Real Estate Terms You Should Know When Renting Housing

Real Estate Agent

     This is an agent that serves as the landlord’s agent for renting housing and that buys and sells real estate.

Guarantor

     This is a person who pays unpaid rent or unpaid repair costs after you vacate rental housing when you do not/cannot make the payment yourself.  A guarantor is required when applying to rent rental housing.  Guarantors must have an income that exceeds a certain level.

Application Fee

     This is money that is paid to the real estate agent when reserving a rental agreement.  Check if the application fee is returned if a rental agreement is not formed.

Important Points Explanation

     When a real estate agent is acting as the agent for rental housing, the real estate agent will explain the important points of the rental agreement to the renter (potential renter) before the rental agreement is signed and an important points explanation sheet will be given to the renter.  The important points regarding the state of equipment, handling of the security deposit, etc., will be explained, so listen carefully and ask questions when you do not understand something.

Security Deposit (Guarantee Money)

     The security deposit is deposited with the landlord at the time the rental agreement is signed as a safeguard against non-payment of rent or repairs required when the rental housing is vacated.  As a guideline this is usually about the equivalent of 2 months rent.  Any remaining security deposit after settle of expenses at the time the rental housing is vacated is returned to you.  In some areas the security deposit is called guarantee money.  The guarantee money is often the equivalent of 6 months rent.

Agent Fee

     This is money that is paid as a fee to the real estate agent and is set within 1 month rent.

Damage Insurance Premium

     It is common at rental agreement signing to acquire damage insurance coverage to protect against fire or water damage caused by the tenant.

Rent

     This is the charge for renting the housing, and generally the rent for the current month is due at the end of the previous month.  If you move into or out of housing after the first day of the month, the rent for that month in principle will be prorated.

Common Service Fee (Management Fee)

     This is money that covers the cost of electricity used or cleaning fees, etc., for spaces used in common by the tenants, such as stairways and hallways.  In Japan, you pay a common service fee (or management fee) that is separate from the rent.  This is generally paid for the current month together with the rent at the end of the previous month.

Co-occupants

     If there will be co-occupants in the rental housing, this must be stated to the landlord when the rental agreement is being formed.  If this is not stated and you allow co-occupants without permission, you could be evicted from the housing.

Rent Liability Guarantee Company

     A rent liability guarantee company is a company that guarantees to pay the rent to the landlord in the event that you do not pay the rent.  To use such a company, you must pay a set guarantee fee (this is often 35% to 50% of one month’s rent paid in advance as the guarantee fee for 2 years).  However, this is not insurance.  The guarantee company will bill you for the rent that it paid for you.

Regular Rental Agreement

     A regular rental agreement is the type of rental agreement generally used in Japan.  The landlord cannot refuse to renew the agreement at the end of the agreement period without due cause.  In other word, the contract is automatically renewed even if there is no renewal agreement.

Lease Agreement

     A lease agreement is a rental agreement that covers a specified contract period and ends at the end of the contract period without being renewed.  A new contact can be made by agreement between the landlord and renter.

Non-refundable Restoration Fee

     The non-refundable restoration fee is a contract method that sets in advance the amount of the portion of the security deposit or guarantee money that will not be returned when the housing is vacated. 

Renewal Fee

     This is money paid to the landlord by the renter when the rental agreement is renewed to continue the agreement and is specified in a special term in the rental agreement.  The contract period is normally 2 years.

Original Condition Restoration

     You must pay the expense incurred to restore the rental housing to its original conditions when it has been damaged or dirtied willfully, negligently, or carelessly by you.  This is called the original condition restoration fee and is subtracted from the security deposit when the housing is vacated.  Take care to keep the housing clean and in good repair.

Termination Notice

     To terminate the rental agreement before the end of the agreement period, you must inform the landlord or rental estate agent of your intent to terminate by applying in advance (the advance period requirement is stated in the rental agreement and is usually 1 or 2 months).