Renting in Japan vs America – Part 2

Last week I began this series with a post detailing my experience, and what I know about the system of renting a place to live in the US, mainly focusing on details that are of particular note for a comparison with Japan. I then followed up with an interlude on anecdotes of racial discrimination in the American housing market, as discrimination in apartment rental is widely discussed in Japan. I had intended to continue sooner, but we’ve had so much active discussion on the blog over the past week that I decided to hold off for a bit longer. In this post, I will describe what I know about the process of renting a residence in Japan, explaining the peculiarities of the fee structure and the search process, but not getting much into the actual laws or regulations. I decided to keep these separate as I believe it is important to first discuss the reality of the system before trying to analyze how it compares with the letter of the law. In the next post I will describe my own experiences in searching for and renting here in Kyoto, as well as providing the details of my current contract as a case study.

In Japan, the vast majority of rentals go through real estate agents, and direct rentals from a landlord are quite rare without a personal connection of some kind. A typical rental process goes as follows:

You go to a real estate agent, tell them what you’re looking for, they show you information on some potential rentals, you pick ones you want to see. This process may begin online, and there are plenty of websites for browsing real estate, but once you indicate your interest and head over to the office, things are pretty much the same.

The agent will first call the party responsible for the property, be it the actual landlord, management company, or another real estate firm to check availability, verify conditions, and arrange a viewing time. As rental units are often cross-listed with multiple agencies, they need to coordinate schedules to make sure prospective renters don’t run into one another, and that the key is available. Once one or more viewings have been arranged, the agent will then drive you around in the company car to view the properties. They will show you as many as you like without complaint, and without expecting any charge, as these services are all provided for by the introduction fee paid upon completion of a rental lease.

Once you pick one you like, they sit you down, read and explain the contract clause by clause (apparently a legal requirement) and then you sign/stamp it, pay them, they hand over the key and documents related to required disaster insurance or activation of utilities, and get to move in. After moving in, you never have any dealings with the real estate agent again, but instead usually deal with a management company (管理会社), who actually accepts rent on behalf of the owner, and fields any questions you have regarding repairs etc.

When moving in, one usually has to pay first months rent, key-money, security deposit, real estate agent fee, and an insurance fee. The monthly bill may include a ‘common maintenance fee’ (共益費) to cover costs relating to the common areas of the building, usually a few thousand yen a month (compared with a typical rent of tens of thousands yen). In the US, condo or coop residents pay a similar maintenance fee, but for rental units it is subsumed into the general rental fee. As far as I can tell, there is no logical reason for this separate fee, except to make the advertised rent look smaller than it really is.

The term ‘key money’ is the standard translation of the Japanese term reikin (礼金), which literally means something like money given in thanks, or as an obligation.  According to Wikipedia, reikin actually started as a gift given to the landlord by the family of a young student or single worker who moved from the country to the city, in exchange for the landlord watching after the naive new arrival. This gradually became institutionalized, and over the decades shifted from being a payment intended to cement a two-way social obligation (as the word implies) to a simple up-front fee paid to the owner when renting a place to live. Today, reikin equal to 1, 2 or even 3+ months rent is ubiquitous, although apparently common in some regions than others.  Unlike a security deposit, reikin is never returned, regardless of how long one stays in the place, and the amount is also unrelated to how long one intends to stay. The legal status of  has always been ambiguous, generally assumed to be technically illegal, but with no clear guidelines or alternative to paying it.

Key money does exist in the US, but is both explicitly illegal and quite rare. The only place I am aware of it being common is Manhattan, where building superintendents are known for requiring a cash bribe in exchange for leasing a desirable apartment, particularly those with rent-controlled below market-rate rent, although it probably exists in other markets as well. The two big differences are that reikin in Japan is both clearly advertised, and grudgingly tolerated, while key money in Manhattan is always an under the table cash, due to its status as a clearly illegal bribe, and that in Japan reikin always goes to the landlord, while in Manhattan it often goes to the super instead. In recent years, there has been an increasing trend to offer reikin-free apartments in exchange for a slightly higher monthly rent, which is obviously superior for anyone who isn’t completely sure they will be staying in the same place for many years, or who lacks enough savings to easily spare the hundreds or thousands of dollars (equivalent) that one has to piss away on reikin.

Security deposits (shikikin – 敷金) are also standard in Japan, and usually equal one or two months rents, as in other countries. Supposedly, landlords in Japan are far more likely to con you out of your security deposit than in most other countries, but I am told that if you press hard enough you can usually get most of it back. A good contract will specify that certain accouterments, such as the tatami mats, wallpaper, fusuma (wooden/paper screens) are “disposable” items, damage to which shall not be charged from the deposit.

Sometimes, the reikin and security deposit are combined into a somewhat bizarre ‘guaranty money’ (hoshoukin – 保証金), in which one pays a certain large amount, from which a certain smaller amount may be returned at the conclusion of the lease. This is functionally identical in every way to having a separate reikin and deposit, except that by using a different fee structure the real estate agent can disingenuously advertise the unit as ‘no reikin!!!’ while in reality being just as bad. Hoshoukin is usually 2-4 months rent, or equal to the amount that reikin and security deposit would be combined.

As I mentioned earlier, there is also a fee paid to the real estate agent, usually equal to one month rent, but sometimes companies will offer a fee equal to 1/2 month rent. Disaster insurance is also mandatory, at least when renting a house (I don’t recall for apartments), but is not particularly expensive, perhaps in the range of ¥10,000-20,000 per year.

The last fee that needs mentioning is the ‘renewal fee’ (更新料). Most apartment leases in Japan are for one or two years, after which one generally has to pay a renewal fee, usually equal to one month rent per year of lease. In Japan, one can generally cancel a lease with no penalty by giving only one month notice, which is actually one of the reasons that landlords had been hiking up the reikin for so many years-to compensate for the possible loss of income due to a very short-notice vacancy. (And also just because they can get away with it.)  The renewal fee is essentially interim reikin, discouraging tenants from making an unscheduled move in the middle of their lease, and helping to prevent loss of long-term rental income to the landlord.

While not a fee exactly, I can’t end this post without discussing the guarantor system. When renting a place in North America, ones credit worthiness is based on the credit score, which is ultimately derived from one’s entire financial history. The landlord checks the customer’s credit score, perhaps also looking a recent tax statement for proof of current earnings, and then allows them to rent if they seem sufficiently trustworthy. Generally, a co-signer or personal guarantor is only needed in cases where the renter hs no credit history or income, such as the case of the college student I mentioned in the first post. In Japan, there is no personal credit score, with personal guarantors required for and and all rentals. The guarantor (hoshounin – 保証人) the guarantor co-signs the lease with the renter, and is therefore legally on the hook should the renter skip out on rent, or refuse to pay for damages in excess of the security deposit. The guarantor’s creditworthiness is generally based on proof of income, and can be anyone that makes enough money. Foreigners can actually serve as guarantors, although permanent residency may be required. For renters who don’t have a relative, boss, teacher, or well-off close friend to serve as a guarantor there are also companies that provide guarantor services-essentially rent insurance-for around ¥50,000.

So, there you have a general overview of some of the unique properties of Japanese rental arrangements. I’ll move on to my personal experience in the next part, but I’m sure everyone will bring some corrections/additions/information on local variance to the comment thread below.

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63 thoughts on “Renting in Japan vs America – Part 2”

  1. A note on guarantors, from Tokyo experience. When I switched from paying rent through my company to paying directly (from houjin to kojin keiyaku), I was told that at least for rents above 200,000 yen per month, either a guarantor (someone making 10 million yen a year or more) or else a rental guarantee company is required. The latter is paid a certain fee, based on the length of the contract, and will supposedly pay the landlord if you fail to pay your rent.
    Recently one such company went bankrupt, and others have been the object of complaints about strong-arm tactics. I’d be interested in hearing of others’ experiences in this regard.
    As for shikin, we have generally got all or most of ours back, though on several occasions the landlord was slow to pay. This is not supposed to happen, since legally they are forbidden from using the deposit and should be able to repay immediately. I guess there are no shikin guarantors for us renters.

  2. Thanks for explaining all the fees in detail! Now I am really happy that a dorm was provided by the company when I was working in Japan. The renting system sounds to be a massive burden on your wallet whenever you move. Some of my Japanese friends were moving quite often while I lived there, so either they had lots of money to spare or they knew a way around some of the fees. Obviously I didn’t ask.

    I just got back the security deposit from my students dorm in Germany, finally, two months after I moved out. 🙂

  3. Wataru: In my experience, guarantors are required for virtually any rental, except for the absolute lowest end of the market. I would put the cutoff at closer to 30,000 than 200,000 a month. Although I just realized after I typed that that you were saying that for 200,000 a month you need a better paid guarantor than usual. In cases like that, you can also sometimes get dual-guarantors.

    I’d love to know how reikin / shikikin values differ in various parts of Japan. Anyone? Especially the non-Tokyoites.

  4. Hopefully someone can correct me, but I remember that my credit card application had a list of (3) Japanese credit rating agencies for individuals. Though most people do not really know that they exist, I think they do have agencies.

    Also, the whole contract renewal fee is slowly coming under pressure. I am aware of atleast two court cases that have stated that the renewal fee is illegal.

  5. Non-Tokyo here, recently moved into my current 60+ m2 abode. I was very limited in my choices, needing both three rooms plus a pet-ok place, so ended up with basically what I could get. Shiki is usually 2 months here, though some places charge three if you have a pet (will often knock a month’s worth off the reikin in that case). I also paid the standard two months’ reikin, so as far as I know they are both bog standard traditional. Did need a guarantor, luckily not one earning over 10 million. I needed a guarantor for my first place, which was 35,000 a month, but the university did that for me. And still waiting on the return of the last deposit, which will be used to replace certain sections of the wallpaper and fix a hole in the wall that appeared somehow (well, I made it, by accident). Incidentally, I was paid money to move out of my first apartment, as the landlord wanted to knock it down. This also meant complete and full return of deposit, since there was no need to fix anything.

    What on earth do you get for 200,000 in Tokyo? Here you could basically rent a massive seven-bedroom house and still probably have money left over.

  6. Jade Oc: “What on earth do you get for 200,000 in Tokyo?”
    Not that much, actually, if you are a family of five and also need a room to work in, and want to live in a half-way decent part of the city.
    In the past we have paid as much as three times that amount, but thankfully things have settled down since those bubble days.

  7. 600,000?? Were you on an ex-pat housing package or something? A few years’ worth of that rent would let you BUY a house in most parts of the country. I am so glad I don’t have to live in Tokyo….

  8. Land with a house for less than 600,000? 6,000,000, yes, easily, but you’d be a fair way out in the boonies for less than 600,000 yen.

  9. Roy/Guess: There are indeed credit agencies in Japan — four or five of them, I think — but I believe they are all run by banks/sarakin companies, so non-financial companies and individuals don’t (usually) get access to them.

    Jade: If you lived in Tokyo you would get Tokyo pay, which lessens the blow. For what it’s worth, 200,000 is about what you’d pay for a sizable, but not very scenic, 3LDK on the west side of the Yamanote (Mejiro, Yoyogi, Ebisu or similar area). 600,000 would get you a swankier 4-5LDK in Azabu or Hiroo, or a serviced 1-bedroom in Roppongi Hills. And the sky’s the limit — the “designer” 2-bedroom units in Roppongi Hills go for 1.5 million per month. Outside the Yamanote, the cost of rent goes down dramatically. Here in Ayase, which is 30 minutes from downtown by train, you can easily get a 2LDK for 100,000 or less.

  10. So do they really pay you about three times regional salaries in Tokyo? I live about five-ten mins walk from downtown of a large regional centre (half a million) and pay about 65,000 for a 3DK, and that is on the expensive side due to its location. I knew there was a reason I never wanted to live in Tokyo….

  11. There might be a higher proportion of jobs that DO pay triple, but there’s also plenty of crappy jobs that pay the same or only slightly more, for a far reduced standard of living.

  12. So do they really pay you about three times regional salaries in Tokyo?

    That’s what Dubya would call “fuzzy math.” You don’t need three times as much salary to pay three times as much rent. If you’re living in the “inner burbs” you might need an extra 100,000 or so per month, i.e. 1.2 million more per year, which would be a 50% raise even for a low-end job.

    2005 average salaries I just googled quickly seem to indicate that working in Tokyo (at least almost) makes up for this.

    Tokyo: 6 million yen
    Osaka: 5.3 million
    Aichi: 5.2 million
    Kyoto: 4.9 million
    Hiroshima: 4.7 million
    Fukuoka: 4.4 million
    Hokkaido: 4.1 million
    Okinawa: 3.4 million

    National average: 4.9 million

  13. Key money is now illegal! My article [spaced] below:

    my.nowpublic.[spaced]com/world/tenant-fees-japan-finally-illegal

  14. Just to be clear, the houses that were going for 600,000 yen in Tokyo 15 years ago are considerably less today. The sweet spot for a nice 4-bedroom home in Suginami or Musashino is now around 350,000 or so.
    It should not be surprising that rents are more expensive in Tokyo than in other parts of Japan. The same is true of New York City, San Francisco, nice parts of LA, London, you name it. These are the places where people want to be. Somewhat offsetting the rent is that we don’t need a car. Above all, though, we simply prefer life in Tokyo to anywhere else.

  15. It really depends on your profession. If you’re a teacher, doctor or bus driver, you have considerable versatility in choosing where to live in Japan. My job specialty (international finance-related legal work) doesn’t exist in Japan outside Tokyo to any significant degree, so living in the provinces would force me to do something else and to probably take a hit to my standard of living.

    Rents are an issue of supply and demand even in Japan’s distorted market, so cheap apartments are cheap for good reason: because few people want to live there. The apartment that works for Jade wouldn’t work for 95% or more of us.

  16. 200,000/month gets a decent 2LDK in the Iidabashi/Kagurazaka/Ushigome area with 4 subway lines and JR within a 10 min walking radius. That amount will buy a lot more if you are looking closer to Edogawabashi or Waseda since access is less convenient. In that area, the best deal I saw was 60 m^2 for 150,000 (plus 2 and 2 r and s).

    Especially now, always ask to have the reikin and shikikin reduced. If it is 2 months each, ask for 1 month each. You’ll likely end up only paying 3 months total.

    And not to knitpick, but the article really needs a proof read – there are lots of little grammatical errors throughout that make it a bit of a tough read. I don’t at all get the part on koshinryo, though this could just be me. How does charging the tenant a renewal fee discourage them from moving out mid lease?

    The only thing discouraging me from moving is not the renewal fee but the prospect of paying reikin again. The renewal fee is just taking advantage of this.

  17. You forgot to mention the prevalence of “cleaning fees” that are often deducted from one’s deposit when one moves out, and usually run between 1,000-1,500 yen per square meter. This is of course handled by the management company, who uses a “preferred” cleaning company (read: a company from which they receive kickbacks). There’s really no way to refuse, even if you try to argue that the rent / key money should cover cleaning costs and the company should foot the bill, since these clauses are written into every contract I’ve seen and trying to negotiate it out will almost always result in a refusal to rent to you.

  18. Actually, just looked over the article again and I think there is an important point missing:

    that Japanese rental laws are more in favor of the tenet than the owner.

    In Japan, it is much more difficult (from what I understand) to evict someone that in the US – even if the renter just stops paying rent. I was a property owner/landlord in the US, and while eviction is never quick and easy, afaik it is much easier to do in the US because owners have more legal protection than in Japan.

    If you view Japanese property owners from this point of view, it partially explains reikin and the need for hoshonin.

    Perhaps a part three on the legal issues?

  19. I certainly believe I left some grammatical errors in the post before I hit publish, as I didn’t proof it like I normally do. Sorry about that!

    The renewal fee discourages people from moving out mid-lease because of the sunk cost. I.e., let’s say you have a two year lease. You pay a huge amount of money before you move in, and then a moderate amount every month. Then in month 23 you decide to renew the lease because you have no reason to move, so that month you pay both your normal rent as well as a renewal fee equal to 2 months rent, for 3 months rent total. Then 2 months later you say, lose your current job and find a new one on the other end of Tokyo, or get transferred to an office a 90 minute commute from your apartment instead of 30 minutes way. You’d love to move closer, but you just blew 3 months of rent to extend your lease and it’s both hard to get the spare cash for another 6 months rent in various up-front fees, and psychologically difficult to justify paying to move immediately after blowing the money on the renewal fee. That’s what I mean by sunk costs.

    Yes, without the renewal fee you’d still be paying the massive reikin and everything else up-front, but in a situation like I just described, you could be hit with the double-whammy of having to pay nearly a full year’s worth of rent in various fees in the space of a couple of months to be able to move, which would certainly make one reluctant.

    “Perhaps a part three on the legal issues?”
    Maybe part 4, since I have a different plan for part 3, as I said in the beginning of the post.

  20. Yes, everything I have read indicates that once you are in, you are in, though it seems at odds with the very weak position you have before actually renting (ie all those fees) and indeed after. I can see a need to gouge them while you can, I guess.

    Joe: no, you are correct that you only need the extra rent amount, but I prefer to think of it as a percentage of your income. (I think that is what it is, anyway (mathematics is by far my worst subject: my wife likes to tease me by asking me what 6×7 is….)) I am lucky in that my current occupation allows me to live anywhere I can get an internet link, so am not forced to live in Tokyo or somewhere like that. Each to his own of course, and sometimes it would be nice to be closer to some of the things you can do there, but I remember when I lived in Tokyo how nice it was to get out and see paddy fields and such.
    Also remember that average salaries are not median salaries, and in Tokyo will be jacked up by all the shacho and kaicho et al.

    I believe cleaning fees are also deducted from the deposit in my own country.

  21. “a renewal fee equal to 2 months rent”

    Woah. *Two months* renewal fees? Hell, I paid 20,000 (less than half the rent at the time) and was annoyed about that (especially as the previous place was really laidback and I never paid renewal fees in 12 years there). Two months is insane (my current place is half a month).

  22. I see now where you are coming from.

    I was considering the first lease, before the renewal fee hit, in which case a renewal fee due in month 23 would not deter me from moving out in month 15.

    But, indeed, if you just paid it, you would be more hesitant to move out in month 25.

    Part one was so long ago (with the Katayama Debacle – which is what I am officially calling it – and all), that I had forgotten about a third part coming.

    I would, though, be very interested in seeing a thorough treatment of renter laws in Japan. I have a suspicion that these laws are significantly different from those of most developed countries. If this is the case, then Japan could represent a unique habitat where unique species (e.g., reikin et al.) evolved.

    Take for example shaken. I haven’t owned a car in Japan in 8 years, but back then I would do user shaken (for a few thousand yen) when most people were paying over 100,000 yen (on top of taxes) to get a car inspected. As a result, a car that was 10 years old (at the time iirc the point at which shaken frequency dramatically increased) a car became worthless and had to be thrown away (for a fee of course)

    This is/was a situation unique to Japan afaik, though now the “secret” of user shaken has gotten out and I don’t think anyone pays such a ridiculous amount for an inspection.

    Completely OT, but I used to be a bit of a gear head and would scour junk yards in the US looking for toyota truck parts. I had this image of japanese junkyards as a paradise for barely used parts… Until I actually went to one and realized a car that is worthless in the Japanese market is now valued by international standards once it gets tossed. That is, a car that you can’t give away, that you have to pay someone to cart off for you, is now magically worth 500,000 yen (or whatever they can sell it for in Oz minus transport fees).

  23. “Completely OT”

    The downturn in the Japanese economy (which will mean fewer used cars for export) could throw some hammer blows on Australia and NZ – countries where many new “middle class” are dependent on cheap Japanese used imports that support commuter / box store consumer lifestyles.

  24. Might as well run with it.

    The downturn in the Japanese economy (which will mean fewer used cars for export)

    I wouldn’t be so sure. If people are more strapped for cash, they may choose to dispose of their expensive luxury items. Between parking, inspection costs, fuel and insurance prices, and given the availability of reliable public transport, a car definitely counts as a luxury for many (if not most) Japanese people.

  25. I don’t think they do the key money thing in Manhattan anymore, although I only ever rented there once legally as a non-student (in 2002). I think they cracked down on that sort of thing by the end of the 1990’s, but I’ve read about it… like in books.

  26. And continuing to run with it but don’t want to turn this into a discussion on cars (though I think there are likely interesting parallels between renter laws and automobile laws create a unique habitat in Japan).

    Between parking, inspection costs, fuel and insurance prices, and given the availability of reliable public transport, a car definitely counts as a luxury for many (if not most) Japanese people.

    In Tokyo or Osaka-Kyoto-Kobe, certainly, but in inaka, perhaps not the case. In Sapporo, Sendai, Nagoya, maybe even Hiroshima, a car could be a luxury. But in a city the size of Akita or smaller for example, a car is a necessity IMO.

  27. A discussion of cars some other day would be a good idea, but I must admit that as a non-driver I don’t really care all that much about it and have never bothered to learn much of anything. Still, from a policy/economics standpoint it’s worth looking into-although the part that most intrigues me is what happens to the cars after they leave Japan. Of course, it’s worth looking into WHY they leave so early as well.

    To make a connection though – parking spaces can be a serious bitch in Japanese cities, can’t they? Of course, there’s nothing unique there. Trying to keep a car in Manhattan is a seriously masochistic prospect.

  28. “But in a city the size of Akita or smaller for example, a car is a necessity IMO.”

    I don’t think anyone would disagree with you there, but if you includes Kanto, Kansai, Sapporo, Sendai, Nagoya and Hiroshima area I’m pretty sure you’ve already got a pretty solid majority of the country’s population.

  29. Stevicus: you are quite right. People in the Big Cities may be able to survive with trains, but not where I live. I would have to bus to the supermarket, or ride my bike, which then limits what I can buy. My current apartment is near a shopping centre, and I do walk there, but it doesn’t have everything. And my wife would flip if I tried to make her walk or bus everywhere. Parking has seldom been a problem in Japan, as even in the big cities there are coin parks where you might pay as little as 1,000 yen overnight (I’m talking travel, rather than residence), even in downtown major cities. I’ve driven from Akita to Kagoshima and always found a place to park. However residential parking in the major centres is insane, I believe.

  30. Of course, it’s worth looking into WHY they leave so early as well.

    Because the mandatory vehicle inspections cost an arm and a leg, so it makes more economic sense for people to sell their car to an exporter and buy something new.

  31. Don’t worry Roy, we’ll surely get back to renting before long.

    “a car definitely counts as a luxury for many (if not most) Japanese people.”

    Good point, but that would mean a spike in used cars now – what about in 2-3 years? The Japanese press has done a nice spin on hybrids, but overall car sales are way down this year. I can see people dumping their cars, and then never getting a new one. Recet book 無印日本 makes a decent case for the point that younger Japanese are increasingly going without cars altogether. In any case, NZ is a fascinating case – pretty much can’t sustain current lifestyle without cars, but given the exchange rate, a decent car will set one back more than the average worker makes in a year. Pretty much dependent on Japanese people dumping perfectly good cars.

    “In Tokyo or Osaka-Kyoto-Kobe, certainly, but in inaka, perhaps not the case.”

    In my inaka there has been a transition from box stores along the highway near the outskirts of the major regional city (the 80s model) to mega-mall complexes complete with free shuttle buses, etc. way out in the boonies. This is a trend elsewhere and I have to wonder how long it will take for Aeon and others to catch on to the fact that they could clean up by doing grocery delivery for old people on a large scale. Hell, if people are too lazy to go to video stores, heralding the onset of online rentals (unlike the US services, the Japanese ones seem to be focused on the same old crap that you can get anywhere while Netflix makes sure that they have all of the niche stuff that you can’t find in Bumbleton, Al.) can grocery delivery for all be far behind? In any case, Akita will probably be the last place to see any of this happen….

  32. Renting in the inaka – you can get a 3LDK five minutes walk from the Kencho for 60,000 a month.

  33. “I don’t think anyone would disagree with you there, but if you includes Kanto, Kansai, Sapporo, Sendai, Nagoya and Hiroshima area I’m pretty sure you’ve already got a pretty solid majority of the country’s population.”

    I include Sapporo, Sendai, Nagoya, and Hiroshima because off the top of my head, those were the cities I could think of with a subway or light rail network. But there are large swaths of those cities not served by the rail network, and with buses tending to stop service relatively early, a car could be necessary.

    Also think of the relatively densely populated Tokai region – say Kamakura to Hamamatsu, I don’t think any city along the way has a developed rail system. If you lived close to a Tokkaido line station or one of the private lines, perhaps you could get by without a car, but I think many people there would probably want to have one.

    “In my inaka there has been a transition from box stores along the highway near the outskirts of the major regional city (the 80s model) to mega-mall complexes complete with free shuttle buses, etc. way out in the boonies.”

    That’s interesting, I wasn’t aware of that – enter the kangei basu.

    And to bring this back to housing 🙂

    I see a similar attitude toward house purchases. No one wants a used home. Must be new. This is both similar and dissimilar at the same time to the situation with cars. Cars get trashed before their useful lifespan is exceeded because of market forces. Houses get demolished because they were originally built to only realistically have a useful lifetime that fits with the market, e.g., the desire for that “new house smell.” And of course these are sweeping generalizations probably based entirely on my own stereotypes.

    I just earned decent revenue from the sale of a 60-year old house in the US. Almost no one here can fathom that I 1) would have every bought such an old house that was not in some fashion “historic” or otherwise 2) that I was able to find some sucker to buy it and 3) that I didn’t lose money on the whole deal (especially given the way the masu comi is presenting the US housing market).

  34. Because the mandatory vehicle inspections cost an arm and a leg, so it makes more economic sense for people to sell their car to an exporter and buy something new.

    Joe, you mean pay an exporter to take their car and buy something new, which is something I could just never fathom.

  35. “Because the mandatory vehicle inspections cost an arm and a leg, so it makes more economic sense for people to sell their car to an exporter and buy something new.”

    That’s not any explanation at all though. Why does vehicle inspection cost so much? When did it start? Why hasn’t it been changed? We can all guess it has something to do with developmentalist economic pressure out of 1970s METI or something, but whatever the cause it’s definitely a complex story.

  36. Isn’t it like 60,000 every two years? That is a lot, but it sure doesn’t explain why many Japanese are dumping their perfectly good cars after 6-7 years. I mean, I’m pretty much blown away that you can get a perfectly good kei from 2002 with 1 year of shaken left on it for like 16 man around here….

    I understand that the system has been around since the occupation (when there were very few cars) and is just one of those things that has been left (like having to pay for kosoku) because “the man” likes it that way.

  37. Why does vehicle inspection cost so much? When did it start? Why hasn’t it been changed?

    It really doesn’t cost much at all – if you do it yourself. And it has changed. It seems that the average mechanic charges half if not less of what it used to cost.

    Unlike in the US states that require an inspection (FL does not), in Japan, inspections are active and require specialized equipment. The car is run down a conveyor belt where it is put on a treadmill and ran up to speed then the brakes are tested. Wheels are torqued in different directions to see if balljoints and tierods are not worn too much, etc.

    In the US all of this is passively/visually measured, (does the tire wobble when the car is jacked up and you yank on it? If so, proly needs new tirerod ends)

    So, the car must go to the Shaken-jo. The actual cost of the inspection is almost nothing since the government purchased and maintains the equipment and doesn’t pass that cost on to the owner (at least in the form of an inspection fee)

    And in Japan, specialized tasks are done by specialists, partly because most people have an overblown idea of what is involved and partly because that is the way the wa works.

    I mean, don’t you find that calling the NTT guy connecting a wire “construction” (工事) is a bit overblown?

    Picture this senario: customer needs shaken and goes to local mechanic. Mechanic explains that the car must go to the shaken-jo (typically the city on the license plate – maybe different for Tokyo) and go through what I described above. Customer thinks, “wow, that is really specialized and involved, I’d better let the “pro” handle it.”

    Not to mention a day of nenkyuu.

  38. The bulk of the cost of shaken is mandatory fees – taxes, like the vehicle tax and the engine size tax. The reason they can or used to spiral up is because there was a tendency to be over-conservative and replace anything that looked like it might fail in the next two years. Without telling you until it came time for the bill. Nowadays you get places advertising they won’t replace anything say over 5,000 without your okay (unless it’s legally vital). If your car is in decent nick, it should not cost that much more than the government taxes and the basic inspection charge (variable, say around 10-15,000). My old car (5-number) got its non-user WOFs for under 100,000, and I think that was even including the cost of new rear tyres each time.

    “No one wants a used home. Must be new.”

    Are there actually stats on this? Must be. While I know this is hyperbole for dramatic effect, I don’t think the second-hand market in homes is as bad as it is painted.
    Okay, maybe it is: 「住宅を購入するとしたら新築か中古か」の問には「新築が良い」とする割合は82.3%に昇り、「中古が良い」とする割合は3.4%に留まっています。[…] アメリカの中古市場では人口当たりの中古流通量は日本の12.6倍の規模となっており(「平成13年度国土交通白書」より)、日本における中古住宅の市場規模は小さいといえます。
    (hypertext transfer protocol bush bush buish dot nomu.com/column/vol129 hypertext markup language)

    But then Sumitomo says:
    2006 second-hand home market: 1兆2919億円
    2006 new home market: 3兆9405億円
    About 3.5 times the size, though given that new homes are generally more expensive, it’s not as big a gap.

    The Nikkei disagrees: わが国の全住宅に対する中古住宅の割合はわずか13%、アメリカの78%、イギリスの89%、フランスの66%と比較しても明らかに低い。I have no idea how they square a 13% market share with the figures above for the market.

  39. “Picture this senario: customer needs shaken and goes to local mechanic. ”

    Many times the mechanic is licenced to carry out shaken. That is where I got mine done on my old car.

  40. “Many times the mechanic is licenced to carry out shaken. That is where I got mine done on my old car.”

    As in they can now do it in their own shop?

  41. M-Bone: “1 year of shaken left on it for like 16 man around here”
    On-road costs could double that price. Cars are almost always advertised for 車体, and you will need a whole heap of additional costs, including taxes (which vary depending on when you buy it). For example:
    http://www.carsensor.net/usedcar/detail/CU0004186550/index.html
    This adds 200,000 to acar that you think costs only 70,000.
    (that one includes shaken, but it is still outrageous)
    http://www.carsensor.net/usedcar/detail/CU0002678187/index.html
    This doubles the price.
    BTW, an ad for a Maybach 62 for a mere 28,000,000 (not a typo) wants an extra 854,000 for on-road costs. What the hell are they charging you for? A solid gold shaken certificate? Or are they just charging like wounded bulls as the market for that offensively expensive Merc will bear it?

  42. Third try to post this. from wikipeidia sans URL or anything remotely resembling a URL.

    ユーザー車検(ゆーざーしゃけん)とは、ユーザー自らが運輸支局等に車両を持ち込んで車検を受けること。かつての車検は、自動車ディーラーや修理工場に任せ、高額の車検費用を支払うことが常識であった。しかし、1990年頃から車検費用の低減を謳うユーザー車検のガイドブック的な書籍が多数出版されたほか、インターネットの普及につれインターネットサイトでも手順が無料で掲載されるようになり、ユーザー車検の受検者が増加。規制緩和の流れも追い風となって車検場側の受け入れ態勢も整備されたことから、受検手段の一つとして定着することとなった。

    And the best part:

    ユーザー車検の広がりとともに、ディーラーの点検費用が格段に安くなった。

  43. Jade: Interesting. Where I used to live when I owned a car, no shop could do it. Every car had to go to the inspection center for lack of any other option. So I just assumed that every car was required to go.

  44. OK, so it sounds like shaken is much less of a problem then it used to be. I still assume that high shaken was somehow encouraged as a way to prime domestic auto sales by shortening the useful life of an automobile in Japan, but I don’t have any actual evidence or time to look for it right now.

    “I mean, don’t you find that calling the NTT guy connecting a wire “construction” (工事) is a bit overblown?”

    I kind of imagine that the whole process is a holdover from the days when telephone lines actually had to be installed from scratch much of the time. I guess it’s still “construction” when you get your new house wired. And when I got fiber hooked up here when I moved in, they did have to drill a small hole in the wall, run some lines, install some brackets and stuff. Not a huge amount of work, but I guess it’s enough to qualify, and you certainly wouldn’t have a non-specialist do it.

    Interesting stats on used vs. new home sales though. One problem with these sorts of figures in Japan in general is the disconnect between ownership/sale of the land and the house itself, which I’m fairly sure doesn’t exist in the US at all (except for condos) and I haven’t heard of in any other country.

  45. Interesting stats on used vs. new home sales though. One problem with these sorts of figures in Japan in general is the disconnect between ownership/sale of the land and the house itself, which I’m fairly sure doesn’t exist in the US at all (except for condos) and I haven’t heard of in any other country.

    Nail, meet head.

    I think that when I discuss selling property in the US with people here, I might do better to discuss selling land (that just happens to have a perfectly good house on it).

  46. I tried to explain to my father in law why my brother’s condo in Vancouver has nearly doubled in value in the past 8 years but he thought I was lying.

    Still, there is something to be said for the Japanese housing situation – housing fires in Japan in 2008 – 30,000; housing fires in the US in 2007 – 415,000. These numbers are for 建物 for Japan and “residential structures” (which may be understating compared to the broader Japanese category, the US number does not seem to be significantly inflated by forest fires, only 2% were from “natural” causes) for the United States.

  47. One of the thigns that I really like about going off topic is that it forces one to question assumptions on subjects that one rarely thinks about. I would have thought that something like 10% of American houses that burn are are lost to wildfires, but it seems insignificant. That 2% natural could include lightning, wind blowing over a candle, anything.

    Children playing with matches – 0.4%. I feel unfairly demonized by public service commercials.

  48. Some of the largest American wildfires in living memory turned out to have started due to arson. So, even though the conditions were ripe for a natural fire, because the spark WAS some mentally disturbed kid playing with matches instead of the lightning that probably would’ve sparked it soon after, the entire devastation probably gets calculated as due to arson instead of natural causes.

    On a related note – maybe people living in such dry areas should in fact build more out of concrete and so on, and leave the wood-frame houses for the wetter climates…

  49. “heard of in any other country.”

    Isn’t this just the difference between freehold and leasehold? Perhaps not quite the same, having looked it up, but I know it is possible to buy a house and rent the land it is on.

  50. It’s possible under common law, but it’s exceedingly rare these days. We didn’t even bother to discuss it in law school property class.

  51. You know what, I like this blog – stumbled onto it because of the NYT article, but the regular contributors obviously are well educated and have a deeper understanding of Japan that the typical OMFG!!!111!!! this place is [insert cliché here]

  52. Roy mentioned parking spaces, and so I should mention that I live in a UR (Urban Renaissance Agency – 都市再生機構) apartment that accepts pet owners (one small pet per household is allowed, although the rule is broken often). Pet owners *must* pay into the pet club, which is 500 yen a month.

    The deposit was three months, but there was no key money, which was part of UR’s marketing shpiel back when foregoing key money was a big deal. There is a multi-level parking structure, and depending on the size of parking space one requires, the rates can run from 25,000 to 27,000 yen per month.

    I only bother mentioning this because of the idea of sunk costs and psychological barriers to entry and exit. The “rational” spender of his money has no problem leaving a movie theater ten minutes into the movie, despite having spent 1800 yen on the ticket (wasting one’s time waiting for the movie to get good isn’t going to reduce in any way the 1800 yen already spent). But yet, regardless of how cost-prohibitive it may be to hire a mover and pony up the entry fees for a new place, there is a psychological block to moving out right after transacting what is seen as a lot of money. This is what I thought of when you mentioned it being “psychologically difficult to justify paying to move immediately after blowing the money on the renewal fee”.

    Here’s the kicker: Even though the reputation of UR is such that I will probably not lose my deposit, I still feel as if it’s a sunk cost (= never coming back), and thus I need to depreciate the cost psychologically before being ready to move out. I reconfirmed this, when I received information on the parking spaces, which also require a three month deposit. Even though the only cost is the opportunity cost of depositing the funds in someone else’s account, I think of it as sunk, and still have cold feet about renting the parking space.

    Kahneman and Tversky would be appalled.

  53. I assume you have a car? If you do, you need the space, as expensive as it is (out here in the boonies, at my last apartment I was getting parking included in the rent and an extra park for 3,000 yen a month; here, five minutes from downtown by foot, I am paying a bit under 10,000 and feeling ripped off). I think that no matter how much I was making (well, anything realistic) I would have a huge psychological barrier to that kind of money. At the very least I would make sure I had something really worth parking in it and not some tinpot K-car.

  54. No car yet. In order to get a car, I need a place to put it, though, and there’s a longer waiting list for spaces than there is for cars (I’m not in the market for a hybrid), so I’m investigating the spaces first…

  55. So, things have taken an interesting twist. Just as I was writing about my rental history in Japan, circumstances have dictated that I need to find a new place to live ASAP. I guess this series just got longer.

  56. I’ve just applied for a 21.5 sq meter apartment in Ebisu. The question I have is about the shinsa. I have a wealthy houshonin that easily should cover any doubts that the kanrigaisha should have about me but after 5 days I still haven’t received a pass or fail answer. Just a “still checking” answer. Any info on what or how they check for shinsa would be great.

  57. That’s odd. What documentation did the hoshounin provide in addition to their signature/stamp on the contract? From my experience after renting 4 different places, the shinsa was just a formality as my hoshonin each time was a university professor or administrator, which seem to be well enough trusted positions. If your hoshonin is wealthy but doesn’t have a regular job they may be more suspicious, or maybe you just got a stickler of a kanrigaisha. Or maybe it’s just generally a lot stricter in Tokyo.

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