Guide to Residential Property in Japan for Foreigners- Procedures and Rental Contracts

Outline of lease agreement

Procedure for Renting Real Estate in Japan

1. Inspection: - Generally accompanying the real estate agent, look at the property to make sure that it fully meets you requirements.
2. Sign the contract and stamp with your seal: - At the time of signing the contract all the expenses explained below have to be paid.
3. Possession: - Finally receiving of keys of the property from your agent and moving-in.

Required time and cost for agreement

In Japan at the time of renting a property the following expenses are incurred. Generally, the payments of these expenses are included in the agreement.
・　Deposit money
・　Key money
・　Agent commission
・　Advance payment of the rent
・　Other payments(Fire insurance charge, key exchange money, guarantee money , communal(for lighting, water) fees etc. ）

Deposit money is given to the owner of the apartment to compensate in case of any damages in the apartment during the stay, or in case, rent is not paid. It is usually 1 to 3 months worth of rent. At the time of leaving, costs for damages or unpaid rent is deducted from the deposit and the remaining amount returned. This ensures the owner against non-payment risk at the end of contract.
Houses without deposit money are also available, but in that case, you have to pay the claimed money at the end of the contract. So it does not mean that these houses are inexpensive.

Key money is a charge, paid to the owner of the apartment at the time of contract. It is usually 1 to 3 months worth of rent. It is non-refundable. In Japan it is meant as a payment to express gratitude to the owner or as an indirectly payment to compensate for the loss of rent after you leave.

Agent commission is the payment charged by agent for the services rendered by him. Usually it is equivalent to one-month rent or less. This is for the efforts spent to collect the information given to you, expenses for preparing a contract and material used for the contract etc.

Advance payment is the rent for the remaining part of the month after you enter the contract. It is calculated based on number of days remaining in the month.

Fire Insurance is usually paid by the tenant.

We help foreigners who are searching for rental property
We provide information on available houses or apartments, accompany you to see the property, translate, and help you at the time of contract.

Real Estate Investment related Information for foreigners

Outline of Investment contract

Procedure to be followed at the time of purchasing real estate in Japan

1. Preliminary Inspection of the house- Generally accompanying your real estate agent, view of the property and collect all necessary information.
　　　
2. Signing the contract At this time, you may have to pay some portion of money.
　　　
3. Inspection of property by bank to get the loan- In case you need mortgage loan to purchase a property, bank will inspect the property you are going to buy. If the bank is ready to give mortgage loan, you can proceed with applying for the loan.

4. Settlement- The seller and purchaser of the property organize a meeting and the seller receives the payment of agreed amount (Cost of the house- Granted loan amount). Other fee and expenses are also paid at this time. In Japan, property registration is mandatory. At this time, the title is also changed to the name of the purchaser, and he receives the keys. Thereafter, it is possible to move in.

Required Time and expenses for an agreement

1. At the time of contract
・　Earnest money
・　Agent commission( half )
・　Cost of revenue stamp
・　Expenses of loan（Guarantee charge, revenue stamp etc.）

2. At the time of settlement
・　Remaining payment
・　Agent commission (half)
・　Registration expenses
・　Taxes and public dues etc

Earnest money is paid at the time of agreement. Usually it is 10 to 20 % of the property price. After entering this agreement if somebody cancels the agreement this entire amount is forfeited by the seller.

Agent commission is that amount which you have to pay to the real estate agent or Real Estate Corporation if they are acting as intermediaries to buy or sell the real estate. Generally, the commission amount is 3% of the down payment + 60,000 yen. Agent charges commission from both sides, buyer as well as seller. For the buyer it is the amount given to the agent for the information and investigation done to search a good house and for completing all the formalities related to loan. As for the seller it includes the advertising and publicity expenses incurred by the agent to find a customer for the house.
Revenue stamp cost is the expenses incurred to purchase a revenue stamp, which is necessary at the time of written contract. According to Japanese law, it is necessary to pay stamp duty as a tax at the time of preparing any important official documents.

Advance payment of rent is the amount paid for the month of moving, calculated as on daily basis for that particular month. If the moving is, in the beginning of the month, calculations of the rent is according to monthly rate but if you are moving in between the month, the calculations of the rent is on daily basis for that particular month only.
Registration expenses include the transfer charges incurred to change the possession in the name of buyer, to pay the duty (registration certificate tax) and for the documents needed to file the application.

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Property Information for Temporary Visa Holders

Weekly and Monthly Mansions

Briefly speaking, it is a “mansion or apartment designed for a short stay”

Weekly and monthly Mansions are furnished apartments available for a minimum stay of one week. It is possible to use them for a longer period of 3 months to 1 year.
Monthly Mansions are complete with not only basic living needs such as TV, video, refrigerator, and washing machine but even some dishes. You can carry on with your usual life from the day you move in. It is like living in your own apartment rather than staying at a hotel. There is a wide variety of the house plans available for singles or Family purpose.

Generally, these are well-furnished mansions, fully equipped with home electrical appliances such as rice cooker, vacuum cleaner, washing machine etc., bedding set, kitchen appliances, knife, saucepan or fry pan etc., and daily living articles, such as hangers etc.

Additionally, some apartments offer a package containing internet connection, towels, some boxes of tissues, hair shampoo, dishes etc. as a “Single Life Kit”.

These are relatively costlier if compared with renting an apartment and furnishing it yourself, but cheaper if compared with staying in a hotel in Japan.
In practice, you have to pay the rent before moving in. Depending on your staying period rent is calculated on daily, weekly or monthly basis.
Another difference from staying in a hotel room is that you are free to go and come anytime you like and you can call your family and friends to your apartment. At the time of going out you don’t have to return the keys to the counter.
For example, if you want to rent a furnished studio for 1 month in Tokyo Metropolitan Area, if you add the rent, public utilities charges, cleaning expenses etc. it will cost you approx. 170,000 yen. If you compare this with a 1 night hotel stay, it costs you 8000 yen. The total for one month will become 8000 yen×31days ＝248,000 yen. In 1 month, you save 78,000 yen.

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Real Estate Trouble Support

In Japan, the Leased Land and House Law governs the leasing or renting of property or land. This law strongly protects the lessee involved in Japanese lease agreements and specially designed to handle the matters related to building and land matters.
The Law is enacted to protect the tenant even when his financial conditions are not very sound. However, this law is not applicable for the property which is only for one time (very short term) lease, or the property leased without any charge. This law applies to land which is taken on lease and built upon for the purposes of living
The person who holds or possesses the land under lease is called as Tenant and the person who owns the property and grants the lease is called as Landlord. In the case of building the terms lessor (one who grants a lease) or lessee (a tenant under lease) is popular in practice.

Residential Tenancy Right:- Residential tenancy right is the right to live in a leased property. In brief, if any of the parties (lessee or lesser) does not provide notification of termination of contract 6 months to 1 year in advance of the termination date, the contract extends automatically for the next lease period on the same conditions as the previous one. In case, lesser does not want to renew the contract, the requirement for a justifiable reason arises. If the lesser has a justifiable reason, he has to inform the tenant and after the termination of the contract if tenant still continues to use the house the lesser has to give warning immediately to vacate the house. If the warning is not given, the contract is still considered extended. Again, in case of termination, the lesser has to inform at least 6 months before the termination date and he needs a justifiable reason. If the tenant wants to terminate, he has to notify 3 months in advance.

・Subletting or Subleasing:-

Subleasing means the lease of all or a portion of premises by the tenant who has leased the premises from the owner. A sublease may be prohibited by the original lease, or require written permission from the owner. In case consent of the lesser is not taken, he has the right to terminate the contract based on these grounds.

If you have problems related to
Unilateral termination from the owner.
Tenant defaulting on rent payments
Noise from the floors above or below yours
Water leaking from floors above resulting in property becoming unusable
Trouble about pets
Complaints related to parking lot size or availability etc.

We provide consultation and support for these problems.

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Real Estate Concierge Services

Management of leased property for foreign owner
What is lease housing administration?
At the time of renting out a house
　　For a temporary period if you need to leave Japan, you might consider renting out the property you own. Generally, two types of rental agreements are followed:
Normal rental agreement
Fixed Term rental agreement
　　　　　　In normal rent agreement proprietor cannot refuse without a strong reason the renewal of the agreement. So instead of temporarily lease it is better to go for fixed term lease.
　

　
Searching for a tenant

　　1. Calculation of reasonable rent

For the calculation of reasonable rent, two methods are generally used, Estimation method and Comparison method.

Estimation method:-In this method monthly rent is calculated from summing up all the costs of land and construction and divided appropriately with the life of the house or amortization period
　　　｛（cost of plot of land+ construction cost）＋（Amount of loan＋loan interest）＋Landlord profit｝÷Amortization period＝Monthly rent

Comparison method: - According to this method, we survey the rental prices in the area surrounding the property, and adjust for the life of the property, closeness to station or malls, layout, fittings etc.

However, practically speaking, if the rent calculated from estimation method is higher than that from Comparison method, it will be very difficult to get a tenant willing to pay above market price. So the only choice left is to go for comparison method.
In comparison method, you can compare the rent with total amount or with the per meter price (unit price). From using unit price method you can calculate the rent even when no property of comparable size or layout is available. However in estimating the real rental price, it is essential that we take into account the uniqueness and character of the building.

　　2. Terms of Tenancy

It is upto the owner to attach any special conditions for renting out for example “Student only” or “Women only”.　However, if owner apply these types of restrictions to enter into the contract, it can be harder to find a tenant. On the other hand, although the owner might be concerned about getting the property dirty or damaged by pets, allowing tenant to keep pets in the property increases the salability. This equally applies to musical instruments too.

　　3. Establishment of terms of agreement (Normal & Fixed Term agreement)

The owner decides which contract to choose − Normal contract or fixed term contract. The difference between the two is that in Fixed term contract, the term of the contract is well defined and owner does not have to provide any justifiable reason to ask the tenant to vacate the property.
In case of normal rent agreement after finishing the contract time duration, if tenant demands for the extension, the landlord cannot refuse the renewal without a proper or strong reason. He might also have to pay the tenant a fee for vacating the property.
However, for fixed term rent agreement you have to fulfill all the requirements specified in Leased land and Property law. It is better to take specialist advice for this purpose.
Since Fixed Term contract is usually disadvantageous from the point of view of tenant, the rent is lower and the owner might not receive the upfront payments (Key money etc.)

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Acting as an agent to collect deposit on your behalf and send to you overseas

If you vacate a rented property to go overseas, you are entitled to receive the money back which you paid as Advance Deposit at the time of entering into rental contract. Part fo this money is used to repair the house, but the remaining money is paid back to you. However there are many foreigners who are either not aware of this or don’t have time to wait long enough, and they leave Japan without collecting this payment.

For this, our real estate concierge service gives you a consistent support starting from the departure procedures to depositing money overseas

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