1. Landlords and Real Estate Agents

When a person wants to rent a house, a room, an apartment, a condo or whatever, the first thing a lessee needs to do is go to a real estate agency in town and find out the initial cost of the property. But, in the case for business use, the process is completely different.

These include the “Shikikin”, which is a security deposit, “Reikin”, a key money, agency fees, common service fees, and rent. The security deposit is to be returned to the lessee in the future, but for example, if the lessee has a pet or smokes, then, the lessee may be required to replace all the cloths when moving out. In such a case, the lessee may be asked to pay for the cleaning fee equivalent to the rent for one month. Of course, this applies only if there is any damage during the tenancy and the cost will be covered by the lessee.

Before signing a contract, decide with the real estate agent regarding the management of the property. They will ask you about the rent rates in the area and the landlord’s particulars. The landlord may have various requests, such as no families, no students, no foreigners, no pets, no playing musical instruments, and no lessee who do not pass the screening of the guarantee company. Don’t be shy about saying what you want. If you tell them after the fact, you may end up in trouble. Having been said that the one-month security deposit means the amount equivalent to one month’s rent.

A security deposit can be as many months as you want, but some real estate agents recommend zero. The phrase “no key money for security deposit” has become popular, but the point is that it makes it easier to attract customers. Recently, one- or two months free rent is also in vogue. The key money was originally the amount of money the landlord would receive but is often offered to the real estate agency that attached the lessee as an advertising fee. This often happens when there is a difference between the placement and the landlord who requested the property. Also, if you have a hard time getting the placement, the real estate agent you are asking may tell you. The trick is to not violate the phrase “advertising fee” which is the Real Estate Brokerage Act. The brokerage commission is the commission paid to the real estate agent. Common service fees are used to pay for things like lights in the hallways of apartments. Landlords often pay 3% to 5% of the rent to real estate agents as a management fee after the rent is generated. Make sure you know how much work, in terms of management is being done. If you are not convinced, visit a different real estate agency, because once you start, you will have a long relationship with that real estate agent you chose. So if you want to find other agents, I would recommend visiting a real estate agency that specializes in rentals.

2. Common Things To Encounter As A Landlord, Who will fix the air conditioner?

Nowadays, when you rent out a room, you are required to have at least an air conditioner. There was a time when air conditioners were considered a luxury item and people living on welfare were not allowed to own. Now, even in Hokkaido, the northern most part of Japan, you can get heat stroke if you don’t have one. Since the air conditioner is an electrical appliance, and depending on how you use it, it may break down and comes the questions of who is going to clean the filter? And if there are four rooms, will each room need to be equipped with an air conditioner?

The answer is simple, just put one in the living room. However, some lessees may request to put in other rooms. To prevent them from installing it without permission, make sure to install a sleeve in advance so that they can’t drill a hole in the pipe in an arbitrary place.

Also, if an air conditioner is left by the previous lessee, make sure to add a phrase in the contract that the air conditioner left by the previous resident will not be repaired because it is not the property of the landlord.

In Japan, we generally do not install lighting fixtures, curtains, or furniture. On the other hand, there are apartments fully equipped with air conditioning, lighting, curtains, and Wi-Fi to make it easier for a lessee to move in. It is a matter of lesser and the landlord’s way of thinking. Neither is an incorrect answer.

3. Japanese Love Personal Seals!

Neither the network society nor the online work has changed the Japanese love for personal seals or Hanko. In my opinion, contracts come with a tax in the form of a stamp. The stamp comes with a tally impression so that is can’t be used twice. Therefore, for the country itself not to lose this tax revenue, a stamp, tally impression and of course a seal is required before signing a contract. This trend will never be gone, and so does the seal

or the hanko. Regarding the seal, there are variations.

1. HANKO meaning it’s proof that you understood or saw that particular item 

2. MITOMEIN is a regular seal for confirmation.

3. SANMONBAN is the cheapest seal with no meaning,

4. JITSUIN is a registered seal with the most legal power out of the different types mentioned here.

5. TODOKEDEIN is a type of seal you hear when visiting a bank. Its basically a seal you registered at the bank upon opening an account.  

You can use your personal seal for everything. For Jitsuin, literally translated as “actual/true seal”, it is registered at the municipal office where you have registered your resident registration. When using this seal, is means officially valid. Even if you buy a seal at a 100-yen store, if it is registered as a “jitsuin”, it becomes official.

For a person with non-Japanese names, you will need to personalize your seals. If you make your seal in katakana, you can register it at the municipal office with your katakana name, which will make your real estate transaction smoother. You can consult with a Hanko shop about the size, material, and font of the seal. Sometimes I encounter a seal impression that is missing some edges. This not only makes bad impression but also, leads to some trouble when registering as a “jitsuin” or when applying a bank load. So I strongly recommend to make the seal itself again as soon as possible.

“Ouin”, “Natsuin”, “Gonatsuin” is a term people here often. However, these all have the same meaning which means “please place your seal here”. There is also the term “teisei-in” and “sute-in” which I will talk about it later. Also, foreign people are not familiar at stamping the seal, so I’ll show you how to do it in a video soon.

4. About Tax

In Japan, land and the building standing on that land are considered as two separate pieces of real estate. Therefore, the owner of the land and the building standing may be different.

Some people rent land and build apartments. Some people build apartments on their father’s land. I won’t go into the legalities here, but when signing a contract, you must be careful not to get into trouble from various sides. Now, each of those two properties will be subject to property tax. Land is always land, but buildings become old, don’t they? The Japanese tax system has a concept of useful life. Newer buildings have higher property taxes while the older buildings have lower taxes because property taxes become lower with the useful life of the building. For example, wooden houses that is 22 years old doesn’t mean its property taxes will be zero after 22 years. But it’s become close to zero. So, some may think, why doo’t you buy an old building and rent it out? The problem in this case is that rental income becomes low, and older buildings are subject to more repair work. One thing that is often overlooked in the rental business is this tax problem. This is common even for both Japanese and foreign owners, but they become satisfied with just owning an apartment, and the related expenses and taxes become an afterthought. And even if you do not live in Japan, you are obligated to pay this property tax. For those living abroad, when buying Japanese real estate, it is mandatory to register a contact person who has a residence certificate in Japan. The person will contact you and tell you how much it is, and you have to pay. There are cases where a delay may result in foreclosure. The end result of the seizure is that the property is auctioned off and confiscated. Delinquent payments of property taxes are also disadvantageous when you want to sell, as the word “foreclosure” will appear in the registry (official property certificate). Be sure to check this before you buy a property. Of course, the more urban and popular the area, the higher the property tax. Also, there is a one-time tax payment called real estate acquisition tax. I’ll feature this story later, too.

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