Japan’s real estate market is not only shaped by law and economics but also by a set of deeply rooted business customs—many of which are puzzling even to Japanese citizens. For foreigners entering this market, understanding these traditions is crucial, as ignorance can lead to confusion, inefficiency, or unexpected financial burdens.
One of the most talked-about examples is the practice of “reikin,” or key money. This is a non-refundable fee paid by the tenant to the landlord at the start of a rental agreement. Unlike deposits, reikin has no legal or financial basis and is not returned when the tenant leaves. It is often explained as a gesture of gratitude, but even within Japan, few people can clearly articulate what service or favor it compensates. In many cases, this “gratitude” fee ends up being passed on to the real estate agent as a hidden source of commission.
Another common but unique element is the security deposit system, known as “shikikin.” While similar in function to deposits in other countries, Japan’s version is often entangled in regional traditions and informal expectations. In some areas, landlords deduct extensive cleaning or repair costs from the deposit—sometimes unreasonably—leading to disputes over “genjō kaifuku” (restoration to original condition). Although recent legal reforms have attempted to clarify tenant and landlord responsibilities, the interpretation and enforcement vary widely.
Guarantees are another unusual feature. It’s typical for Japanese rental contracts to require a “rent guarantor,” or “rentai hoshōnin”—a person who legally commits to paying the rent if the tenant defaults. Traditionally, this role fell to family members, which poses an obvious hurdle for foreign tenants. More recently, guarantee companies have emerged as substitutes, but these often come with high fees and complicated screening processes.
Then there’s the management fee (“kanrihi”) and the shared facility fee (“kyōyō-hi”), both of which are often mandatory in apartment rentals. While some of these fees fund legitimate building maintenance, others lack transparency and seem arbitrarily priced.
Land sales, too, include uniquely Japanese elements. For instance, “kenchiku jōken-tsuki tochi”—land sold with attached construction conditions—means the buyer must build a house through a specific contractor, usually within a set timeframe. This practice limits buyer choice and complicates financing, yet it remains legal and widespread.
Even within Japan, these customs vary dramatically by region. In the Kansai region (centered on Osaka), for example, it’s more common to pay a larger deposit instead of key money, and contracts often operate on different expectations. A rental agreement in Tokyo may involve entirely different norms than one in Kyoto or Fukuoka. This inconsistency is a frequent source of confusion for both domestic and international tenants.
Important legal documents, such as the “jūyō jikō setsumeisho” (explanation of important matters), are legally mandated disclosures provided before any real estate contract is signed. However, these documents can be dense, technical, and often fail to explain the more informal or customary practices that tenants should know.
Recent years have seen a rise in disputes over “genjō kaifuku” obligations. Tenants are often charged for full wallpaper replacement or professional cleaning—even if they lived in the unit for only a short time. This clashes with updated legal guidance that stipulates landlords should only claim costs related to damage beyond normal wear and tear. However, enforcement is uneven, and many landlords continue to follow old norms, especially when dealing with foreign tenants who may not push back.
Guarantee companies, once seen as a solution to the burdensome guarantor requirement, are now themselves a source of friction. Many tenants are required to use a guarantee company even if they already have a viable guarantor. Worse, these companies charge initial fees and annual renewal charges, essentially becoming a semi-permanent cost of tenancy. Critics have raised concerns about the lack of regulation and potential for abuse in this industry.
The regional disparities in real estate customs also extend into property sales. In some Kansai cities, transaction intermediaries expect buyers to approach them through introductions or referrals, rather than public listings. This can make it hard for outsiders to even identify what’s available. Meanwhile, in Kanto, the emphasis tends to be on formality and process, but that doesn’t mean transparency is guaranteed. Customary expectations, like non-refundable deposits to “hold” properties even before formal negotiations, are not always stated explicitly.
Perhaps the most baffling aspect for foreigners is the subtle tension between what is legally codified and what is culturally expected. While legal contracts govern the transaction and take precedence in any dispute, informal customs can still shape expectations and behavior—especially in smaller, family-owned buildings. Tenants may find themselves complying with unwritten rules or traditions not out of obligation, but to maintain harmony or avoid discomfort. Such customs do not override the law, but they can create pressure to conform beyond what is contractually required.
Foreign buyers and renters are therefore advised to go beyond just translation. Cultural interpretation is often more important than linguistic clarity. Understanding which customs are negotiable, which are enforced only sometimes, and which are legally binding requires insider knowledge.
One example of a customary-but-not-legal fee is when landlords ask tenants to shoulder the real estate agent’s commission—despite the fact that agents are typically working for landlords. This is widespread and rarely questioned, but it reflects how certain fees are socially accepted regardless of legal logic.
To navigate these quirks, some foreign residents rely on community forums or bilingual support centers. Others retain property lawyers. While these steps add cost, they can save money and frustration in the long run. Japan’s real estate market does function smoothly, but only for those who understand the silent choreography behind each transaction.
Ultimately, the unique real estate customs in Japan are not arbitrary—they evolved through decades of practice and social reinforcement. But what works for insiders can easily confuse or alienate newcomers. For the foreign renter or buyer, success begins not with signing a contract, but with asking the right questions—and knowing when the answers aren’t written down.