When renting a home in Japan for the first time, many newcomers—particularly foreign residents—may feel overwhelmed by unfamiliar terminology and unique rental practices. From required documents and upfront fees to daily living rules, many aspects of the leasing process differ significantly from those in other countries.
To help ease the transition, this guide outlines 7 essential facts that everyone should know before entering into a Japanese rental agreement. Each point is explained with an emphasis on accuracy and practicality, offering a clear foundation for a smooth and informed leasing experience.
Understanding the System of Security Deposit and Key Money
One of the most confusing aspects for first-time renters in Japan—especially for foreign tenants—is the unique upfront costs known as security deposit and key money.
Security deposit is a refundable deposit paid to the landlord at the start of the lease. It serves as a financial safeguard against potential property damage or unpaid rent. If there are no issues at the time of move-out, part or all of the deposit may be refunded. However, deductions may be made for cleaning fees or repairs deemed necessary.
Key money, by contrast, is a non-refundable fee paid to the landlord as a form of gratuity. Historically common across Japan, key money is no longer universally required, and an increasing number of listings now advertise “no key money.” However, in such cases, landlords may compensate by charging other fees under different names, so it’s crucial to assess the total move-in costs before committing to a lease.
Guarantor or Guarantee Company Required for Lease Agreements
In the Japanese rental market, it is virtually mandatory for tenants to provide either a personal guarantor or enroll in a rental guarantee company to ensure the landlord’s financial protection. A guarantor is typically a relative who agrees to cover the rent or other liabilities if the tenant is unable to do so.
In recent years, however, the use of rental guarantee companies has become the norm, especially for tenants without access to a qualified guarantor. When using a guarantee company, tenants are usually required to pay a guarantee fee equivalent to 50% to 100% of one month’s rent at the time of contract signing, along with annual renewal fees thereafter.
Approval from a guarantee company is not automatic. The screening process often involves a review of the applicant’s employment status, visa type, and documentation accuracy. Incomplete or incorrect submissions can lead to denial, so careful preparation is essential.
Understanding Lease Terms and Renewal Procedures
In Japan, residential lease agreements are typically set for a two-year fixed term. Upon the expiration of the contract, renewal procedures are usually required, and many properties involve a renewal fee, commonly equal to half to one month’s rent. These details are clearly stated in the lease agreement.
Even when the lease includes a renewal clause, the process is not always automatic—tenants may be required to submit formal notice of their intent to renew and complete related paperwork. Although rare, there are instances where landlords may decline lease renewal, particularly depending on the property’s future plans. To avoid misunderstandings, it is essential to review all terms related to contract duration, renewal options, and associated fees in writing before signing the lease.
Estimating the Total Initial Move-In Costs
When renting a property in Japan, the initial move-in costs typically amount to four to six months’ worth of rent. These costs may include the security deposit, key money, agent’s commission, first month’s rent, fire insurance premium, key exchange fee, and rental guarantee company fees.
Some properties may offer promotional incentives such as “free rent” for the first month, known as free rent campaigns. However, it is important to note that other charges may be adjusted to offset the discount. Since campaign details and fee structures vary widely by property, tenants should always review a detailed cost breakdown and compare listings based on the total amount payable, not just the rent.
Understanding the Important Matters Explanation
Under Japanese law, tenants must receive an Important Matters Explanation before signing a rental agreement. This explanation is conducted by a licensed real estate agent—either in person or online—and serves as a formal review of the property’s legal and contractual details.
Topics covered include the property’s structure, management conditions, zoning regulations, usage restrictions, renewal terms, and obligations related to restoration upon move-out. Despite the often complex content, tenants are required to sign a document indicating they have received and understood the explanation. It is therefore critical not to proceed without a full understanding of the terms. Tenants with language concerns should inquire in advance about the availability of translation support or multilingual documentation to ensure clarity and legal awareness.
Fire Insurance Is Principally Required
In most Japanese rental agreements, tenants are required to enroll in a fire insurance policy as a condition of the lease, even though it is not legally mandated. This has become a standard practice to mitigate potential risks for both landlords and tenants. Fire insurance policies typically cover damages caused by fire, lightning, and water leakage, and often include personal liability coverage for damage caused by the tenant to the building or neighboring units. The average premium is approximately ¥15,000 to ¥20,000 for a two-year term.
Tenants are frequently encouraged to enroll in a policy recommended by the real estate agent or landlord. However, in many cases, tenants have the option to select their own insurance provider. To ensure appropriate coverage and fair pricing, it is advisable to compare multiple policies and carefully review the balance between premium costs and coverage limits.
Carefully Review All Lease Agreement Terms
The lease agreement in Japan contains much more than just rent, security deposit, and key money details. It also outlines prohibited activities, rules for using shared spaces, and procedures for handling disputes or damages. Special attention should be given to custom clauses and terms regarding restoration obligations upon move-out.
For example, some contracts stipulate that the tenant must pay for professional cleaning or even replace wallpaper at the end of the lease. Additionally, early termination of the contract may trigger penalty fees, depending on the specific terms. Tenants should compare these conditions against their lifestyle and intended duration of stay to ensure they align with their expectations and needs.
It’s also important to note that verbal promises or informal agreements may not carry legal weight. Therefore, all terms and commitments should be confirmed in writing, and tenants should feel empowered to request amendments when necessary.