Upfront costs on a regular Tokyo lease: a worked example

If the quote for your first regular Tokyo apartment adds up to four or five months' rent, read it line by line before you pay. The total is usually six or seven separate payments. One is money the landlord holds for you, two are rent you would pay anyway, one has a legal ceiling, and the rest are either the landlord's terms or extras added by the agent or management company.

This guide covers an ordinary unfurnished lease signed through an agent. A furnished monthly apartment is priced differently; our key money guide for monthly apartments covers that side.

The lines you will see

敷金 (shikikin — deposit). The landlord holds this against unpaid rent or damage. Under Article 622-2 of the Civil Code, the landlord must return what is left after deducting money you owe, once the lease ends and you have handed the home back. Article 621 says you don't pay for ordinary wear or ageing. So the deposit is money being held, not a fee. What comes back is the deposit minus unpaid rent, the cost of repairing damage you caused, and any cleaning charge that is both in the contract and legally valid.

礼金 (reikin — key money). A payment to the landlord that you don't get back. No law requires it; it's part of the landlord's terms. A 2007 MLIT survey of rental management companies found key money in 57.5% of Tokyo contracts, averaging 1.4 months' rent. The figures are old, but they show why the line is so common here.

仲介手数料 (chūkai tesūryō — the agent's fee). This one has a legal ceiling. The MLIT fee notice says the agent may take at most 1.1 months' rent in total from landlord and tenant together, tax included. For a home, the agent may take at most 0.55 months' rent from one side unless that person agreed to pay more when they first asked the agent to find them a place. Article 46 of the Real Estate Brokerage Act makes it illegal to charge above the notice, and Article 47 bans demanding an unreasonably high fee. A listing that says the fee is one month's rent is quoting the maximum, which needs your agreement.

前家賃 (maeyachin — rent in advance). The first full month's rent, paid before you move in. If you move in part-way through a month, the days until the end of that month are added as 日割り (hiwari — pro-rated rent). This is rent, not a fee.

Guarantee company and insurance. If the landlord requires a 保証会社 (hoshō-gaisha — guarantee company) instead of a personal guarantor, the company charges a fee at signing. Many contracts also require insurance for the room. Our no-guarantor guide explains how to read the guarantee contract.

鍵交換 (kagi kōkan — lock change), 24-hour support, sanitising. These are extras. The MLIT restoration guideline treats changing the lock between tenants as the landlord's cost when the previous tenant didn't lose or break the key, so a lock-change charge on your bill is a reasonable thing to question. No law requires a support plan or a sanitising treatment.

A worked example

The prices below are invented to show the arithmetic. Suppose rent is ¥100,000 a month and you move in on the 21st of a 30-day month, so you owe 10 days of pro-rated rent (¥100,000 × 10 ÷ 30 = ¥33,333).

Out of ¥491,333, ¥100,000 is held for you and ¥133,333 is rent. The money that is truly spent on getting the keys is ¥258,000. If the agent had charged a full month plus tax (¥110,000) without your prior agreement, that would be ¥55,000 above what the notice allows from one side.

Spread over 24 months, the ¥258,000 adds ¥10,750 to every month's rent, so the home really costs ¥110,750 a month before utilities. Leave after 12 months and it adds ¥21,500 a month, so ¥121,500. To compare with a furnished apartment, do the same sum on its quote: its monthly rent, plus its non-refundable charges spread over the same number of months, with utilities either included on both sides or left out of both.

Budget for the renewal

An ordinary lease here runs two years. If you stay longer, the contract may charge 更新料 (kōshinryō — a renewal fee). The same 2007 MLIT survey found a renewal fee in 65.0% of Tokyo contracts, averaging one month's rent. The Supreme Court ruled on 15 July 2011 that a renewal fee clause written clearly in the contract is valid unless the amount is excessive compared with the rent and the renewal period. The clause it upheld charged two months' rent for each one-year renewal. Read your own clause for the amount and how often it applies, and treat a fee in that range as one you will have to pay.

In the example, staying a third year would add ¥100,000 at renewal, plus a new insurance premium and often a yearly guarantee-company charge. If your contract is a fixed-term lease, there is no renewal at all; you sign a new contract or leave.

What you can ask for before paying

Ask the agent for the written list of every payment other than rent, with what each one is for. Article 35 of the Real Estate Brokerage Act requires a licensed agent to give you that list, in writing, before the contract is signed, as part of the 重要事項説明 (jūyō jikō setsumei — the pre-contract explanation). You can mark each line as held, rent or spent yourself.

In Tokyo there is a second required document. The Tokyo rental dispute prevention ordinance obliges the agent to explain, in writing, how move-out restoration costs are split, who pays for repairs during the tenancy, any special clause that puts extra costs on you, and whom to call when something breaks. If the contract has a clause making you pay for cleaning or wallpaper regardless of condition, it will be in that document.

Then raise the lines that are not fixed by law. The agent's fee above 0.55 months needs your consent, so you can decline it. Lock change, support plans and sanitising can be removed if the landlord or management company agrees. The landlord decides whether to reduce key money; ask the agent to pass on your request. Rent and the deposit are the landlord's terms as well; you can ask, but those two are the least likely to move.

Keep the itemised list with your contract. When you move out, the MLIT guideline and the Tokyo document are what you compare the deductions against before the deposit comes back.