2017-02-08

Renting Out Your Home in Japan

Advice

If you purchase property in Japan and would like to visit only sometimes, and rent out the property the rest of the time, there are some important things you need to know.

About traditional lease contract and fixed-term tenancy agreement

There are two types of contracts. First of all, the traditional lease contract. If you do not intend to return to your property, we recommend this approach. However, if you want to return home, you should choose a fixed-term tenancy agreement.

One significant benefit for choosing a fixed-term tenancy agreement is that you can decide the term(s) of the contract by yourself. In addition, upon the expiry of the contract term(s), you can return there without any problems with a tenant living there.

As for the traditional lease contract, renewal of the contract is compulsory and is in many cases done automatically unless there is a significant enough reason to end it. However, for fixed-term tenancy agreement, when it reaches its expiration date, the agreement will be terminated automatically.

As for early termination, you can lay down your own conditions in the agreement in order to avoid it. Having said that, it is not advisable for either party to cancel the agreement while the agreement is still in term.

An owner must not terminate the agreement early if it is bound under the fixed-term tenancy agreement. As for the traditional lease contract, the owner is not allowed to terminate the agreement if the tenant wishes to renew the agreement, unless for some extreme reasons.

How much commission do I need to pay?

When you rent out your home, you have to pay commission to the real estate agent. It is about half of your monthly rent plus tax. On top of that, you need to pay entrusted management fees, property tax, city planning tax, service charge and sinking fund.

These are the fees that you have to keep paying, but the good news is, you can make a profit out of it simultaneously. Furthermore, if you want to return there, you can easily do so with the fixed-term tenancy agreement.

If you have any questions or would like to arrange a viewing, please feel free to contact us!