Renting in Japan: Key Money and Deposits

The first shock of renting an apartment in Japan is rarely the monthly rent. It is the amount due before you move in.

For a unit renting at 80,000 yen per month, it is not unusual to pay 500,000 to 600,000 yen upfront. Key money, a security deposit, a brokerage fee, advance rent, a guarantor fee, insurance — the costs stack up quickly, and they stack up before you have spent a single night in the apartment. This is part of the same tight urban housing market that keeps Japanese homes so small — high demand for limited space shapes both the size of the apartment and the price of getting into one. Understanding what each of these upfront costs is, where it comes from, and why it exists is the first practical task for anyone navigating the Japanese rental market.

The Upfront Costs, Listed

A standard breakdown of initial costs when renting in Japan looks like this:

Reikin (key money): zero to two months’ rent, non-refundable
Shikikin (security deposit): one to two months’ rent, partially refundable on departure
Brokerage fee: one month’s rent plus consumption tax
Advance rent: one month (the following month paid in advance)
Guarantor fee: approximately 0.5 to one month’s rent, if using a guarantor company
Fire insurance: roughly 10,000 to 20,000 yen

Added together, these typically come to four to six months’ rent paid before moving in. On an 80,000 yen apartment, that means somewhere between 320,000 and 480,000 yen due at signing. The monthly rent figure that appears in listings tells only part of the story.

What Key Money (Reikin) Is

Reikin translates literally as “gratitude money” — a payment made to the landlord as a gesture of thanks for being allowed to rent the property. It is paid at move-in and is not returned when you leave. This is the fee most foreign renters mean when they ask about “key money in Japan,” and it is the single most confusing cost on the list because, unlike a deposit or a brokerage fee, it does not correspond to any service or protection at all.

The most widely cited explanation for its origin connects to the severe housing shortage in Japan following the Second World War. With accommodation desperately scarce, being granted tenancy was understood as a genuine favor, and tenants began offering money to landlords as a voluntary expression of gratitude. The practice became convention and eventually an expectation.

A second theory traces the custom to the practices of migrants from the Korean peninsula in early twentieth century Tokyo. The historical record is not entirely clear, and the origin story continues to be debated. What is certain is that reikin is not a legally required payment — it is a custom that became embedded in the market.

Its logic has been questioned for decades. From the tenant’s perspective, reikin is a pure loss: money paid for nothing except the right to sign a lease. In markets with high demand, landlords have been able to maintain it. In areas where vacancies are common, the calculation shifts — which is part of why reikin-free properties have become more prevalent as Japan’s population has declined.

What Shikikin (Security Deposit) Is

Shikikin is the security deposit, and unlike reikin, it is in principle refundable. When a tenant moves out, the deposit is returned minus any amount required to cover damage to the property.

The difficulty lies in what “damage” means.

The concept at the center of shikikin disputes is genjo kaifuku — restoring the property to its original condition. Japan’s Ministry of Land, Infrastructure, Transport and Tourism has published guidelines on this question, establishing that normal wear and tear from everyday living is not the tenant’s financial responsibility. Faded walls from sunlight, minor scuffs, aging of surfaces over time — these are considered the landlord’s cost, not the tenant’s.

The guidelines exist because the disputes are real and common. Tenants — particularly those unfamiliar with their rights — have been charged for restoration costs that properly belong to the landlord, and have paid rather than contest. Foreign tenants face an additional disadvantage in these situations: the combination of unfamiliarity with Japanese tenant protection law and limited Japanese language ability makes pushback difficult. Knowing what the guidelines say before signing — and before leaving — matters.

Guarantors and Guarantor Companies

Traditional Japanese rental contracts required a hoshounin — a guarantor, typically a family member or close personal contact, who would assume financial responsibility for unpaid rent if the tenant defaulted.

For foreigners newly arrived in Japan, this requirement has historically been one of the most significant barriers. Without established personal connections in the country, producing a guarantor is often simply not possible.

The guarantor company — hoshougaisha — emerged as the market’s response. These are private companies that provide the guarantee function for a fee, typically 0.5 to one month’s rent paid upfront, sometimes with an annual renewal fee thereafter. The landlord receives the same protection; the tenant does not need a personal guarantor.

Guarantor company use has become standard in much of the rental market, and properties that still require a personal guarantor are now a smaller share of what is available. For foreign tenants, this shift has been meaningful. The market that required something most foreigners could not provide has largely moved to a format that treats the guarantee as a purchasable service.

How the Process Works

Finding and securing a rental property in Japan follows a reasonably consistent sequence.

Search. Most people begin with online portals — SUUMO, HOME’S, and athome are the major platforms. Listings include floor plans, photos, and the full breakdown of initial costs. Narrowing by area, budget, and building age is standard, and timing matters: if you search during Japan’s January-to-March moving season, expect more competition and less room to negotiate any of these fees down.

Viewing. Properties are shown through real estate agencies. Viewings are free and typically arranged through the agency that holds the listing.

Application. Submitting an application requires proof of income, identification, and for foreign nationals, a residence card. Guarantor information — personal or company — is required at this stage.

Screening. The landlord and any guarantor company conduct a review. Income level, employment status, and nationality may all factor into the decision. The process takes several days to a week.

Contract. Once approved, the contract is signed and the initial costs are paid. A licensed real estate agent is required by law to explain the key terms — the jūyō jikō setsumeisho — before signing. Keys are handed over after payment is confirmed.

What Foreign Tenants Encounter

The rental market in Japan presents specific challenges for foreign nationals that go beyond the financial.

Refusal. Some landlords decline to rent to foreigners. The stated reasons vary — language barriers, concerns about cultural differences in how common areas are used, difficulty in contacting tenants in case of problems. The practice occupies a legally ambiguous space, but it is a real feature of the market. Foreign tenants encounter it with enough frequency that knowing it exists is simply part of being prepared.

Language. Rental contracts are legal documents written in formal Japanese with specialized vocabulary. Understanding what is being signed requires either strong Japanese ability or an agency that provides foreign-language support. Signing without understanding is a risk that produces problems at departure, usually around the interpretation of shikikin deductions.

Cultural expectations. Garbage sorting rules in Japan are specific, vary by municipality, and are taken seriously by neighbors and building management. Noise expectations lean quiet. Greeting neighbors when moving in is the norm. These are not formally part of the lease, but they are part of renting in Japan, and not knowing them creates friction.

How the Market Is Changing

Japan’s rental market has been moving in directions that make it more accessible, driven partly by demographic change and partly by technology.

Reikin-free properties have multiplied as vacancy rates have risen in many parts of the country. Population decline has shifted bargaining power modestly toward tenants in markets outside the major urban centers. Zero-reikin, zero-shikikin listings — once unusual — are now common enough to search for specifically.

Foreign-friendly services have expanded. Real estate agencies specializing in foreign tenants, properties explicitly marketed as accepting foreign nationals, contracts available in English, Chinese, or other languages — the infrastructure supporting non-Japanese renters has developed substantially over the past decade.

Electronic contracts arrived in full following regulatory changes in 2022, which permitted the mandatory explanatory process to be conducted online rather than in person. It is now possible in many cases to complete a rental contract without setting foot in a real estate office — a practical improvement for anyone managing a move from abroad.

A Worked Example: What an 80,000-Yen Apartment Really Costs

The range of upfront costs is wide, so here is a rough example for an apartment with 80,000 yen monthly rent. The figures are illustrative and vary by property and agency.

Key money (reikin): 0 to 160,000 yen (zero to two months)
Security deposit (shikikin): 80,000 to 160,000 yen (one to two months)
Brokerage fee: about 88,000 yen (one month plus 10 percent consumption tax)
Advance rent: 80,000 yen (one month)
Guarantor company fee: about 40,000 to 80,000 yen
Fire insurance: about 10,000 to 20,000 yen

Added up, that is roughly 300,000 yen at the low end, if there is no key money, and close to 600,000 yen at the high end. That is why many newcomers need to budget for around four to seven months of rent before they get the keys. Some move-in costs, such as the first month’s prorated rent, may be added on top.

How to Reduce Upfront Costs

Search for reikin-free listings. Many portals let you filter for properties with no key money, and they are increasingly common in areas with vacancies.
Consider UR housing. The Urban Renaissance Agency (UR) rents apartments with no key money, no brokerage fee, and no guarantor required, although there are income requirements and the options are limited to UR properties.
Look at the off-season. Outside the January to March rush, landlords are more willing to waive fees. See why the moving season is so competitive.
Ask about campaigns. Some agencies offer discounts on brokerage or free-rent periods, especially for older buildings.
Check company support. Some employers subsidize housing costs or cover part of the initial fees.

Whatever you choose, read the full cost list before you apply. For what happens after you move in, including rent increases and renewals, see does Japan have rent control, and for the guarantee itself see the guarantor system.

From the Field: Extra Costs for Foreign Applicants

In the cases I supported, foreign applicants were sometimes quoted a higher guarantor company fee or a security deposit one month higher. If you hear this, ask whether another property, or an agency that specializes in foreign residents, offers better terms. See the guarantor system for more.

Frequently Asked Questions

What is key money in Japan?

Key money (reikin) is a non-refundable payment made to a landlord at move-in, traditionally equal to zero to two months’ rent. It functions as a gesture of gratitude rather than a service fee, and unlike a deposit, it is never returned.

How much does key money cost in Japan?

Key money typically ranges from zero to two months’ rent, depending on the region, the building, and current vacancy rates. Combined with a security deposit, brokerage fee, advance rent, and guarantor fee, total move-in costs usually add up to four to six months’ rent.

Is key money refundable?

No. Key money is non-refundable by definition. This is what distinguishes it from shikikin (the security deposit), which is partially refundable after deductions for any damage beyond normal wear and tear.

Does Japan have rent control?

No, Japan does not have rent control in the way it exists in some Western cities. Landlords can set initial rent freely, though rent increases during an existing lease are restricted by tenant protection law and generally require negotiation or, in disputes, mediation.

How much cash do I need to rent an apartment in Japan?

Roughly four to seven months of rent in total, covering key money, deposit, brokerage fee, advance rent, guarantor fee, and insurance. For an 80,000-yen apartment, that is roughly 300,000 to 600,000 yen, depending on the terms.

Can I avoid paying key money in Japan?

Yes. Search for reikin-free listings, look at UR housing, which has no key money, or rent in the off-season, when landlords are more flexible. Key money is a custom, not a legal requirement.

Is key money negotiable?

Sometimes. In areas with high vacancy or for older buildings, agents may be able to reduce or waive it. It is more difficult in popular areas during the January to March season.

What This System Reveals

The Japanese rental market’s customs — reikin above all — are a study in how practices that made sense in a particular historical moment can outlast the conditions that produced them, sustained by convention and market power long after the original logic has dissolved.

The housing shortage that made reikin a gesture of gratitude no longer exists. What remains is the expectation, maintained in markets where landlords can maintain it and abandoned where they cannot. The pattern is familiar: customs that function as frictions in the market persist where supply is tight and dissolve where it is not.

For anyone renting in Japan — especially for the first time, especially as a foreigner — the practical knowledge matters. What each cost is, what it is for, what rights a tenant has around the security deposit, and what to expect at every stage of the process makes the difference between navigating the market and being navigated by it.

Renting in Japan: Key Money, Deposits, and the Customs That Confuse Everyone