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“Key Money” and "Security Deposits" for Housing Leases in Japan

HOME > “Key Money” and "Security Deposits" for Housing Leases in Japan

“Key Money” and "Security Deposits" for Housing Leases in Japan

In Japan, when you rent a room, there are various fees in addition to the rent.

These include agency fees paid to real estate agents(“chuukai-tesuuryou”), fees paid to guarantor companies, fire insurance fees, lock replacement fees, and advance rent.

In this section, we will explain the security deposit(“shikikin”) and key money(“reikin”), two things which make up a particularly large portion of these costs.

What is a security deposit?(“shikikin”)

money you have to pay in advance for renting a house

A security deposit(“shikikin”) is money that the tenant of a room leaves with the landlord in advance when moving in

It is mainly used to pay for repairs to the room when you move out.

If the repair costs are not too much and some of the deposit remains, the remaining amount will be returned to you.

In the unlikely event that you are late in paying your rent, you may be asked to pay for the rent out of the security deposit.  In this way, the security deposit can serve as a kind of rent insurance that prevents you from being asked to move out immediately. 

There is a difference between Kanto and Kansai

In some areas of Kansai, and in some areas of Kyushuu, the security deposit is called “hoshoukin” instead of “shikikin”, and there are some differences in the system there.

In the “hoshoukin” system, part of the security deposit is considered to be “shikibiki”, which  is not refundable at all, so please be aware of this when you sign the contract.

What is key money (“reikin”)?

thank you for renting a house

Key money(“reikin”) is considered as a thank-you gift to the landlord for letting you rent the property

It is very common in Japan, but it is a unique system that is relatively rare elsewhere in the world.

Some people may wonder why the landlord needs to be thanked or why there are additional fees not included in the rent.

The Origin of Key Money

There are many theories about the origin of key money, but it is said to have started when people who lost their homes after the Great Kanto Earthquake in 1923 gave money as a token of appreciation to the people who rented them houses.

It is also said to have originated when the parents of students who were starting to live on their own gave money to the owners of the houses their children rented as a way of saying, “ Please take good care of them.” 

In any case, key money is considered as a thank-you gift, and unlike the security deposit, you will not get it back when you move out.

Key money and security deposit costs

fairest prices for reikin sikikin

1~3 months’ rent

The market rate for both the security deposit and key money is one to two months’ rent in Kanto, and two to three months’ rent in Kansai. 

Recently, key money has been on the decrease.  In particular, in the Kanto region outside of Tokyo, it is not uncommon to find properties that do not require key money. In addition depending on the region, the cost of key money can also depend on the popularity of a particular property.  There is a tendency for key money to be higher for popular properties than for properties that have been vacant for a long time.

There are also properties with no key money or deposit

Around 2005, the number of “zero-zero” properties (“zero-zero-bukken”)  with no key money and no deposit began to increase.

Traditionally, moving required a large sum of money, but every year, the hurdle of initial expenses including key money and the security deposit is getting lower.

Your security deposit after you move out

repair cost that you have to pay

How can I get as much of my security deposit back as possible?

Although you may be able to get your deposit back when you move out, how much you get back is directly related to the “obligation to restore the property to its original condition”(“genjoufukki”), which means that you have to restore any part of the room’s value that has decreased due to use and for which you are responsible.

If you are concerned that you might be billed for repairs that you are not responsible for, it is important to review the scope of repairs covered in the “genjoufukki”.

Normal wear and tear and age-related deterioration

Scratches and marks caused by normal living are considered to be normal wear and tear.

The range of normal wear and tear includes dents in the floor caused by setting up furniture, black marks on the wall behind the refrigerator, and marks caused by puncturing with a nail gun.

Age-related deterioration is the natural aging and degradation of quality that occurs over time.Sunburn on the walls from sunlight and aging gaskets in water closets are examples of such deterioration.Repairs due to normal wear and tear and age-related deterioration are within the scope of the landlord’s responsibility.

Deterioration considered to be the tenant’s responsibility

Scratches and stains caused by the tenant’s intentional or negligent actions are referred to as “special wear and tear.” These include walls that have become discolored from cigarette smoke, holes in the wall from hitting things, and graffiti from children.

Mildew in the bathroom and stains in the kitchen are also treated as special wear and tear caused by not having been cleaned properly. The cost of repairing the special wear and tear will be covered by the deposit.

If the room is too dirty or damaged, the deposit may not be enough to cover the cost of repairs, and you may be asked to pay the amount not covered by the deposit.

Therefore, in order to get as much of your deposit back as possible, you should take care of your place and pay attention to ways in which your daily life affects its condition. For example, not smoking in the house and not dragging furniture when you carry it will help prevent additional costs when you move out.

You can learn more about “genjoufukki” at the Ministry of Land, Infrastructure, Transport, and Tourism’s website (in Japanese)
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