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Home Insurance For Condominiums In Japan: Understanding Shared And Personal Coverage – Apartment Hunting in Japan: Introduction to Key Money, Guarantee Fee and Hidden Fees When you are apartment hunting in Japan, you may be surprised that the monthly rent or yachin (家賃) is different from the total amount you have to pay.
Apartment Hunting in Japan – Avoid paying more than expected by being aware of the hidden fees associated with renting a place in Japan. It is always best to be informed before signing a contract.
Home Insurance For Condominiums In Japan: Understanding Shared And Personal Coverage
When looking for an apartment in Japan, you may be surprised that the monthly rent or yachin (家賃) is different from the total amount you have to pay. Renting in Japan is tied to hidden fees, some more cultural and optional like key money. So before you jump at the chance to find a one-bedroom apartment in Tokyo for ¥50,000 a month, consider the other fees first, because that amount can quickly quadruple in the end.
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In Japan, tenants are required to give their landlords a gift in the form of key money, gratitude money or reikin (礼金) as a token of appreciation for letting them rent out a place. This non-refundable amount can be equal to the original security deposit or as high as six months’ rent. What’s more, the final amount is entirely up to the landlord, meaning it can be multiplied or canceled entirely.
To better understand the concept of gratitude money, let us first study the history. It is understood that the practice only began during the latter parts of the Second World War when there was a severe housing shortage. This meant that tenants had a surplus and there was a high demand for housing, which placed landlords in an optimal position to choose the most profitable solution. Basically whoever offered the highest key money got the key to the house.
Another theory stems from the Great Kantō Earthquake of 1923, when the supply of rental properties also decreased. Real estate agents say the practice gained popularity after parents in rural areas sent a gift to landlords in Tokyo to curry favor with their children migrating to the city for study or work.
Could you imagine that amount reaching a year’s rent in the late 1980s and early 1990s? It sure was a good time to be a landlord back then. But as the situation settled and the economy developed, thus creating more supply for consumers, rentals became more available. Now that the tables have turned, landlords are competing to get their space rented out; therefore many offer low to zero key money. You can confirm this with a real estate agent, although the space’s advertising will often include details of “no key money.”
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With key money out of the way, we move on to more common fees such as the security deposit called the hoshōkin (电影金) or shikikin (敷金) and the renewal fee, called the koshinryo (最新料). The deposit is paid in advance as a sign of good faith that the tenant would take care of the space. In the event that some damage occurs (in addition to typical wear and tear) at the final inspection before the tenant moves out, a certain amount is deducted from the deposit.
Then you have koshinryo, which is the renewal fee. Since most apartments or houses come with a contract, usually two years, you have to pay the landlord a certain amount to continue living in the place. Renewal fees are often around a month to a month and a half’s rent. Keep this in mind when checking the contract.
If you are a non-Japanese renting an apartment, the landlord may want you to find a Japanese resident to act as extra security in case of complications. Another option is to use your employment agency as your guarantor (with consent of course), although some tenants do not want their residence to be linked to their workplace for reasons of privacy and security.
If you do not have anyone who meets the criteria to act as a guarantor, then you move to a guarantor company. These are companies that act as guarantors for tenants for a fee. Guarantee fees, or hoshōgaisha riyō-ryō (电影会会电影料) are usually 50 to 120 percent of your rent. Tenants must first pass the company’s audit before signing a contract, although the chances of failure are quite low.
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In addition to the security deposit and guarantor fees, you may also find other costs that are not included in the monthly rent, such as fire insurance or kasai hoken (火災保院), key exchange fee or kagi kokan hiyo (鍵工作质质), maintenance fee or kanri-hi (管理費), cleaning fee or pest control.
Fees for fire insurance, maintenance, cleaning or pest control are implemented to ensure that your living area and common areas remain clean and safe. In the meantime, tenants must pay to have the door lock changed when they move in, so you can be sure that the previous tenant does not have access to your new home.
If you have a pet, expect to pay extra to keep your pet in the apartment. Be aware that accommodations that allow pets (often only cats and small dogs; up to two per unit) are quite rare, so your choices will be limited.
Finally, if you went the real estate route, the broker has to make a commission, so you pay an agency fee or chūkai tesūryō (上汉). The agency fee is usually about one month’s rent plus five percent tax. However, if you are looking for a place in non-peak seasons, some real estate companies offer a discount on their agency fees, some even waive it completely.
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After discussing the possible fees and costs you may encounter when signing a contract for an apartment, here is an example of an upfront cost summary that shows the total amount that can come from the stated yachin. The prices below are for a space in Tokyo approximately 10 minutes away (walking) from the nearest station that can fit a tenant (usually a room with a kitchenette).
Finding a suitable apartment can seem daunting with all the above fees and costs. The best advice that can be given to tenants is to be informed. Read the contract and ask the critical questions, such as “what are the initial move-in costs.” You can also ask if the company has promotions or promotions, such as no key money or agency fee.
By being informed about letting apartments, you as a tenant minimize the chances of falling into the trap of hidden costs that hopefully won’t surprise you when you’ve already signed the contract.
Hana is a freelance writer, financial analyst and chef who pursues various hobbies. She aspires to be a philanthropist, helping others in any way she can.
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The Suica card, Japan’s iconic contactless smart card, is more than just a convenient means of transportation. Originally…So you’ve decided to look for your very own Japanese apartment! Great! For most people, the first thought is to look for a real estate agent, or 褌三屋 (fudosan-ya; real estate alone is simply 褌三・ fudosan, although this can also be a verbal abbreviation for the agency).
In some countries it is perfectly fine to find landlords online and complete the transaction privately without paying extra fees to a middleman or agent. But since everything is (officially at least) regulated and rigid in Japan, most leases go through an agency. Some of the better known agencies are Suumo, Home’s, Chintai and Minimini. Everything is online now, so you can check the web and contact the agent directly if you find a good apartment. Note that specific properties online may not still be available when you first arrive at the agency – they have a very bad tendency to disappear! We recommend that you note down what you liked most about these properties so that your agent can find similar ones in the event that your dream home is off the market.
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However, we would be remiss if we didn’t prepare you for the process of meeting your fudosan-ya. Although there are some agencies that staff workers who can speak English, don’t just walk in and expect it. It is highly recommended to call ahead to make an appointment. Also, if you are already in Japan and happen to have a willing Japanese friend, ask him or her to come with you to discuss potential apartments. It is also a sad but true fact that not all agencies or building owners are equally welcoming to foreigners. Even if you can speak Japanese fluently, having a native there can ease the agency’s concern.
If you’ve ever rented an apartment before, you understand that landlords have different ways of protecting themselves against non-paying tenants. In Japan, landlords usually require a guarantor (hosho-nin) or guarantor. If the tenant fails to pay rent due to unemployment, illness or other problems, the guarantor is obliged to cover the rent. Japanese often
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