and thereby increase the occupancy rate.
3. Which locations are desired by foreigners
According to the guidebook, more and more foreigners are moving to industrial areas, to areas where there is good access to the city center and to neighborhoods with low rent. Many foreigners also move to established neighborhoods where there are shops and businesses operated by other foreigners because they are attracted to the unique community there. What someone considers a “good location” is, of course, also very dependent on your reason for living in Japan and the neighborhood’s characteristics.
For landlords struggling to fill vacant rooms, says the guidebook, it’s possible that your property is located in a neighborhood that is in demand by foreign tenants and by being open to rent to foreigners you may discover demand that you didn’t know existed.
3. Answers to FAQs about renting to foreigners
The guidebook has a detailed chapter with answers to FAQs about renting to foreigners. Here are just a few sample questions which provide a little insight into the concerns that some landlords may have about renting to foreigners:
- How do I advertise my property to foreigners?
- What kind of things should I be particularly concerned about when dealing with foreigners?
- What kind of identification documents do foreigners use?
- How do I guarantee a rental lease (with a foreigner)?
- Is it ok if I use a Japanese lease agreement (with a foreigner)?
- Do I need to have them sign with a seal (inkan) (or is a signature ok)?
- How do I explain what “restoration to original condition” means?
- What are some issues that might arise after the tenant moves in (for example, sorting garbage)?
- What are some things to consider when the tenant cancels the lease?
The language issue
The guidebook’s answer to this question provides even more insight into the language barrier, from the perspective of a Japanese landlord who doesn’t speak the language of their potential tenant.
- Question: “What kind of things should I be particularly concerned about when dealing with foreigners?“
- Answer: “Be sure to use easy-to-understand Japanese and to speak clearly and slowly. There’s no need to be particularly conscious that (the applicant) is a foreigner. It’s important to be as kind to them as you would to a Japanese person. It can also be effective to write down numbers as you try to explain what you are saying and to check (that the applicant understands). If you really aren’t able to communicate in Japanese (with an applicant), have a friend or acquaintance interpret for you.”
4. Guidebooks to help foreigners apply for rental housing
On the demand side, the government has also prepared guidebooks in various foreign languages to help foreigners apply for rental housing. Below are links to the English versions:
Apartment Search Guidebook (English)
On the official MLIT page, you can find links to other languages, including Japanese, Chinese, Korean, Spanish, Portuguese, and Nepali.
If you want to rent an apartment without having to deal with the language barrier and other stresses, you may want to consider the GaijinPot Housing Service. This is a housing service for foreigners looking for an apartment in Japan. With this service:
- You can apply from overseas
- Don’t have to speak or read Japanese – And will get full bilingual support
- Don’t need a guarantor
- Can pay for everything with a credit card
- Will not be rejected for an application because of your nationality
Learn more here: GaijinPot Housing Service
Lead image: “Japanese Only” signage at at club at Misawa Airbase, Aomori via Debito.org