———We asked a real estate professional

 

From those who have just arrived in Japan to those who have lived here for many years, one of the top concerns for foreigners is always "finding a place to live." In Japan, where culture, customs, values, and laws differ, what makes the search for housing so challenging for foreigners?

I asked Kenji Miumi, the president of Caesar C Co., Ltd., a real estate company located in Nihonbashi, about such questions. Caesar C Co., Ltd. values "connections between people" and aims to create new communities. With Chinese staff on hand, they are well-trusted by their Chinese clients and are deeply rooted in the community.

 

(Titles omitted)

JII: For foreigners, searching for properties in Japan can be challenging and there are many puzzling aspects. I would love to hear the thoughts of property owners and real estate agents about this. By understanding their perspectives, I believe we can discover some valuable compromises that benefit both sides. So today, please share your insights with us.

Miumi: Yes, I have my intuitive feelings about this, and I might be wrong, but I will share my insights based on my experiences so far.

 

Foreign guests reflecting the changes of the times

JII: Before we dive into the main topic, could you tell us a bit about Mizumi? How long have you been in real estate?

Miumi: We moved our shop here from Roppongi three years ago. I originally worked as a developer in B2B, which means I was involved in real estate business. However, after facilitating a deal for a property, I was entrusted with its management, and from there, I started interacting directly with end users. Gradually, I realized that it would be better to provide a more thoughtful and understandable service to our customers, so I decided to open a store aimed directly at end users (B2C).

JII: I see, you've shifted from B2B to B2C. In recent years, the number of foreigners living in Japan has been steadily increasing. From your perspective, have you noticed any changes?

Miumi: It was ten years ago that I first took action to sell real estate to clients in China. I traveled to Beijing for that job and held a seminar introducing Japanese real estate. However, at that time, China was experiencing a period of rapidly rising property prices, so compared to that, Japanese real estate, which aimed for income gains (rental income) rather than capital gains (resale profits), was not understood by Chinese clients and received no attention at all.
After that, following the Lehman Shock, low interest rates continued, and once the Tokyo Olympics were confirmed, there was a renewed interest in purchasing real estate. Initially, many properties were being sought by individuals from Hong Kong and Taiwan. Subsequently, it seems that people from China have also started to come.
Foreigners who have actually made transactions have looked for properties to purchase for living in Japan, as well as those interested in managing vacation rentals or running a business.
One background factor is the relaxation of Japan's visa policies. Since around 2010, the Ministry of Justice has eased visa regulations for foreigners. Following the 2013 earthquake, policies were introduced that allow for multi-entry visas when visiting specific locations, such as Okinawa, along with the influence of medical tourism. As a result, many affluent individuals have been visiting Japan, experiencing the culture firsthand, and increasing their purchases of antiques and artworks, which has also led to a growing interest in Japanese real estate.

JII: I see. So, customers who wouldn't have given it a second thought ten years ago are now finding Japanese real estate appealing. Given the increasing number of foreign customers, I would like to delve into the challenges that foreigners living in Japan are facing.

 

Key Points to Consider for Renting and Financial Matters - Part 1

Understanding the Process of Renting a Property

JII: I remember having quite a bit of trouble when renting a house during my student days. There were many things I didn't understand, like key money and security deposits. Nowadays, it seems like there are more properties with zero key money and security deposits in the city center...

Miumi: In the past, it was common to pay two months' key money and two months' security deposit, but recently, due to changes in the law, many places now require only one month or no key money, and the same goes for the security deposit.
There is a reason for this. In real estate terms, over the past few years, the number of properties managed by so-called real estate funds has significantly increased. These companies aim to maximize income (rental revenue) by setting rents slightly higher, minimizing initial investments, and encouraging tenants to move in quickly.
As such properties increase, customers are drawn to them, making it increasingly difficult for other real estate to maintain the traditional two months' key money and two months' deposit.

JII: First, let me confirm the steps for renting a property at this time.

Miumi: First, start with an online search (narrow down properties based on the area you want to live in, the layout, and the rent you can afford).
→ Contact the real estate agent you are managing to check the availability of properties.
→ Go to Real Estate → Further search, narrow down your favorites
→Preliminary visit (varies by person, but typically 3-4 locations)
→ Decide on what you like
→Application (including procedures for the guarantee company)
→ Review (Landlord + Guarantee Company)
→Contract (Explanation received regarding real estate)
→Pay the initial fee
→Move-in (Relocation)
→ Moving-in procedures and more

Even if you find a property you like on JII, it's common to be told that it's no longer available when you inquire about it.

Miumi: Right now, there are still some of those, but I feel like about 60% can be found online.

 

Instead of a guarantor, use a guarantee company; the key is communication.

JII: It seems that there is an increasing number of properties that allow foreigners.

Miumi: First and foremost, there should be no assumption that it's easier or harder to rent because someone is a foreigner.

JII: That's right! (I agree)

Miumi: Properties that are typically fund-based do not have any restrictions regarding whether someone is a foreigner or not. Rather, it may be the case with properties managed by individual owners, where they conduct their own screening.

JII: What does the review process evaluate? Is it income, or is there something else?

Miumi: When we talk about what to look for, it ultimately comes down to whether you have a stable income, are employed, and can provide proof of that. For example, even if you are a foreigner, if you are employed by a reputable company, can provide proof of income, and have a visa, it is not impossible to rent. This is the basic requirement now. However, there can be differences depending on the level of the property, the owner, and the management company.

JII: I see. Finding a guarantor can be quite challenging as well.

Miumi: Recently, the number of guarantee companies has been increasing, leading to a decrease in the need for joint guarantors. There are also more cases where guarantee companies are mandatory. If you are unable to pay the rent, the guarantee company will cover it for you. The screening process of guarantee companies is similar, looking at income, employment, and any past issues. They may also investigate through their own channels, such as credit card companies.

JII: If reviewing individually, does the owner contact the card company directly?

Miumi: The owner doesn't do it themselves, but they request the real estate agency they have entrusted to conduct various investigations. For example, they check whether the guarantor's income is stable.

JII: Will the evaluation be based solely on the submitted documents, or will there be further investigation to verify the information?

Miumi: It depends on the person. For example, if someone who works at a bank applies, it might be considered acceptable because they are seen as reliable due to their job. On the other hand, if someone has just arrived in Japan and their income is still unstable, I might feel concerned about whether they can manage. The stability of their income is the most significant factor.

JII: It's about credibility and stability. More than a decade ago, there were no guarantee companies, so I had to ask university professors for help, which was quite challenging in its own right.

Miumi: There are various guarantee companies, but for example, there are several major ones.

JII: When you find a property you want to rent, we will also handle the procedures with the guarantor company.

Miumi: That's right. The issue for foreigners often arises when they don't understand Japanese. If they can't comprehend confirmations from the guarantor company like, "We're going to proceed with this contract, is that okay?", they may not be able to provide the guarantee.

JII: You can't enter into a contract without understanding its terms, right? Were there any cases where someone couldn't speak Japanese?

Miumi: Yes, there were challenges. I couldn't speak Japanese, and while it was okay, I struggled quite a bit. When I said, 'I can't speak Japanese,' they would respond, 'That's difficult, isn't it?' In the end, it becomes a problem when you want to convey something and can't get your message across.

JII: Is there a foreign language version of the contract?

Miumi: The legally valid version is the Japanese one. Therefore, asking "Do you understand Japanese?" is equivalent to asking if you understand the terms of the contract. There are foreign language translations available, but ultimately, the Japanese version holds the authority. However, in cases of significant contracts like sales, it is common to include an English translation along with the contract, but this is usually not the case for rental agreements.

 

How to Obtain Credit Information: Key Points

JII: The key is how to prove your income. The other factor is your lifestyle habits.

Miumi: It's about how to obtain credit information.

JII: When it comes to information that leads to trust, for students, the only options are part-time jobs or financial support from family. What should we do?

Miumi: It might be helpful to have proof of parental support or a recommendation from a school teacher.

JII: The truth is, the most troubled time is during the student years, isn't it?

Miumi: For example, we could rent an entire building for international students, and they could make monthly payments from their home country. It might be good to have something in place for management in Japan that also teaches them about local customs and lifestyle (laughs).

 

Carefully check the preview, and the payment is for 3 to 4.5 months.

JII: Do you have any tips for efficiently searching for properties?

Miumi: First, you need to decide the distance to your workplace or school and the area where you want to live. Next, consider the train line and then the rent. These are the two minimum factors.

JII: What are the key points to look out for when going on a site visit?

Miumi: Buying and renting are different. When renting, the first thing to consider is the distance from the station. It's important to actually walk the route to your home. Check if the convenience of daily life is adequate, and for women, whether there are any unsafe areas. Additionally, prioritize security. Look for any management issues (like whether there are any unpleasant spots). For example, see if the garbage is properly managed. Always check what facilities are included in the room. Take note of the view from the window, as well as any sounds or smells inside. Japanese people, in particular, may be sensitive to odors.

JII: I see, will you tell me about the rental costs?

Miumi: The initial payment is,

Rent + Management Fee 1
Key Money 1
Security Deposit 1
Brokerage Fee 1
Guarantee company fee 0.5 (lump sum and monthly payments) 50% of the rent for the first year, 10,000 per year from the second year
Fire Insurance 20,000/2 years

Yes, 4.5 months' worth is needed. Then we can make adjustments. If there is no key money, and the brokerage fee is 0.5 for 3.5 months, then it would be 4 months in total.

JII: Will the guarantee fee be paid for the entire duration of your stay?

Miumi: That's right. The annual fee is a bit higher, but you won't have the burden of finding a guarantor.

JII: Renting a house is indeed a significant expense. Are there any points where I can negotiate a discount?

Miumi: It varies slightly depending on the owner's perspective. Before signing a contract, it's important to negotiate aspects like finding a property with favorable conditions, key money, security deposits, and rent. Popular properties are naturally more challenging to secure. It's all about the balance of supply and demand. There's no harm in asking, so it's a good idea to negotiate. You should also consider management fees as part of the rent.

JII: The management fees are not paid to the landlord, right? What are they used for? If there is a cleaning person, I can still somewhat picture it.

Miumi: It's not just about the uncle; maintenance on the building, like repairs and waterproofing, can really add up over 5 to 10 years due to wear and tear. A budget of 5,000 yen a month just isn't enough.

JII: It's better to consider management fees as part of the rent.

 

Rental agreements require payment in advance

Miumi: We will finalize the contract once the management company or landlord confirms the deposit has been received.

JII: So, you will make the payment in advance, right?

Miumi: That's right. Consumers might think otherwise, but in the case of rentals, we require almost 100% of the payment to be made before the contract is signed and the keys are handed over, once the payment is confirmed.

JII: It's a bit different from the usual sense of a contract.

Miumi: In most real estate cases, contracts are often signed on weekends, so we ask for payment on Thursday. If we confirm the payment on Friday, we can proceed with the contract over the weekend. If we hand over the keys beforehand, we might worry about what to do if the payment isn't made. This applies to both Japanese and foreign clients alike. That's how rental agreements work.

Miumi: In the case of renting, it's a matter of hundreds of thousands of yen, but for buying and selling, the timing of handing over the money and signing the contract happens simultaneously.

(continued)

(Text: Yang Miao, Mariko Uematsu)

 

Related Articles

• Why is it so difficult for foreigners to find properties?! Part 1: Key Points for Property Search and Finances
• Why is it so difficult for foreigners to find properties?! Part 2: Avoiding Troubles
• Why is it so difficult for foreigners to find properties?! Part 3: Why are they rejected? Income? Lifestyle habits?