Japan – Property Letting

How does the property letting process work in Japan?

The legal foundations for real estate leasing in Japan rest on two principal instruments: the Act on Land and Building Leases (shakuchi shakka-hō) and the Civil Code (minpō). In contrast to common-law jurisdictions where verbal agreements can sometimes carry legal force, Japan’s tenancy system operates almost entirely through written documentation, and foreign landlords are well advised to engage a licensed real estate agency from the start to ensure proper compliance.

Tenant recruitment typically takes place through licensed real estate agencies (fudōsan), which advertise available properties on major platforms including SUUMO, Homes.co.jp, and Athome. The screening process is notably thorough by international standards: landlords generally require applicants to provide a guarantor alongside standard documentation such as identification or a residence card and evidence of income. Many landlords also insist that applicants engage a hoshō gaisha (guarantee company) as a safeguard against rent arrears, particularly where the applicant lacks a Japanese personal guarantor.

Tenancy agreements are typically set for one or two years. Where no renewal is anticipated, the tenant is expected to vacate by the time the contract expires. Where the tenant wishes to continue occupying the property, the relevant renewal procedures must be completed at least one month before the contract end date. Japan’s standard lease arrangement — the futsū chintai keiyaku — renews automatically unless one party formally objects, which distinguishes it sharply from fixed-term leases common elsewhere.

Lease contracts in Japan routinely include detailed behavioural rules covering matters such as noise levels, pet ownership, smoking, and even the handling of waste. While such provisions may seem unusually prescriptive to those from other rental markets, they reflect Japan’s broader culture of cleanliness and communal consideration. Subletting — that is, passing the tenancy on to a third party — is typically prohibited without the landlord’s express written approval, preserving the landlord’s control over who lives on the premises.

What types of rental arrangements are available in Japan — long-term, short-term, and holiday lets?

Japan’s residential rental market falls broadly into three distinct categories: conventional long-term leases, medium-term furnished rentals, and short-term tourist accommodation (referred to as minpaku). Each category is governed by its own legal framework, and landlords need to identify clearly which model they intend to pursue before placing a property on the market.

Long-term residential letting under either the standard or fixed-term lease framework is the approach most commonly adopted by foreign property owners. A fixed-term lease sets out in advance that the tenancy ends on a specified date — for instance, a two-year agreement entered into in February 2022 would require the tenant to vacate by February 2024. This gives landlords considerably more predictability than the automatically renewing standard lease.

For short-term tourist accommodation, Japan operates a dedicated regulatory structure known as minpaku. The Private Lodging Business Act (Jūtaku Shukuhaku Jigyō-hō), which came into force in June 2018, brought the practice of renting private homes to visitors onto a legal footing — previously, such activity occupied a regulatory grey area. The Act introduced specific operating conditions to address the concerns that had accompanied the unregulated growth of the sector.

Under the Residential Lodging Business Act, standard minpaku operations may not exceed 180 days of activity per year. This restriction means that properties must either cease short-term lettings for roughly half the year or shift to medium- or long-term rental arrangements during the remaining period. Operators who fail to obtain registration face fines of up to one million yen, and local governments carry out enforcement including on-site inspections.

Local authorities retain the power to layer additional requirements on top of the national rules. Some cities have introduced tighter controls over the areas in which minpaku can operate, alongside provisions relating to noise management and waste disposal. Osaka City has emerged as a particular focal point: its designated ‘special zone minpaku’ accounts for approximately 90% of the national total, yet in fiscal year 2024 the city received around 400 complaints concerning noise, rubbish, and unlicensed short-term rentals. In response, Osaka City announced around October 2025 that it would halt the acceptance of new applications for special zone minpaku.

What rental income can landlords expect in Japan, and how are rates set?

Japan does not operate a nationwide rent control regime of the kind seen in certain European countries, where rents are tied to an index or subject to legislative ceilings. Residential rents are determined by market conditions, with location, proximity to transport links, property size, building age, and condition all playing a significant role. There is no equivalent of rent pressure zones as found in some other jurisdictions.

Across Japan, rental pricing is heavily influenced by access to train stations, properties tend to be compact in size, and the great majority of apartments are let unfurnished. Achievable rents and rental yields differ considerably between Tokyo and larger regional centres such as Osaka, Nagoya, and Fukuoka, and rural locations, where vacancy rates are generally higher and achievable rents lower. Landlords seeking current market data should consult the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) portal alongside local real estate agencies.

Furnished properties typically attract monthly rents that are approximately 10,000–20,000 yen higher than comparable unfurnished units (as of 2025), reflecting the value tenants place on accommodation that is ready to move into immediately. Landlords should also take account of the kanri-hi (monthly building management charge), which is ordinarily billed separately from rent and paid to the building management company by either the landlord or the tenant depending on what is agreed in the lease.

Because rents are driven by the market, landlords should review comparable listings on portals such as SUUMO or Homes.co.jp, or commission a licensed agent to prepare a rental valuation. There are no statutory caps on rent increases for residential tenancies, although any increase during an existing tenancy must be agreed between the parties or resolved through mediation.

Do landlords need to provide a furnished or unfurnished property in Japan?

There is no legal obligation in Japan requiring landlords to furnish a residential property prior to letting. The overwhelming norm is for apartments to be offered unfurnished. In some foreigner-oriented buildings, particularly in Tokyo, a degree of basic furniture may be provided, but this remains an exception rather than the rule. The unfurnished convention means tenants are generally expected to arrive with their own appliances, including washing machines, refrigerators, kitchen equipment, and — where not already installed — air-conditioning units.

Furnished accommodation occupies a niche portion of the market, and is most often found in serviced apartments, corporate housing aimed at international professionals, and short-stay accommodation targeting foreign nationals or students. Furnished rentals and short-term apartments directed at overseas tenants frequently dispense with key money, with providers typically asking only for the first month’s rent and a modest deposit. For those staying a year or less, this arrangement can represent a substantially more cost-effective entry point than a conventional lease.

From a taxation standpoint, furnishings supplied as part of a tenancy can generally be claimed as a deductible expense or depreciated over time — though landlords should obtain confirmation of this from a qualified Japanese tax accountant. Adding furnishings does not alter the property’s residential classification for regulatory purposes, but it may influence the achievable rent level and the profile of tenant the property attracts.

Do you need a licence or registration to let a property in Japan?

For conventional long-term residential letting, Japan imposes no requirement on landlords to hold a personal licence or register with a centralised tenancy authority — a contrast to systems such as Scotland’s landlord registration scheme or Ireland’s Residential Tenancies Board. Any individual or corporate property owner may let a residential property without formal landlord accreditation of that kind.

The position changes significantly, however, when it comes to short-term tourist accommodation under the minpaku framework, where registration is compulsory. Property owners must submit a notification (minpaku registration/todoke-de) to the relevant authority and demonstrate compliance with both national and local requirements. Properties must satisfy prescribed safety and health standards, including the provision of fire extinguishers, the posting of emergency exit plans, and maintenance of cleanliness and hygiene. One requirement that is easily overlooked is that each room must provide at least 3.3 square metres of floor space per guest.

Depending on the particular circumstances — for example, where the property contains more than five rooms, or where the owner cannot manage the accommodation personally — it may be necessary to appoint a registered minpaku management company to handle day-to-day operations, including guest reception and adherence to local regulations. In practice, non-resident foreign landlords operating under the minpaku regime are subject to this requirement. Prospective operators should check with their local prefecture or municipality for current application procedures, as local rules vary considerably across Japan.

How do you obtain a landlord licence or register as a landlord in Japan?

For long-term residential letting, no landlord licence or formal registration is required. The steps set out below apply specifically to the process of registering a short-term minpaku operation, which is the most tightly regulated form of letting in Japan. The responsible bodies are the relevant prefectural and municipal government offices. Fees and procedures can vary by region — always verify current requirements with your local authority.

1. Confirm local rules and zoning: Before applying, check that your property is located in an area where minpaku is permitted. Some municipalities restrict or ban minpaku in certain residential zones. Contact your local city or ward office for current rules.
2. Prepare safety and facility requirements: Ensure the property meets national safety standards — fire extinguishers, emergency exit signage, adequate floor space per guest (minimum 3.3 m²), and hygiene standards. You may need an inspection.
3. Appoint a management company if required: If the owner is not a resident of Japan, a licensed local management company must be appointed. This applies to most non-resident foreign landlords operating a minpaku.
4. Prepare documentation: Gather property ownership documents, floor plans, photographs showing safety equipment, fire insurance policy, and — if applicable — the management company’s licence details.
5. Submit the notification (todoke-de): File your minpaku registration notification with your prefectural government. This is separate from a standard business licence and is submitted online or in person at the relevant government office. Processing times and any administrative fees vary by prefecture — check the official portal for your region.
6. Display registration number: Once registered, display your minpaku registration number at the property and in any online listings, as required by law.
7. Comply with ongoing obligations: In some areas, municipal ordinances or building regulations may require homeowners to inform neighbouring residents or the local neighbourhood association about their minpaku activity — a reflection of the importance placed on maintaining harmony within residential communities. Maintain guest records, report to authorities as required, and observe the 180-day annual operating cap.

For the official national minpaku notification portal, refer to the MLIT Minpaku information page. Always check with your local municipal office for prefecture-specific requirements and any fees, as these can change.

What are the rules around deposits in Japan?

Japan’s deposit arrangements are among the most distinctive features of its rental market, and landlords arriving from other countries are often caught off guard. There are two separate upfront financial payments that landlords should fully understand: the security deposit (shikikin) and key money (reikin).

The security deposit (shikikin) operates in broadly the same way as deposits in other countries, giving landlords a degree of financial protection against problems such as unpaid rent or damage to the property. Most landlords require a deposit equivalent to one to two months’ rent, though properties at the higher end of the market or in premium locations may command larger amounts. The sum required tends to reflect the rent level and the landlord’s overall assessment of risk.

Unlike the deposit protection schemes that are legally mandatory in countries such as the UK and Ireland — where deposits must be safeguarded by an independent third party — Japan has no equivalent national deposit protection scheme. Deposits are retained directly by the landlord, and any disagreement is resolved through mediation or, if necessary, the courts rather than via a regulated protection mechanism. The 2020 revision to the Civil Code introduced clearer rules governing the return of security deposits. Tenants bear no responsibility for normal deterioration resulting from everyday use. In practice, deposits are generally returned within one month of the tenant vacating, following a condition inspection carried out by the management company.

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) has published detailed guidelines designed to prevent unjustified deductions from security deposits. Under these guidelines, tenants are not liable for what is characterised as “natural wear and tear” or the ordinary ageing of the property. Costs such as wallpaper discolouration from sunlight exposure, carpet indentations left by heavy furnishings, and the replacement of worn-out fixtures fall to the landlord. Tenants are only liable for damage resulting from deliberate acts, negligence, or misuse of the property.

Key money (reikin), which translates literally as “gratitude money,” is a separate payment made to the landlord as a traditional expression of appreciation for granting the tenancy. Unlike the security deposit, key money provides no financial protection for the landlord whatsoever — it is a customary gesture. Reikin typically amounts to between one and three months’ rent, though in highly sought-after properties it can sometimes reach six months or more. This payment is made upon signing the contract and is never returned to the tenant, regardless of how carefully they maintain the property or how long the tenancy continues. As of 2024, 54.5% of Tokyo properties still charge key money, down from 72% in 2010.

Who is responsible for maintenance and repairs in Japan?

Under the standard lease arrangement, it is generally the landlord’s responsibility to carry out repairs to the property during the tenancy. Equally, it is typically the tenant’s obligation to restore the property to its original condition when they vacate at the end of the lease or upon early termination. This division — landlord responsible for structural and functional maintenance during the tenancy, tenant responsible for restoration on departure — represents the standard operating framework.

The MLIT’s guidelines on genjō kaifuku (restoration to original condition) define what landlords may and may not legitimately charge tenants for at the end of a tenancy. Landlords are not entitled to charge tenants for ordinary wear and tear arising from everyday use of the property. Items such as wall discolouration from sunlight, small holes in walls left by picture hooks, or routine fading of surfaces are treated as natural deterioration that falls within the landlord’s responsibility to address. Damage stemming from carelessness, deliberate acts, or accidents, however, remains the tenant’s financial responsibility.

In practice, lease agreements often include specific clauses allocating responsibility for particular items — such as air-conditioning filters, tatami mats, or fusuma sliding doors. Landlords should ensure that any provisions departing from the standard allocation are set out clearly in writing and that tenants have explicitly agreed to them, as broadly worded “restoration” clauses may be challenged as unfair under the Civil Code. Unlike some European frameworks, Japan does not require landlords to obtain a statutory fitness-for-habitation certificate before letting a property, but premises must be in a liveable state, and the courts have consistently upheld tenants’ right to demand repairs where defects affect habitability.

How are letting agents used in Japan, and what do they charge?

The great majority of residential rental transactions in Japan are handled by licensed real estate agents (fudōsan-ya or fudōsan gyōsha). For foreign landlords — and particularly those based outside Japan — engaging a letting agent or property management company is in practice indispensable. Agents typically take charge of advertising, screening prospective tenants, drafting tenancy agreements, and in many cases providing ongoing property management throughout the tenancy.

Brokerage fees are capped under the Real Estate Transaction Business Law at one month’s rent plus consumption tax as a maximum. Within this ceiling, fees may be structured with the tenant’s agreement. As a general rule, the cost is divided equally between tenant and landlord, with each paying half a month’s rent for a combined total of one month’s rent. However, with the agreement of both parties, the proportion borne by each side may be adjusted. These figures apply as of 2025 — verify current fee structures directly with your agent and the MLIT.

Overseas owners frequently adopt an “asset plus managed operation” model, with management fees for short-term rentals running at approximately 15–20% of rental income (as of 2025). For long-term residential lettings, property management companies generally charge 5–10% of monthly rent for ongoing management services, though the precise figure varies by company and location. Some agencies, particularly those with experience handling foreign landlords and international tenants, charge a reduced commission or waive it entirely. It is worth obtaining quotes from more than one agency rather than limiting negotiations to a single provider.

What taxes apply to rental income in Japan?

The principal tax applicable to real estate rental income in Japan is income tax, levied on the earnings generated by an individual or entity from leasing a property. Simply holding property in Japan does not, in itself, give rise to an income tax liability. The rules differ meaningfully depending on whether the landlord is classified as a Japanese tax resident or a non-resident.

Resident landlords: For an individual residing in Japan, rental income from real estate forms part of the total income subject to income tax. Japan applies progressive income tax rates ranging from 5% (on income below 1.95 million yen) to 45% (on income exceeding 40 million yen), as of 2025. A Special Reconstruction Income Tax of 2.1% is levied on top of income tax for each year falling within the period from 2013 to 2037. Resident landlords are also subject to inhabitant tax levied by municipalities on individuals who have been continuously resident in Japan for at least one year, calculated on the basis of income from the previous year.

Non-resident landlords: Rental income from Japanese sources earned by a non-resident is generally subject to tax at a rate of 20.42%, or at a reduced rate where an applicable tax treaty provides, through withholding at source. This rate (as of 2025) is set by the National Tax Agency (NTA). Withholding tax is not remitted directly by the foreign property owner. Instead, it falls to the tenant to withhold and pay the relevant amount — where the tenant is a corporate entity, or an individual renting the property for purposes other than their own or a close relative’s residence. A tenant who is an individual renting the property as their personal home is exempt from this withholding obligation. Tenants who are liable must withhold 20.42% of the monthly rent and remit it to the tax office each month.

The precise conditions and procedures vary according to the landlord’s country of residence, so it is advisable to establish whether your country has a tax treaty with Japan and then consult a tax accountant for guidance on the applicable procedures. Japan has concluded double tax treaties with over 80 countries. Non-residents owning property in Japan are required to appoint a “Tax Agent” — a Japanese resident — to file the annual tax return on their behalf.

Rental income comprises the gross rent received in connection with the letting of the property. Allowable expenses and depreciation are deducted from this gross figure to arrive at the taxable amount. Expenses that may typically be deducted include agent management fees, property taxes, repair costs, insurance premiums, and depreciation on the building structure. Landlords should consult a qualified zeirishi (Japanese tax accountant) for current guidance on allowable deductions, as the rules are subject to change.

What are the rules around ending a tenancy or evicting a tenant in Japan?

Japan’s tenancy system affords tenants a notably high level of protection — exceeding that found in many comparable frameworks. The Act on Land and Building Leases is the primary legislation and establishes robust security of tenure for those who occupy rental accommodation. Recent developments have reinforced the “justifiable grounds” requirement that landlords must satisfy before they can seek to bring a tenancy to an end. A landlord cannot simply decline to renew a contract without a substantial and legally recognised justification. This safeguard is intended to ensure that occupiers retain a secure home environment for as long as they meet their contractual obligations.

In assessing whether justifiable grounds exist, the courts consider a range of factors, and establishing such grounds is generally difficult for a landlord. Relevant considerations include the respective necessity of the property to the landlord and the tenant; the history of the tenancy relationship; the current use and condition of the premises; and whether the landlord has offered compensation to the tenant in exchange for vacating. In certain circumstances, the offer of an adequate financial inducement can itself constitute justifiable grounds.

Where a tenant has breached the lease agreement and caused loss to the landlord, the landlord may seek compensation or require the tenant to make good any damage to the premises. Whether under a standard or fixed-term lease, terminating a tenancy on the grounds of a breach is also constrained by established court precedent: termination will not be upheld unless the breach is sufficiently serious to have fundamentally undermined the relationship of trust between the parties.

In Japan, the preferred approach to resolving disputes is through mediation rather than litigation, reflecting the broader cultural emphasis on harmony — or wa. Small claims procedures tend to be the route taken for disputes over the return of security deposits. Relatively few cases reach the formal court system. Most prefectures operate dedicated advice centres for foreign residents dealing with issues such as rent increases or deposit returns, with professional interpreters available to ensure that language is not a barrier to accessing support.

What should expat landlords know about managing property remotely in Japan?

Managing a Japanese property from outside the country is achievable, but it demands thorough legal and administrative preparation. The obligations and practical steps that apply to non-resident landlords differ in important respects from those that apply to owners who are based in Japan.

Property management: Non-resident landlords should engage a reputable Japanese property management company to oversee the day-to-day running of the property — including collecting rent, coordinating maintenance, communicating with tenants, and ensuring regulatory compliance. For short-term minpaku lettings, a licensed local management company must be appointed where the owner is not resident in Japan. For long-term residential lettings, while this is not a statutory requirement, appointing a management company is strongly recommended.

Tax agent appointment: Non-resident landlords are required to appoint a “Tax Agent” who is resident in Japan and who can file the annual tax return on their behalf. Once appointed, the landlord must notify the local tax office with jurisdiction over the property by submitting a form entitled “Notification of Tax Agent.” This requirement is mandatory for non-residents who own property in Japan.

Withholding tax mechanics: Withholding tax on rental income involves deducting a prescribed amount from rental payments before they are remitted to a non-resident property owner. The tenant pays the withheld sum directly to the local tax authority on behalf of the overseas landlord. The applicable rate is 20.42%, encompassing both income tax and the Special Reconstruction Income Tax (as of 2025). Non-resident landlords should make tenants aware of this obligation from the outset and ensure it is addressed explicitly within the tenancy agreement.

Treaty relief: Certain bilateral tax treaties — such as the Japan–US Tax Treaty — may exempt property owners resident in the treaty partner country from paying withholding tax on their Japanese rental income. However, such exemptions are not applied automatically; the owner must submit an application to the relevant authority in their country of residence. Whether your country has a tax treaty with Japan can be verified via the NTA website.

Repatriation of income: Japan places no restrictions on the transfer overseas of rental income earned by foreign property owners. Funds may be remitted after applicable taxes have been settled, though landlords should factor in prevailing currency exchange rates and any bank transfer charges. The current position should be confirmed with a Japanese tax adviser and your property management company.

Power of attorney: Non-resident landlords who need to execute legal documents, enter into contracts, or deal with official authorities in Japan without travelling to the country should consider granting a formal power of attorney (inin-jō) to a trusted Japanese resident or professional adviser. This enables the designated representative to act on the landlord’s behalf in their absence.

Frequently Asked Questions

Can a non-resident foreign national own and let property in Japan?

Yes. Japan imposes no nationality or residency restrictions on foreign nationals buying or letting property. Non-residents are entirely free to own and let residential property. However, they are subject to additional tax obligations — including the 20.42% withholding tax on rental income (as of 2025) — and must appoint a Japanese tax agent to submit tax returns on their behalf. Consult the National Tax Agency for current requirements.

Do I need a local agent to let my property in Japan?

For long-term residential letting, there is no legal requirement to use an agent, but doing so is strongly advisable — particularly for non-resident landlords. Letting agents manage advertising, tenant screening, contract preparation, and ongoing property administration. For short-term minpaku letting, non-resident owners are in practice required to appoint a licensed local management company to operate the property on their behalf.

What is key money (reikin) and do I have to charge it as a landlord?

Key money, or reikin, translates literally as “gratitude money” and is a traditional non-refundable payment made to the landlord as a gesture of appreciation for granting the tenancy. It is charged entirely at the landlord’s discretion — there is no legal compulsion to require it. Recent market data shows a clear trend away from key money, and landlords seeking to attract foreign tenants in particular often choose to waive it in order to broaden their pool of applicants.

Is there a deposit protection scheme in Japan?

No. Unlike countries such as the UK or Ireland, which mandate that security deposits be held in a government-approved protection scheme, Japan has no national deposit protection requirement. Security deposits (shikikin) are held directly by the landlord. Tenants’ entitlements regarding the return of deposits are governed by MLIT guidelines and the Civil Code — most notably, landlords cannot make deductions for ordinary wear and tear. Disputes are generally resolved through mediation.

Can I run an Airbnb-style rental in Japan?

Yes, but subject to strict conditions. The Minpaku Law, which came into force in June 2018, legalised the rental of private homes to tourists, bringing an end to the previous legal uncertainty. Operations under the standard minpaku scheme are capped at 180 days per year, counted from 1 April to 1 April. Registration with the relevant prefectural government is mandatory. Non-resident owners must appoint a licensed local management company. Fines for operating without registration can reach one million yen (as of 2025).

How much tax will I pay on rental income in Japan as a non-resident?

Rental income from Japanese sources earned by a non-resident is generally subject to withholding tax at 20.42% (as of 2025), or at a lower rate where a relevant tax treaty applies. The tax is withheld by the tenant in applicable circumstances and remitted to the tax office. Filing a final tax return in Japan allows the landlord to claim deductions and potentially receive a refund where the amount withheld exceeds the actual tax liability. Consult the NTA website and a Japanese tax accountant for current guidance.

How long does a standard tenancy in Japan last, and can I end it early?

Standard tenancy agreements in Japan typically run for one or two years. Under a standard automatically renewing lease, a landlord cannot terminate the tenancy early without “justifiable grounds” as defined by the Act on Land and Building Leases, and is generally required to give adequate notice and may need to offer the tenant compensation. Fixed-term leases expire on the agreed date without automatic renewal, offering landlords greater certainty. Landlords considering early termination should seek advice from a qualified Japanese attorney (bengoshi).

What ongoing costs should landlords budget for when letting property in Japan?

Beyond any mortgage or acquisition financing costs, landlords should plan for: property management fees (typically 5–10% of monthly rent for long-term lets, as of 2025); building management charges (kanri-hi); fixed asset tax and city planning tax (combined at approximately 1.7% of assessed property value per year); fire insurance; routine maintenance and repair costs; and tax agent fees for non-resident landlords. Operators of minpaku properties should additionally budget for compliance costs, inspections, and potentially management company fees of 15–20% of rental revenue. All figures should be verified with your management company and tax adviser, as they are subject to change.