In Japan, residential leases typically follow a two-year contract cycle, at the end of which a formal renewal process is required. At this point, many tenants encounter the concept of a renewal fee—a uniquely Japanese custom that often raises questions such as:
“Why is this fee necessary?”
“How much does it typically cost?”
“Are there properties where this fee can be avoided?”
This article offers a clear and concise overview of the costs associated with lease renewals, explains how the renewal fee system works, and highlights key considerations to ensure you fully understand what you’re agreeing to.
What Is a Lease Renewal in Japan?
Residential lease agreements in Japan generally fall into one of two categories: fixed-term contracts or standard rental agreements. The latter is far more common for long-term residential use and typically includes a built-in expectation of renewal every two years.
A lease renewal involves the following steps:
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If the tenant wishes to continue residing in the property, they must formally extend the agreement.
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The property manager or landlord will typically send a Renewal Notice by mail or email.
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The tenant confirms their intention by signing and stamping the renewal documents—or completing the process online—and pays the associated renewal fee to extend the lease.
Key Costs Associated with Lease Renewals
| Item | Description | Typical Cost (Based on ¥100,000 Monthly Rent) |
|---|---|---|
| Renewal Fee | Paid to the landlord to extend the lease | Equivalent to one month’s rent (¥100,000) |
| Administrative Fee | Charged by the property management company for handling the renewal | ¥5,000–¥15,000 |
| Fire Insurance Renewal | Fire insurance must be renewed every two years | ¥15,000–¥20,000 |
| Guarantor Company Renewal Fee | Applies annually or biennially depending on the contract terms | Around ¥10,000 |
What Is a Lease Renewal Fee—and Why Is It Charged?
A renewal fee is a unique practice in the Japanese rental market, referring to a payment made by the tenant to the landlord in exchange for extending the lease. While not legally mandatory, it is enforceable if clearly stipulated in the rental agreement.
The Rationale Behind Renewal Fees:
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For landlords, it serves as compensation for avoiding the cost and risk of finding a new tenant, including potential vacancy periods.
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For tenants, it is considered a premium for the continued right to occupy the property, offering peace of mind and continuity.
Regional Variations and the Rise of “No Renewal Fee” Properties
The renewal fee system is not standardized nationwide, and customary practices can vary significantly by region. Below are some typical trends:
| Region | Common Renewal Fee Practice |
|---|---|
| Greater Tokyo Area (Tokyo, Kanagawa, etc.) | Typically one month’s rent |
| Kansai Region (Osaka, Kyoto, etc.) | Ranges from 0.5 to 1 month’s rent, depending on the property |
| Regional Cities | Often no renewal fee; may charge only a minimal administrative fee |
💡Due to increased market competition, more properties now advertise zero renewal fees. However, it is not uncommon for these properties to compensate by setting higher monthly rent.
Key Considerations When Renewing a Lease
✅ 1. Is the renewal fee amount clearly stated in the contract?
→ If not explicitly outlined, landlords may not be legally entitled to enforce such charges.
✅ 2. Is there a separate administrative renewal fee?
→ In some contracts, a management company may charge an additional fee beyond the standard renewal payment.
✅ 3. What is the procedure if you choose not to renew?
→ Typically, advance notice—often one month—is required. Failure to give notice may trigger an automatic renewal and the corresponding fees.
✅ 4. Will there be a change in rent?
→ In certain cases, rent may be revised at renewal. Always confirm whether any adjustments are documented in writing.
Common Questions About Lease Renewal Fees
Q. What happens if I don’t pay the renewal fee?
→ In many cases, failure to pay may result in non-renewal of the lease and a request to vacate, or the landlord may pursue the outstanding balance.
Q. Can I get the renewal fee refunded later?
→ No. Renewal fees are non-refundable, as they represent compensation for the right to extend the lease—not a deposit.
Q. What if I’m charged a renewal fee that wasn’t mentioned in the contract?
→ If the fee is not clearly specified in the lease agreement, it may be deemed invalid. Review the contract carefully and consult with your property manager for clarification.
Points to Prevent Renewal-Related Disputes
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Keep a copy of your lease agreement and review it prior to renewal.
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Thoroughly review the renewal notice once received, and ask about any unclear terms.
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If seeking a property with no renewal fee, assess the overall value, including the base rent.
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If you plan to move out instead of renewing, complete the termination process properly and on time.
Is the Renewal Fee Justified—A Reasonable Cost or an Unnecessary Burden?
Lease renewal is a procedural safeguard that ensures you can continue residing in your home with confidence. In this context, the renewal fee functions as a usage fee for ongoing occupancy. However, it’s important to note that not all properties impose this charge, and terms vary by property. Understanding those conditions is key to making a sound decision.
Even if a renewal fee is required, it may still be worthwhile if the property offers strong overall value—considering rent, location, amenities, and living environment. Conversely, if the recurring renewal cost feels burdensome, seeking out properties that waive this fee may be a practical alternative.
Ultimately, a truly informed choice in housing takes into account not only the initial contract terms but also the ongoing costs of living—ensuring long-term satisfaction and financial clarity.