Japanese key money and deposits

May 25th, 2010By Category: Uncategorized

Looking here at the system for deposits and Key Money in Japan.  This is the most commonly misunderstood part of renting an apartment but perhaps the most necessary information to understand prior to searching for your new apartment. “Shikikin” (敷金) means deposits and usually these are set at 2 months on average. Deposits usually are non-negotiable as they are a refundable expense that is meant to cover any damages done to the apartment outside normal wear-and-tear.

These days, modern apartments have a lot of high-tech gadgetry that is costly to replace if it is broken so negotiating deposits is all but impossible. As well, people with pets can generally expect to pay 1 extra month deposit on top of the advertised deposits (example; if the apartment is advertised at 2 months deposit and the apartment allows pets, then the next tenant for that apartment can expect to pay 3 months deposit).

“Reikin” (meaning the dreaded “Key Money” and written in Japanese as 礼金) is a different matter altogether. Key Money is a throwback from the end of World War II where Tokyo was still in the rebuilding phase and living quarters were scarce. People then would pay “Reikin” as a separate gift to the owner for allowing the tenants to live in the owner’s apartment. Despite the fact that Tokyo has since rebuilt and there are many number of locations to live, “Key Money” still exists. That said, there are several ways one can get around paying Key Money which we look at below;

1) If an apartment is listed at 2 months “Key Money”, a prospective tenant might be able to lower the Key Money by offering to pay a higher rent. If you were to try this tactic, then expect to pay between ¥20,000 – ¥30,000 / month in higher rent to reduce the key money. This on the surface looks like the same amount of money coming out of your pocket but if you think you might only stay in the apartment for a year and a half say, then paying higher rent is best rather than paying 2 months key money upfront at the contract signing (as the remaining 6 months you are not living in the apartment you are not paying for at all). Success rate for this tactic is somewhere between 50 – 70% depending on the time of the year and property managers / owners.

2) Outright Elimination of Key Money without Higher Rent – This is an ultimatum to the property manager and owner from the get – go and has little chance of working. Everyone knows a (notice the singular pronoun) friend that got a great deal on slashing the key money on their great apartment and most people assume this is the best way to go about reducing key money. What most people do not realize is that for every one person that successfully negotiated out key money by outright refusing to pay it, there are fifty others who have tried and had their applications outright refused and did not get their dream apartment. Success Rate – 5-10%

3) Watching, watching, watching – This is probably the most successful way to eliminate key money but the most time consuming. Once you have located the building you really want to live in then keep an eye on it for campaign pricing. Usually when a building has a “campaign” that means the first thing to go is key money as the unit has been empty for a couple of months and the owner just wants it filled. Warning though, once your targeted apartment reaches the point of slashing key money to find tenants, be quick to apply as foreign and especially Japanese people alike jump on these apartments very quickly. Success rate – 100% (but takes months to do).

4) Be flexible with your location – Due to the volume of buildings in Tokyo generally, there is at any given time a number of buildings advertising campaigns of 0 Key money. If you do not mind spreading your property search over various wards of Tokyo rather than just limiting yourself to one specific station or area, than your chances of finding a key money apartment increase greatly without having to wait months like option 3 above.

Success rate – 100% (no waiting) GP will be posting some more blogs on getting some comfy diggs for your stay in Japan, you can also check our Japan Apartments section to see whats on offer.

Author of this article

GaijinPot

GaijinPot is an online community for foreigners living in Japan, providing information on everything you need to know about enjoying life here, from finding a job and accommodation to having fun.

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  • I appreciated reading this article, and in particular, the explanation of “shikikin” and “reikin.”

  • Jack

    excellent read. Thank you. Very clear.

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