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The Japanese housing market is perhaps known to foreigners mainly for its tricked-out toilets, econo-sizing, and the sometimes insurmountable shibboleth of the housing “guarantor.” Not merely a formality, the guarantor is basically a co-signer to a rental lease whom the landlord is under no obligation to accept. And given that the common guarantor in Japan is one’s still-working parent, a foreigner is hobbled right out off the gate for reasons both legitimate and not—since the system provides a fig-leaf to the landlord who wants to discourage foreigners from a particular building. Add to this about 6 months’ rent upfront as well as income requirements (usually on Japan-based income) and, Jetsons toilets aside, one could be forgiven for finding the housing market downright hostile.
One could also be forgiven for expecting change to come only glacially, if at all. Tokyo is, besides the world’s largest metropolis, also the world’s most paradoxical. On the positive side of the ledger, the city boasts a peerless transportation system and efficiency in municipal services that can make a foreigner blush. On the other, an ossified and inflexible bureaucratic mindset resists internationalizing the city by updating the codification of its social norms—from business taxation to housing regulations.
For too long, too many lawmakers and businesses (domestic and foreign) have protected the status quo out of rank fear or in order to profit on the cultural arbitrage. Out of this milieu, it is hard to think that anything new could emerge, but it must. The fact of the 2020 Tokyo Olympics seems to be slowly settling in and the indignities and sclerotic inconveniences of everything from housing to SIM cards will have to wither in the glare of an international spotlight. Ben Bernankean green shoots are starting to pop up — from international start-ups flexing their international scale and even domestic companies.
Both Uber and Airbnb have made small, if tenacious, beachheads. Last month, the New York Times Magazine ran an article about Airbnb in Tokyo, touching on some of the peculiarities and challenges of building their concept and business model in risk-averse Japan. The sheer size and diversified international footprint of Airbnb may provide the company with the staying power necessary to wait for the Japanese to meet them half-way, or 30% of the way, as the case may be. Millennials and their cohort will hopefully help make up the rest.
On the domestic front, there is some evidence that companies are trying, if not to remake the housing market root-and-branch, to at least dramatically improve the process. A company called iSmile recently launched a simplified credit card rent and guarantor service that provides the latter service as a fee wrapped with the former — and automatically bills tenants monthly. Not only can a tenant save on brokerage fees and use rent to rack up credit card reward points, but the uncertainty and challenge of finding a guarantor, let alone a suitable one, is rendered moot. At a glance, the company’s webpage is redolent of a domestic Japanese concern, but the service is potentially a good one and, most importantly, they seem committed to serving international customers.
Airbnb and iSmile seem like some of the first steps for a housing market that for decades has failed to live up to the lofty aspirations of traditional Japanese hospitality. As the world continues to globalize, international standards for convenience and service are emerging, and challenging, vested industries the world over. The 2020 Tokyo Olympics provide a tremendous opportunity and target for Japan to welcome and celebrate its global citizens.
© Japan Today
12 Comments
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jerseyboy
Precisely. But, unfortuantely, Ian is just preaching to the choir here. Nothing significant will change in Japan until it is absolutely forced to.
JeffLee
Using a credit card to pay my rent? That would certainly rack up my air mileage.
Pandabelle
I've never seen an apartment rental that requires 6 months rent up front. Never. And recently I have been looking at a LOT of apartments. Typical these days is one month's deposit (two at the MOST) and either 0 key money or one month's.
Why is it that articles like this gauge Japan's openness solely by the acceptance of foreign companies in the marketplace? In the case of Uber, there's a LOT of controversy with Uber in many markets, both for the lack of vetting of its drivers and the circumvention of local regulations. In Japan, Line Taxi is doing quite well, but that's not worth a mention because its not a US company, right?
JMW47
Actually moving in costs at least 5 months: 1 month deposit, 1 month key money, 1 month agent fee, 1 month fee to the guarantor, 1 month pre-paid rent down. Oftentimes it can be 1-2 months key money, 1-2 months deposit.
sighclops
@Pandabelle
I believe the writer is referring to the total cost of moving into a place, which is almost always 5 - 6 months rent. 2 months upfront + questionable 'key money' + agent fees + other associated fees. I've moved a number of times and, whichever way you cut it, it always ends up being around the same amount.
Regarding the article itself, the guarantor & key money systems really need to go. Or be reformed. The problem with the whole system is that the landlord wields ALL the power. Sure, that's the case in most countries, but the Japanese real estate industry is stuck in the 50s.
Pandabelle
It's already rapidly going that way. Plenty of places with no key money now, plenty of places with low agent fees. And that's not even counting something like UR apartments, which are available to any resident and have none of that nonsense.
GW
I stopped renting about 7-8yrs back, before that rented for about 15yrs moved at least 4times.
First place I paid a total of 4mths to start
After that the market was changing I found you could negotiate with landlords & the next place was 3months total, then the last two I only paid two months up front. Again you can negotiate, my wife was totally against this she just said TIJ blah blah insisting we could never save a few yen this way.
SO at one agent where we looked at a place & we liked it before my wife could stop me I said we like it, we will pay 1mth key & 1mth deposit(ad listed 2mths for each) if the landlord agrees we will sign & pay.
The mrs gives me a wicked look HA! The agent goes off makes the call comes back & says the landlord says okay, I look at the wife & she is totally silent haha!! The agent & land lord were fine easy to deal with, I know from other experiences it can be trying to say the least, especially about cleaning costs & that BS.
From then on the mrs is willing to allow me to ask these sorts of questions, after I saved over Y200,000 by asking a question. And told her she can use the savings to buy some new stuff for the apartment!
Its certainly a lot better than the 80s or early 90s, but still a ways to go but at least there are TONS more options compared to when I first washed up on these isles!
nath
I also negotiate with them. I refuse to pay key money. Some landlords won't budge, but they are fewer and fewer these days. Most of them are willing to drop the key money in order to get someone in the door.
My wife also didn't realize that you could negotiate with them - until I negotiated with them. She was amazed.
TravelingSales
I rent out 2 places & don't charge key money on either
Jeff Huffman
Try as I might, I didn't find a thing in the article showing some connection between the domestic housing market and the Olympics. And just how is Uber related to Japanese housing and/or the Olympics?
nath
Jeff: Agreed!
But, personally I want to make my place a bed a breakfast for the Olympics, and cash only. Can that be done?
livinthelife
Great article!! iSmile will hopefully do well with their business.