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  • Terrie’s Take on recent new rulings on tenants’ rights in Japan

    Posted by Dr. ARUDOU, Debito on September 18th, 2009

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    Hi Blog.  I think I’ll let Terrie do the talking today.  Important day tomorrow I’m currently preparing for.  You’ll see why it’s important… tomorrow!  Arudou Debito in Sapporo

    * * * * * * * * * T E R R I E ‘S T A K E * * * * * * *
    A weekly roundup of news & information from Terrie Lloyd.

    General Edition Sunday, July 26, 2009 Issue No. 527

    +++ WHAT’S NEW

    The Japan Times has been doing a good job recently of documenting consumer rights law cases and also foreigner- related issues that might be of use to its readers. Last week they reported on a landmark court ruling, whereby the Kyoto District Court said that a landlord’s insistence on contract renewal fees (“koshinryo”) may violate the rights of the tenant. This is the first time such a case has been ruled in favor of the tenant.

    In the case, the tenant was apparently told that there would be a contract renewal fee, but not why. Presumably the agent thought that because the renewal fee is a traditional payment, dating back to post-war times when the government didn’t want returnee soldiers relocating en masse to the cities, they didn’t go into it in any detail. In any case, as a result of that oversight, when the plaintiff moved out several months after he’d paid the renewal and the landlord refused to refund the payment, the tenant took offense and took the landlord to court.

    The basis for the lawsuit was the 2001 revised consumer protection law, which the court agreed had precedence over the tenancy law. In the ruling the judge apparently commented that, “The reasons for charging contract renewal fees must be clearly explained to tenants and agreed upon between the two sides.”

    Now before everyone starts hooting from the roof tops that it’s time for landlords to get some of their own medicine, it’s worth remembering that this is the exact same Kyoto District Court that in January of last year dismissed a very similar lawsuit. In that earlier case, the tenant also based his claim on the 2001 consumer contract law, where he said that renewal fees in the way they are currently notified and imposed, constitute a contract that “Unilaterally causes damage to the interests of consumers.” We daresay that a lot of readers would agree with that statement!

    It seems that the point of legal consideration by the two different Kyoto law court judges wasn’t whether the renewal fees are allowed under consumer law or not — they are, so long as the landlord or the agent explains clearly that the fees are part of the contract and that the tenant knowingly and willingly signs the contract. Rather, the consideration was all about whether the fee’s purpose was clearly explained — thus allowing the tenant to claim that he wasn’t fully informed and therefore permitting him to invoke the consumer protection law.

    So, the requirement to pay rent renewal fees, as onerous as they are, has not gone away. It’s just now that it’s possible to claim ignorance to the rules, and use that to get your money back. This is not a strong step forward for tenant’s rights, but at least it’s a start…

    As most readers would be aware, the renewal fees are not the only sticking point when it comes to renting Japanese apartments. There is also the non-refundable deposit and the “cleaning fees” to be deducted from that deposit when you move out. Most people who have moved apartments more than once have learned that very little of their 2-3 months refundable deposit will actually come back — a good reason, of course, why people don’t move so often.

    We’ve heard a variety of opinions about whether tenants can fight the imposition of cleaning fees — especially if you’ve cleaned the apartment thoroughly enough that it doesn’t need much more polishing. Certainly you CANNOT not pay them, since the fees are generally taken out of the deposit paid when you first moved in. The general guideline, apparently is for a cleaning fee of JPY1,000~JPY1,500 per sq. m. of apartment floor area — which for a JPY100K apartment might leave you with the grand total of just JPY50,000 from your original JPY200,000~JPY300,000 of refundable deposit being returned.

    Talking to a certain large rental agent for foreigners, we have heard that the situation is quite different in the non-Japanese sector. Largely because expat apartments tend to be bigger and more expensive to keep vacant, and because there is also a dearth of tenants, landlords are being much more flexible and cooperative. They are cutting deals that strictly Japanese-facing landlords would never dream of. The deals include no-deposit contracts, 3-6 months free rent on a two-year lease (just like B- and C-grade offices), and large price cuts of up to 50% discount.

    But as we’ve noted, one man’s cloud is another’s silver lining. Word is that there are plenty of local foreigners and Japanese moving into the more fashionable districts in Tokyo right now — because they’re trading up into the gaijin apartments, but not having to pay much difference for all the extra space, appliances, and convenience.


    12 Responses to “Terrie’s Take on recent new rulings on tenants’ rights in Japan”

    1. Trisha Says:

      I plan to wait and see if the Able (here in Tokyo) renting company sends me a letter demanding two months rent for the next two year contract. I will be prepared to show them that I know about this ruling. Either they comply or I find myself another apartment that does not demand this key money nonsense. Planning to be here for a number of years, so it is worth it to me.

      Anyone else planning to fight? The more we do, the more landlord companies will know their vile game is up. Would really appreciate comments.

    2. AWK Says:

      There was program on JTV the other day about key money and renewal fees. My wife told me that more and more Japanese realized they are paying for nothing and sue fudosans and you know what 100% tenants win. Japanese sue them when contract is finished and they want all their money deposit back including key money. As you know in this point problems starts so they go to court and get what they ask for. I paid my renewal this February, but I assume that as long as I signed contract 6 years ago I cannot do anything or can I(?)

    3. Kimberly Says:

      The only time I ever moved out of a rental property that wasn’t one of those “no key money” deals to begin with, I got the entire deposit (including pet deposit) back, minus 6000 yen that was to be used to replace the paper on the closet door in the washitsu, which I’d put a nice hole in trying ot move furniture by myself. It was clearly explained to me and since I made the hole, I had no problem paying it. That was a 5DK house, about 100 square meters, and the landlord was completely decent about it.

      …just so ALL landlords don’t get a bad name. It’s nice to see some protection for people who end up with less than stellar landlords too though. Ideally the landlords would all be decent to start with, and the courts would stand up for the tenants when they aren’t.

    4. Rob Says:

      That was a good read, but it’s disappointing to see Terrie using the word “gaijin” in the final para.

    5. nihonjon Says:

      Regarding the 2nd to last paragraph. Know any agencies for sure that are doing this? I’m looking into moving to the Omotesando/Akasaka area to be within biking/walking distance of work and would love to get one of those unbelievable deals.

    6. Eric Says:

      On a related note, the koushin payment (and reikin and shikikin) are unbelievably stupid, but it doesn’t mean you can’t factor them into your calculations when looking for an apartment. For each apartment you’re looking at, make a guess as to how long you’ll be there, and calculate the average monthly payment with the reikin/etc factored in.

      Many times, especially for shorter stays (< 2 years), higher monthly rent and lower reikin will be a better deal and the landlords who stick to the old system will lose tenants. The problem is that even if the whole system is legally abolished then landlords will just increase the monthly rent to compensate.

    7. jim Says:

      key money = fat bonus
      deposit = fat bonus
      when will the renting games end in japan?

    8. Deepspacebeans Says:


      But… it’s tradition!

      Unless Japanese landlords screw over their tenants, how could they ever hope to make a profit?

      At least we are seeing an end coming to some of the ridiculous agent fees with the advent of cost-effective web-based advertisement services cutting out their necessity.

    9. Ben Says:

      @Rob – agree, the sites Terrie writes for often use the “gaijin” word loosely. Had a look at the however they blocked the cookies.

      @Terrie – good write up, it would be nice to use another word than the G word.

    10. Michael Weidner Says:

      I find that a lot of these fees are personally rediculous, but personally have never had to pay key money or “Reikin”. When I moved into my last appartment, I did have to pay a deposit, but when I moved out, the *entire* amount was refunded to me. When I asked if I would have to pay an extra cleaning fee or make any repairs, my landlord said that it was not necissary. Even in the first apartment I moved into here in Hokkaido, I didn’t have to pay anything extra either, and my deposit was also refunded to me. Perrhaps I am lucky in that I’ve never had to pay these extra fees, but I think that it bears saying that because I kept a good relationship with my landlords (bringing them omiage when I went abroad or sharing some of the items that were sent to me by my parents), I perhaps garnered some extra leniancy with those fees. I do recognize that this is perhaps an exception to the rule as larger buildings are usually managed by large companies so this is not possible, but it is probably a good thing to keep in mind when looking for an apartment.

    11. let`s talk Says:

      Just stop paying the last number of months of rent equivalent to your deposit (shikikin) and inform the landlord what you are doing in writing.

    12. Darren Joseph Says:

      @ Trisha Yes, the demand from my agency (Starts; one of Japan’s largest) arrived just when the precedent-setting first Kyoto ruling was handed down and I’ve told the agent repeatedly that I’ve no intention of paying a fee of dubious legality.

      There have since been two subsequent rulings (Osaka High Court then Kyoto once more) in the favour of tenants, I believe.

      I’ve consulted a lawyer via Houterasu (their Yotsuya office offers free consultations to those on a low income). He advised trying to negotiate with my landlord face-to-face before things escalate to a court case; I’m trying to arrange this as I write.

      At the end of the day, koushinryo is but a tradition that has grown out of an immediate postwar policy designed to keep repatriated servicemen returning en masse to a Tokyo severely lacking rented accommodation. Anyone care to enlighten me as to how it’s appropriate to the present rental market with the number of empty properties and no shiki-kin/no reikin offerings increasing by the day?

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