Essential Fees to Budget for When Renting an Apartment in Japan

Getting your own place in Japan could feel like a surprise you weren't prepared for. There's a whole list of fees marching your way, from key money to guarantor fees and management fees—stuff you probably never knew existed. Let's break down the type of fees you’ll come across, so you can move into your new home without any unexpected bumps in the road.

Security Deposit Fee

First on the list, we've got a deposit fee. A deposit fee is used to ensure you leave your place the same as when you first came in. When you move out, the landlord and management company will check your room for any damage. You’ve scratched up the floor or left a mark on the wall? The landlords will use the amount required to fix the damage from your deposit money.

The amount of deposit money might differ according to the property. The most common one is the same amount of your monthly rent, so if you're paying ¥200,000 yen per month, your deposit is ¥200,000. Although, one thing worth noting is you can get your deposit back if you didn't cause any havoc in your room.

Key Money

Now, this “key money” is probably new to most of you. Let’s figure out what key money actually is. At first glance, you might think it's about paying for the actual key to your new place, but here's a little twist – it's more of a thank-you payment to your landlord for letting you rent the place. It came from an old tradition where landlords went beyond just renting you a room, they used to take care of the tenant and sometimes even let the tenant consult with them. Of course, all of this happened before renting apartments or housing was a thing. Fast forward to today, and while you're not likely to get counseling sessions from your landlord, the tradition of expressing gratitude with a bit of cash is still around. It’s not just that, key money is also charged by the landlord as a way to increase their profit without needing to set the monthly rent high.

One of the most common questions is “Does key money affect the quality of properties?” the answer is yes. Properties that have key money are usually the better ones. It is highly demanded because of many reasons such as premium location, great design, used strong materials, newly built, and so forth. Most recent apartments require you to pay key money. In most demanded areas such as Shibuya, Meguro, and Minato only 35,5% of properties dismiss key money.

For the fee, key money costs the same as your monthly rent, in some occasions, it can be more. The good thing is you only need to pay it once, right at the beginning. Unlike the security deposit, this money isn't coming back. It's a one-time gesture of appreciation as you kick off your new chapter in Japan.

Amount of properties without key money in Shibuya, Minato, and Meguro.

Advance Rent

Now, advance rent is straightforward it's exactly what it sounds like. When you're gearing up to move into your new place, you've got to pay the rent for the upcoming month in advance. For example, if you sign the contract in February and start living in your new place in March, you're paying out for March's rent right there in February. Now, you might be thinking, "What if I move in mid-month? Are they charging me for a whole month?" Well, you don’t need to worry. You'll only be charged for the days you're officially settled in. Let’s assume that you moved on the 15th, they will start charging you from the 15th to the 31st. Fair and square!

Fire Insurance

Next on the list is Fire Insurance, or as they call it in Japan, ‘kasai-token’. It's usually required before you move in. Let’s see a quick stat check: Japan sees about 95 fires a day, that is not a small number. For the cost? Around ¥18,000 to ¥20,000 yen for two years. The agents might suggest one, or you can pick your own. Just make sure you're covered for any unwanted disasters like fire, lightning, snow damage, water leaks, and even theft. You also need to know that earthquakes are not usually covered by this.

Guarantor Fee

Now, the guarantor fee might have you raising an eyebrow, especially since you've already handed over a deposit. But in Japan, you need a guarantor to land an apartment. If you don't have one, you are not allowed to get a place. These days, this is where a guarantor company steps in. They'll swoop in to vouch for you, but it comes at a cost – typically 50% to 100% of your rent. They ensure your rent gets paid when you for some reason are not able to pay. This fee is a one-way ticket, you pay it once and it’s not coming back. The good news is that guarantor fees are getting more and more uncommon. Many property management companies and landlords ignore guarantor fees. Only less than 1% of properties still charge guarantor fee.

Agency Fee

An agency fee or brokerage fee is the fee you pay to the real estate company that helps you get the property. See it as a gratitude gesture for the hard-working agents trying to make sure you’ll find not just a room but also a place to call home. The fee is usually the same amount as one month's rent, don’t worry, it’s never more. The law states that agents are not allowed to charge you more than one month's worth of rent. There is a possibility that the agency fees are excluded. Although, it is highly unusual.

So… How much are the initial costs?

Now you’ve come to understand all the fees that you potentially come across. Now let’s estimate how much it will cost for you. Let’s say your rent is around ¥200,000 how much do you actually need to pay?

Price breakdown

When gearing up for a move, it's wise to set aside approximately four times the amount of your monthly rent to cover the expenses. It's a good idea to be ready for the highest possible fees. However, there's a silver lining – you might just find yourself in a stroke of luck where several fees are excluded. The most common waived fees are key money and deposit fees. Yet, it all boils down to the homeowners, they might land you a fantastic deal. It's worth noting though, that the more you try to minimize fees, the narrower your range of available property options may become.