Japanese law and practice is Pro-Landlord as a result of several new laws in the past 20 years, having previously been pro-tenant. The amount of costs that arise even before renting, such as key money, security deposit, agent fees etc favors the landlord convincingly. The tenant is also well protected by the Act on Land and Building Lease (Shakuchi Shakuya Hō) and the Civil Code (minpo), and landlord must follow a strict procedure for eviction. 

Rents: Can landlord and tenant freely agree rents in Japan?

Rents are freely negotiated in Japan. When you wish to rent a home or apartment, you should go to a real estate agency (fudosan torihiki gyosha). Procedures regarding leases are somewhat different from those in other countries. It is important to be familiar with Japanese manners and customs in order to avoid problems after you move.

Rent is typically paid in advance, meaning that upon moving into a residence, tenants are required to pay two months’ rent—one for the current month and one for the following month. Payments are generally made via bank transfer. 
Generally 1–2 months’ rent is paid to the landlord as key money. This money is non-refundable.

In most cases you will need a guarantor when you apply for an apartment. If you do not have one, you may be able to utilize a company that provides guarantors. Please discuss it with the real estate agent.

The Leased Land and House Lease Law (借地借家法, Shakuchi Shakuya Hō) allows rent increases for Regular Lease Agreements (different rules apply to Fixed-Term Contracts). Landlords have the right to request a rent increase, while tenants can also request a reduction.

However, a rent increase requires mutual consent between the landlord and tenant. According to the law, “Raising the rent can be done at the discretion of the landlord if there is a good reason, but it cannot be established without agreement between the two.” If an agreement is not reached, the matter may proceed to arbitration, mediation, or even litigation, where a valid reason is required.

Valid Reasons for Rent Increases

• An increase in land and building taxes.

• Higher taxes paid by the landlord.

• Economic changes, such as rising prices.

• Higher rental rates for similar properties in the surrounding area.

Deposits

A security deposit ranging from 1 to 3 months' rent is paid to the landlord upon moving into a new residence. This deposit is used to cover any unpaid rent, necessary repairs, and cleaning costs when you move out. Any remaining balance of the deposit will be refunded to you after the property is inspected upon your departure.

Realtors fee- This is the commission paid to the real estate agent. As a general rule, both the tenant and the landlord each pay half a month’s rent, totaling one month’s rent. However, if both parties agree, the distribution of the commission can be adjusted, and the proportion paid by each party may be changed.

What rights do landlords and tenants have in Japan, especially as to duration of contract, and eviction?

Contracts usually last for a year or two. If no renewals are intended, the tenant must leave by the expiration of the lease agreement. If the tenant intends to renew the contract, the necessary procedures must be completed by the tenant a month before the expiration of contract. The landlord might ask for an increase before the contract is renewed. Some agents ask for a renewal fee equivalent to about 1 month's rent for the new contract.

If the tenant intends to cancel the contract prematurely, the owner must be notified one month in advance. The owner might charge (or ask for a gift worth) one month's rent for the cancellation.

In Japan, landlords have the right to evict tenants for several reasons, including:

• Failure to pay rent on time or in full.

• Violating the rental agreement or causing damage to the property, even unintentionally.

• Using the property for illegal activities.

• Causing disturbances to neighbors or breaking building regulations.

• Subletting the property without permission.

• Refusing to vacate the property after the lease term has ended.

• Repeated excessive noise complaints from neighbors.

However, landlords must adhere to specific legal procedures and provide the tenant with proper notice before terminating the lease or refusing to renew the contract.

How effective is the Japanese legal system?

In Japan, mediation is the preferred method of resolving disputes. Harmony or wa is more important than justice or compensation. Small claims procedure is usually used for the recovery of security deposits. Very few cases reach the formal court system.

Legislation

 The main sources of Japanese law on real estate lease are the Act on Land and Building Lease (shakuchi shakkka ho) (the “Act”) and the Civil Code (minpo).

Brief History: Recent changes in Japanese landlord and tenant law

Before the implementation of the revised Land and Housing Lease Act and the Law on the Promotion of Supply of Good Quality Housing in 2000, tenants could not be evicted without "just cause." This provision was intended to protect the family of soldiers during World War II, more half a century ago. This caused severe problems for landowners and landlords who were unable to reclaim their property.

After the property market crash in the early 1990s, banks were filled with repossessed property with non-paying tenants in it. It was also difficult to sell the property, because of the tenants that came with the property. To revive the housing market, several laws were passed to make it easier for landlords to evict tenants.