In this article, we give an overview of the main move-in costs required for renting an apartment in Japan and how common it is for a deposit and key money to be a requirement. Of the move-in costs usually required in Japan, the deposit, agency fee, and key money will set you back the most. So if you can find an acceptable property that doesn’t charge these fees, you’ll be able to significantly lower your upfront costs.
What are the main move-in costs I should be aware of?
- Deposit — Not always required – Please see details below
- Key money — Not always required – Please see details below
- Agency fee — Not always required – When required is usually equal to one-half to a full month’s rent
- Guarantor company fee – Sometimes required — Usually equal to one-third to a full month’s rent
- Renters insurance – Always required — Usually about ¥20,000 for a two-year policy
- Lock exchange fee – Always required — Usually about ¥12,000 to ¥15,000
- First month’s rent
What percentage of properties in Japan do not require a deposit?
About 53.4% of rental properties in Japan do not require a deposit.
More and more property owners and property management companies are requiring tenants to use a guarantor company (rather than a family member as a guarantor), because they are use as being better equipped to collect on potential delinquencies.
Guarantor companies basically reduce rental delinquency risk for landlords by guaranteeing that you will not default on your rent. Because of the increasing requirement, there has also been a decreasing nationwide trend in the requirement to pay a deposit.
In the Kinki region, which includes Osaka, Kobe, and Kyoto, the deposit amount tends to be lower than in the rest of the country, but the amount of key money (see below for definition) tends to be higher.
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What percentage of properties in Japan do not require key money?
About 45.5% of rental properties in Japan do not require key money.
What is key money?
This is a gratuity , called reikin (礼金) in Japanese, that you pay to your landlord as part of your move-in fees. It will not be returned to you when you vacate your apartment.
Key money is often explained as a cultural custom or as a relic of the era of rapid post-war economic growth, when Japan experienced acute housing shortages in urban areas. Prospective tenants would pay key money to landlords to get to the head of the line.
But there is also an economic rationale for key money: tenants, as a practical matter, have a right to renew in perpetuity under Japanese law, so landlords demand extra compensation to account for this option to renew.
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What is the average deposit required to rent an apartment in Japan?
Nationwide, the average deposit required to rent an apartment is equal to 1.44-months’ rent. This means if the stated monthly rent is ¥50,000, the deposit would be equal to ¥50,000 x 1.44 = ¥72,000. More commonly, the deposit is a whole number multiple of the monthly rent and is usually equal to 1-month’s rent for lower to mid-range properties and at least 2-months’ rent for higher-end properties.
What is the average amount of key money required to rent an apartment in Japan?
Nationwide, the average amount of key money required to rent an apartment is equal to 1.36-months’ rent. This means if the stated monthly rent is ¥50,000, the deposit would be equal to ¥50,000 x 1.36 = ¥68,000. More commonly, key money is a whole number multiple of the monthly rent and is usually equal to 1-month’s rent, but as noted above, about 45% of rental property listings in 2018 did not require key money.
Thinking ahead to your lease renewal after the initial two-year term
Regular rental leases in Japan have an initial 2-year term. You then have the option of renewing your lease every two years, but some landlords charge a lease renewal fee.
Nationwide, the majority of properties (62.4%) do not require a lease renewal fee; but among those that do, the average lease renewal fee is equal to 0.89 months’ rent.
Lease renewal fees tend to be higher in Kanto (Tokyo, Kanagawa, Chiba and Kangawa) than elsewhere in Japan because this region of Japan is experiencing net population inflow, which means that the demand for apartments tends to be higher than supply, giving landlords more of a financial rationale for charging a lease renewal fee.
The data above regarding deposit and key money is based on a survey conducted by Tokyu Housing Lease for about 11 million rental properties nationwide, that were occupied between January 1 and December 31, 2018.
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