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Initial Costs in Japan

When you enter into an agreement to lease an apartment in Japan, it is common to see initial expenses that must be paid upfront. These initial costs can be categorized into various fees, each with its own cost, purpose, and recipient.

It's crucial to prepare these charges in advance to ensure you are financially prepared and avoid overpaying. Here's a detailed breakdown of the initial costs associated with renting an apartment in Japan:

1. Security Deposit (Shikikin)

- The security deposit is money entrusted to the landlord.

- It covers cleaning, repairs, or unpaid rent upon vacating the property.

- Typically equals one month's rent.

- In some cases, it's referred to as a "cleaning fee" and is cheaper than a full month's rent, but it's non-refundable.

2. Key Money (Reikin)

- Key money is a payment to the landlord as a gesture of gratitude for accepting your application.

- Usually equals one month's rent, but regional variations exist.

- Unlike the security deposit, key money is considered a gift and is non-refundable.

3. Advance Rent

- In most Japanese rental contracts, you must pay the next month's rent in advance.

- You also pay the first month's rent upon signing the contract, even before moving in.

- If you move in mid-month, the advance rent is prorated on a daily basis.

4. Agency/Brokerage Fee

- This is a commission paid to the real estate agency for their services, particularly if you used their assistance in finding a property and handling the application process.

- Usually equals one month's rent plus consumption tax.

5. Fire Insurance

- When signing the contract, you're typically required to obtain fire insurance.

- This insurance covers damage to the property in the event of incidents like fires or water leaks.

- The cost and specific coverage depend on the insurance company and the type of insurance, so it's essential to review the details before signing the contract.

6. Guarantor fee

- A rental guarantee company is required, the landlord will benefit from this since the guarantor company will pay the landlord the rent if the tenant can't. This way, landlords know they'll get the rent on time, even if the tenant misses a payment.

In addition to the initial expenses mentioned earlier, there are several other costs associated with renting an apartment. These may be the moving expenses and the need to buy new furniture and appliances. Therefore, it's important to remember that both moving and renting an apartment will require you to have a certain amount of money set aside. Understanding these initial expenses is crucial to budgeting and preparing for your apartment rental in Japan.


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