No Deposit and No Key Money: Too Good to Be True? (The Pros and Cons of "Zero-Zero" Properties)

When you are looking for a room to rent in Japan, you may  come across  the term “zero-zero property”.

This is a form of rental contract that drastically reduces the initial cost and lightens the burden on the tenant when moving in.

Here you will learn about the mechanism, merits, and demerits of such zero-zero properties so that you can sign the contract with peace of mind.

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What is a zero-zero property?

A zero-zero property is a room with a zero-yen deposit and key money when you sign a lease

 It was started by a major real estate agency in Tokyo in 1988. In recent years, as the number of vacant houses has increased due to the intensifying competition in the rental industry, the number of zero-zero properties has also increased as a countermeasure to vacancies.

Another reason for their popularity is that the initial cost is low, making it easy for young people and non-regular workers to move in.

In the past, only rooms that had trouble finding tenants were rented out as zero-zero properties, but in recent years, even well-located and newly built apartments are being advertised as zero-zero properties.

  Click here for an article about key money and deposit 

 Advantages of zero-zero properties

 The biggest advantage of a zero-zero property is that it reduces the initial cost of moving.

It is said that the market price of the initial cost of moving in Japan is about five months’ rent.

If your rent is 60,000 yen a month, that means you will need to pay about 300,000 yen in initial expenses.

In this case, the breakdown of the initial cost would be 120,000 yen for the deposit and key money, and another 180,000 yen for the real estate agent’s commission, key replacement, rent deposit, fire insurance premium, and prepaid rent.

If you live in a zero-zero property, there’s no deposit or key money , which means that you can save almost half of the initial cost.

A new life in Japan can be quite stressful, so it’s nice to know that you can  save some money here and buy furniture and appliances, or pay for other expenses instead.

Points to note about zero-zero properties

 Zero-zero apartments are very attractive, but of course there are some disadvantages.

・ High rent

From the landlord’s point of view, there’s a risk with having no  security deposit and key money. 

This is because the security deposit is used to cover the cost of repairing the room and also to cover the cost of late rent payments.

For this reason, the rent is usually set higher than a contract with a security deposit and key money.

Incidentally, the fact that there is no security deposit does not mean that repair costs are also free.

The cost of repairing the room must be paid, and in the case of zero-zero properties, it will be paid when you move out.

In other words, the timing of the payment just changes.

There are some people who don’t know this and think, “ Why do I have to pay extra money when I move out!?” However, it is important to understand this point properly.

・Short-term cancellation penalty

Some zero-zero properties have a short-term penalty fee to cover cleaning costs.

The short-term cancellation penalty is a penalty that will be incurred if you decide to move out during the contract period. Even if you have a legitimate reason for leaving, such as a sudden job transfer or problems with neighbors, you will be obligated to pay the penalty if it was part of the contract. Make sure you understand the contents when signing the contract and conclude the lease agreement.

 Things to check at the time of contract

Points we recommend you to check in the lease contract

・How long is the term of the lease contract?

・Is the amount of money to repair the room when you move out fixed?

・Who will pay for the house cleaning?

If the tenant is responsible for the cost of housecleaning, there may be a set cleaning fee. 

People who are suitable for zero-zero properties

A zero-zero property has a lot of advantages if you understand the contract correctly.

It is especially suitable for the following people:

・People who need to move but don’t have the budget to pay for large initial expenses.

・People who plan to stay in the property for a long period of time. 

・People who are not at home much during the day.

・People who can stick to a savings plan. 

Even if you don’t have money when you move out, there is no problem as long as you can plan to pay for repairs when you move out.

If you are working or going to school during the day, there are  less chances of having problems with neighbors, and if you are not transferring, you don’t have to worry about short-term cancellation penalties.

 If these situations are similar to yours, then renting a zero-zero property would be  highly beneficial for you.