Housing Negotiations in Tokyo

When looking at a property, don't just ask about the rent! Ask about what type of contract the owner is offering!

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Over the past 6-months we have witnessed a large part of the Expat Community relocate back to their home lands and home offices. Our Tokyo Office has been flooded with assisting repatriations out of Japan, and we now have many owners in Tokyo begging for the opportunity to show their properties to potential tenants.

Naturally, the rental prices are falling quickly. On average I would say rental prices for properties over 700,000 yen per month have dropped by 20- 30% compared to when Lehman was still around. Yes, that means that there are savings to be found. At http://www.japanhomesearch.com/ we would be happy to assist you find a new house / apartment at a much discounted price per month. We have helped a number of people; rent of JPY 1,500,000 back to JPY 1,200,000 in a new property, rent of JPY 900,000 back to JPY 700,000 in a similar property, etc. There are moving costs and the costs of renovating the previous property and paying the up front fees for new properties. However, when you are saving 200,000, 300,000 or sometimes up to 500,000 yen per month on rent, the cost of moving into a new property is very quickly recovered. Food for thought!

ONE WARNING; There is something you need to be aware of in doing this!! Large savings can be found, but there is a trade off involved in many cases. There is a high potential that you will be asked to sign a fixed term contract.

In Japan residential rental properties are generally offered under one of two types of contract. One is a "Ordinary Contract" (普通契約）and the other is a "Fixed Contract" (定期借家契約）. Ordinary contracts are typically 2-years in length and often automatically renew, or sometimes you pay a 1-month renewal fee. Ordinary contracts very much protect the tenant under Japanese Real Estate Law and once a tenant is in the property, owners often have not even a leg to stand on. This is therefore the contract you want to be signing if you are a corporate company signing for your expat tenant in Japan.

The second kind of contract is the "Fixed Term" contract. This is virtually no different to the ordinary contract during the term of the contract, but the big difference is that once the term is up, the contract does not renew. A new contract needs to be signed. Effectively, this means that as the contract finishes, unless the owner wishes to sign a new contract, the tenant doesn't have a foot to stand on. If the owner says "no" to a new contract, they can demand you leave the property.

So, what are owners doing these days in Tokyo. Well, they are offering you 200,000- 500,000 yen off the monthly rent for a "fixed term". ie. they are asking you to sign "Fixed Term Contracts", which means when the 2 or 3 years is up, they can renegotiate with you on a new contract. The tenant is pretty well protected under real estate law for the ordinary contract, so it is difficult to do for this type of contract. However, fixed term contracts are just that. You need a new contract to continue living in the property, and owners have every right to negotiate with you when this happens. They also have every right to say no to a new contract if you don't agree to their terms. Yes, in 2 or 3 years time, they may come back and ask you to pay the extra 200,000- 500,000 yen or more! Just beware!

Owners mayn't be willing to discount rent so much if you are looking to sign an ordinary contract, so the moral of the story is;

When looking at a property, don't just ask about the rent! Ask about what type of contract the owner is offering!