JAPAN INVESTMENT PROPERTY GUIDE
Provident Investment has prepared a guide to provide investors with some useful information when considering to purchase property in Japan
KEY MONEY
When renting a room, while in some countries the word 'Key Money' is often used interchangeably with “rental deposit”, in Japan, Key Money is separate from the rental deposit, and is an additional required payment or an honorarium made by the prospective tenant to the landlord or the property owner at the time of contracting.
Key Money, or in Japanese “Reikin” (礼金) is part of the Japanese culture as a way for tenants to fulfill their social obligation to the landlord for being allowed to rent and use the room, since in Japan, the home is considered a sacred personal space, where invitations are reserved to very close friends and family members.
Unlike western countries, in Japan, tenancy laws are very pro-tenant, where landlords cannot even inspect the inside of a room occupied by tenants at all and it is generally very difficult to evict tenants in Japan. When a rented room is sold, the new buyer also has no way to inspect the inside of the room and has to purchase it site unseen.
In the past, Key Money was set up to 6 months rent or more, but typically and more commonly 1-2 months rent. Unlike the rental deposit, regardless of the state of the room when the tenant vacates and the rent payment history, the Key money is not returned to the tenant when the lease contract ends and the tenant vacates.
While Key Money has had a cultural significance in the past, in this day and age, as properties are regarded more as investments and often bought and sold site unseen, Key Money is regarded simply as a way to make additional income from new tenants, and since tenants are becoming more budget conscious, to reduce the hurdle to leasing, many landlords and management companies are not charging Key Money.
Key Money, or in Japanese “Reikin” (礼金) is part of the Japanese culture as a way for tenants to fulfill their social obligation to the landlord for being allowed to rent and use the room, since in Japan, the home is considered a sacred personal space, where invitations are reserved to very close friends and family members.
Unlike western countries, in Japan, tenancy laws are very pro-tenant, where landlords cannot even inspect the inside of a room occupied by tenants at all and it is generally very difficult to evict tenants in Japan. When a rented room is sold, the new buyer also has no way to inspect the inside of the room and has to purchase it site unseen.
In the past, Key Money was set up to 6 months rent or more, but typically and more commonly 1-2 months rent. Unlike the rental deposit, regardless of the state of the room when the tenant vacates and the rent payment history, the Key money is not returned to the tenant when the lease contract ends and the tenant vacates.
While Key Money has had a cultural significance in the past, in this day and age, as properties are regarded more as investments and often bought and sold site unseen, Key Money is regarded simply as a way to make additional income from new tenants, and since tenants are becoming more budget conscious, to reduce the hurdle to leasing, many landlords and management companies are not charging Key Money.
