Four things to hate about looking for an apartment in Japan as a foreigner

Seeing as how the entire English-language RocketNews24 team is composed of people who at some point moved to Japan, we’re pretty big proponents of living here. One unpleasant part of the package, though, it that since you can’t claim the whole country as your residence, living in Japan means finding an apartment in Japan, which is generally agreed upon as one of the least enjoyable parts of the expat experience.

Why? For the following four reasons.

1. Key money

When I first heard about “key money,” I thought it was a fee paid for installing new locks when a new tenant moves in. And while that is one of the things you’ll be charged for, “key money” is different…plus expensive and baffling.

“Key money” is really a misnomer, as the Japanese term, reikin, literally means “gratitude money,” because while Japan doesn’t do tipping in restaurants, cabs, or hair salons, it totally does in apartment rentals. Reikin is an amount of money, generally equal to one or two months’ rent (depending on the property), that must be paid before moving in. And just to be clear, it’s not a deposit; it’s simply a lump sum that you pay for the privilege of being allowed to pay rent every month hence, and so you won’t be getting your reikin back after you move out.

Some say that the custom of reikin came about while Japan was transitioning from a rural to an urban society. Early on there were more people moving to the cities than housing to hold them, and so landlords were in a position to ask for a little something extra. But while there’s no severe housing crunch anymore, the practice has remained, and while it is possible to find apartments that don’t charge reikin, it’s an often unavoidable part of leasing newer or amenity-heavy apartments, as well as those in prime locations.

2. You’ll need a Japanese guarantor

While reikin is equally reviled by Japanese and expat apartment-hunters, the guarantor system is an especially big headache for new arrivals from overseas. Most apartment owners will require that you have someone co-sign for your lease, and in general that person has to be a Japanese citizen who’s living in the country. The majority of Japanese renters simply have their parents co-sign, but for foreigners that’s not an option.

Moreover, in the case of a relative serving as guarantor, the standard stipulation is that there be no more than two generational degrees of separation between the tenant and co-signer, so if you’re one-eighth Japanese by your great-grandmother, she probably can’t help you.

For working professionals in Japan a common solution to this is having your boss, or in some cases the company your work at as a legal entity itself, act as your guarantor. That can be a catch-22, though, in that it’s hard to find a job without a base of operations in which to live while searching for employment. For that reason, many foreigners spend their job hunt in Japan living in foreigner-friendly boarding houses, or “gaijin houses” as the expat community refers to them.

3. You deal with an agent instead of the landlord directly

I’ve lived in four different apartments in Japan, and I’ve never once met the owner of any of them. That’s because in Japan negotiations and contracting are done not directly with the landlord, but through a real estate agent.

Of course, the landlord is still the one getting the rent, so instead the real estate agent is paid for the time he put in when the deal is closed. So when you sign that lease, you’ll also have to pay an agency fee, usually one or two month’s rent, to the middleman.

That said, there are a couple of upsides to this setup. Rather than having to make individual arrangements with the owner of every apartment you’re considering, often you can have one agent show you several listings on the same day, since agencies generally specialize in their local neighborhood. Having a middleman can also sometimes make for smoother negotiations or dispute settlements. Not everyone agrees that those are worth a couple of months’ worth of extra pre-move-in costs, though.

4. Lease renewal fees

Almost all apartment leases in Japan are good for two years. Once they’re up, you’ll have to sign new paperwork, once again going through the realtor. At that point you’ll also be charged a renewal fee, generally equal to one month’s rent.

There are two things that soften the blow. Not all agencies charge a full month’s rent for renewals, and with some searching you might be able to find one that only asks for two weeks’. Also, there’s no penalty for breaking your lease and moving out before the two years is up, if you’re so inclined. Most landlords will ask that you give one month’s notice before moving out, but as long as you do, you’re not on the hook for any extra fees or unpaid rent from the remainder of the two-year period. Which is good, because moving out of one apartment generally means moving into another, and you’re going to want that cash to help cover your new reikin and agency fee outlays.

On the bright side, many of these issues are becoming less severe in recent years. Japan’s population is starting to contract, and today’s apartment-hunters are much more informed than those of previous generations, all of which is eroding the advantages that apartment owners and real estate agents have enjoyed up to now. Still, if you’re looking for a place to live in Japan, gritting your teeth and pinching your pennies until you’re settled in might be a wise idea.

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