What is the approximate initial cost of renting a residence in Japan? 【Ways to reduce the initial cost】

Main Points;

・What expenses are required when signing a rental contract?

・The standard initial cost in Japan is generally 5 – 6 months’ rent

・Ways to reduce the initial cost

・Advantages and disadvantages when reducing the initial cost

Necessary forms and initial expenses when renting in Japan

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The standard initial cost for renting in Japan is about 5 – 6 months’ rent

When you to rent a house in Japan, the initial expenses you will need to pay include a security deposit, key money, agency fees, and insurance fees, in addition to the standard rent.

Deposits

In most cases, the amount of a security deposit is equivalent to 1 – 3 months’ rent. A security deposit is a sum of money you leave with the landlord at the time of signing the contract. This money is kept as insurance in the event of, for example, rent being unpaid. As long as no incidents occur during the period of rental, the security deposit will mainly be used to cover the cost of cleaning after you have moved out.

For example, the cost of house cleaning may be taken from your deposit. After this deduction, the remainder of the deposit will be returned to you.

Key money

Key money is usually a sum equivalent to 1 – 3 months’ rent. It is an expense to express gratitude to the landlord for renting you the residence. This is a common expense in Japan. Unlike the security deposit, key money is not refunded at the end of your tenancy.

Agency fee

This is a fee paid to a real estate agent. In general, it is equivalent to one months’ rent. Agency and brokerage fees are non-refundable.

Other Expenses

Other than those mentioned above, there are miscellaneous initial expenses that you will generally need to pay, such as one months’ rent in advance, insurance premiums such as fire insurance, and a “key exchange fee” for a new key. If you are unsure about any of the initial expenses, please ask the real estate agency for more information.

Many people want to keep the initial cost of renting as low as possible because they need to take into account not only the cost of the rental contract but also the cost of moving and furnishing the apartment. As we will explain in more detail later, there are an increasing number of properties in Japan nowadays that do not require key money or deposits. In some cases, there may be no brokerage fees.

In such cases, the initial cost can be reduced. However, please be aware that there can be disadvantages as well as advantages in doing this, and make the best and wisest choice for you.

Ways to reduce the initial cost

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Paying in instalments

When starting a new life in a new location, you may feel uneasy about your savings running out. For those who are worried about this, we recommend paying part or all of the initial cost with a credit card, and paying in installments.

Additionally, by paying by credit card you can earn points or frequent flyer miles, so some people prefer to pay with a credit card for this reason. However, in some cases credit card payments are not accepted, so please confirm with the real estate agency if credit cards are accepted.

Short-term contracts (e.g. share houses) have low initial costs

In Japan, there are many share houses and “monthly mansions” with short-term rental contracts, starting from as short as one month. In some cases, people coming to Japan for the first time will initially live in a share house. A share house typically consists of a private room for each tenant, just like in a rental apartment or condominium, but the kitchen, living room, bathroom, etc. are shared. Unlike most Japanese rented accommodation, in a share house furniture and appliances are provided, so you can save money from the start. This is a good option for those who plan to move within a few months or for those who are staying in Japan for only a short period of time.

In many cases when renting a share house or monthly mansion, there is no need for a deposit, key money, or agency fee, making it an attractive choice for those who want to keep initial expenses low. You may want to consider a share house or monthly apartment as a candidate for your residence in Japan.

Accommodation With No Key Money or Deposit

Properties with zero key money and zero deposit can help you reduce your initial expenses. Recently, some extremely popular properties offer zero key money and zero deposit. However, they may instead have a penalty fee. An example of a penalty fee’s terms is “if you move out within one year of signing the contract, you will be charged a penalty fee.” Penalty fees are an important thing to be clear on when agreeing to a contract, so please make sure to check the terms carefully before signing.

When there is no security deposit required at the start of a contract, it is common to have to pay more when you move out. Please make sure you are well aware of the advantages and disadvantages of key money and zero-yen security deposits before choosing the best property for you.

”Free Rent”

“Free Rent” means that the rent is free for a certain period of time after signing the contract. Usually, one months’ rent is free, but in some cases, three to six months’ rent may be free. In most cases, there is a penalty fee if you cancel the contract within a short period of time, so please make sure to check the contract carefully before signing it.

Initial expenses are less than they were in the past

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Recently in Japan, expenses are decreasing not only in terms of key money and deposits, but also agency fees are being kept low for many popular properties. Starting afresh in a new property can be expensive, but there are a variety of ways to keep initial expenses down.

JAPANBOX sincerely wishes you the best in effectively finding the perfect home in Japan at a low initial cost.