Court: Landlords collecting renewal fees violates tenants' rights

Friday 24th July, 10:57 AM JST

KYOTO —

In what experts termed a landmark ruling, the well-established practice of landlords collecting renewal fees in the housing rental industry was judged illegal Thursday and a violation of tenants’ rights.

The point of contention in the Kyoto District Court ruling Thursday was the “contract renewal fees” for renting houses and apartments, which tenants are obliged to pay their landlords every time their contracts are renewed.

In many cases, the fees are equal to two months’ rent and must be paid by lump sum, putting a heavy financial burden on tenants every few years, in addition to the “key money” that is required when a tenant first enters into a contract.

In the lawsuit, a Kyoto man had demanded that his landlord return 460,000 yen, comprising 110,000 yen in contract renewal fees and 350,000 yen in key money, based on the law to protect consumers in business deals.

Calling the fees a “unilateral infringement on consumer benefits,” presiding Judge Toshio Tsujimoto ruled that the practice has no legally justifiable grounds and ordered the landlord to return the full amount.

Legal experts said the ruling is rare in that it is based on the consumer protection law rather than the law to define the rights of landlords and tenants in house deals. The ruling is expected to affect similar lawsuits pending nationwide.

In April 2006, the man made a two-year contract to rent an apartment in the city and paid about ¥110,000 — the equivalent of two months’ rent — to his landlord in January 2008, when the initial contract approached renewal. But he terminated the contract four months later and vacated, the court said.

“Reasons for charging contract renewal fees must be clearly explained to tenants and agreed upon between the two sides,” the judge said.

Praising Thursday’s ruling, lawyers for the plaintiff told reporters later Thursday that the Kyoto case would become a significant step forward to reform the country’s housing rental industry, which they said has many traditional unwritten codes and rules not accompanied by clear explanations.

“Renewal fees are charged in a lump sum regardless of the span of contracts. In reality, landlords rarely give advance notice until a renewal approaches in a few months, and tenants are effectively forced to pay the fees,” they said in a statement.

People in the housing rental industry, which has already been forced to lower rents because of the recession and land price falls, were quick to slam the Kyoto court ruling.

“This case will surely affect our business,” one industry official said.

A spokesman at a Tokyo-based industry group supporting landlords justified the practice, saying renewal fees are part of funds for long-term repair of properties.

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Latest 15 of 76 Total Comments Show All

sfjp330 at 07:41 AM JST - 25th July

nigelboy;

Some of the accelerated full depreciation offered in California for commercial can be as short as 8 years full depreciation.

Moderator: All readers back on topic please.
DenDon at 10:56 PM JST - 25th July

even nigelboy has to go off on a tandem to avoid having to agree Japan is wrong on this one
DenDon at 10:57 PM JST - 25th July

but still tries to argue and get all knowledgable about something haha
DenDon at 12:01 AM JST - 26th July

Talk about going off on tandem there buddy.

the topic is Japan and it's messed up landlord rules. your chatter about U.S. and property devaluation is the tandem, helloooooo. any comment on 2 year renewal fees? I would imagine they are the bees knees in your world
nigelboy at 12:12 AM JST - 26th July

the topic is Japan and it's messed up landlord rules. your chatter about U.S. and property devaluation is the tandem, helloooooo. any comment on 2 year renewal fees? I would imagine they are the bees knees in your world

Hooray for the tenants! What more needs to be said?

But you go on with your "Japan is wrong" rants.
DenDon at 03:10 AM JST - 26th July

But you go on with your "Japan is wrong" rants.

tell me about my rants. find one and point it out to me.
DenDon at 03:31 AM JST - 26th July

yeah...
lordomni at 11:40 AM JST - 26th July

This is a good step toward reforming the housing industry. If they can get rid of 'key' money as well, they might even have some level of population mobility so people can live closer to work and not jump in front of trains.
Eizenhauer at 10:36 PM JST - 26th July

Yeah, 2 year term pay is called "koushinryo" and most rental agencies have this fee that you must agree upon before moving into your new place. Been in Japan 5 years and moved 4 times already in search for a good rental agency. If you are a foreigner your chances are equal to none to rent a nice apartment unless you have a japanese spouse. I call this 2 year rental fee a BS payment (bull sh... payment). I have never heard of such a ridiculous payment anywhere else in the world...
Biagon at 12:36 AM JST - 27th July

Interesting enough, we folks in the military don't pay the renewal fee. We do have to pay the 4 months rent upon intial move-in. I guess that backs up the claim that those extra fees are irrelevant. But, then again, those landlords who were smart enough to jump into a specialized market of leasing to the Dep of Defense personnel know that they will have a high turnover rate of people and also know that they will ALWAYS be able to get their money from the government. A lack of failure to pay will result in your wages being garnished.
Nessie at 12:27 PM JST - 27th July

I've lived in 5 different apartments in Sapporo, and I've never heard of a renewal fee.
Richard_III at 09:13 PM JST - 28th July

this system exists in NO OTHER first world nation in the world

You can't compare Japan with other first world countries. Not only would reikin not exist but discrimination on letting due to being a foreigner would also not be practiced: it might be written in law, but such discrimination exists throughout Tokyo.

Let them smell cake.
knowitall at 11:09 AM JST - 29th July

If you are a foreigner your chances are equal to none to rent a nice apartment unless you have a japanese spouse.

That is utter BS. If you have a steady job and speak Japanese, the real estate agents are usually more than happy to provide you with a nice place at the same price they charge Japanese. The places I lived in before acquiring a Japanese spouse were better than the ones I got after. Also, even after marriage, the rental agreements have been in MY name, not my spouse's. While there are hurdles to overcome being foreign in any country, you are not unilaterally excluded from a decent apartment.

I've lived in 5 different apartments in Sapporo, and I've never heard of a renewal fee.

It is a regional thing. Some places have it and some don't. Just as key money (礼金) is mostly a Kanto thing.
nisegaijin at 05:32 PM JST - 30th July

well, i just managed real estate agent knock off 10% of rent, 2 months key and renewal fee.. i asked where deposit goes and they said land lord... question is why?
FightingViking at 09:59 PM JST - 1st August

I ealize it's a little late (better late than never!) but is there anyway I could get hold of a Japanese language edition of the Kyoto Court's ruling in this matter to show my lawyer? Thanks in advance!