Civil law in Japan was amended for the first time in 120 years and the new regulations have come to effect on April 1st 2020 (with exclusion).
New regulations apply to all lease agreements ‘’signed’’ after the effective date. Keep in mind that ‘’signing date’’ and ‘’starting date’’ of a lease is different. Even if your lease starts after April 1st, if you sign your name on March 31st, the new regulations do not apply
Let’s look at the changes that the amendments made in the rental market!
Below are the most frequent asked questions.
Will there be more or less disputes over rental deposit?
One of the most often occurred disputes, is regarding the liability of repair fees when moving out. Both landlords and tenants have been following the guidelines written by Tokyo government, but in this amendment, further detailed rules have been established.
The new regulations are expected to lessen the number of disputes. However, with more rights granted, increase number of compliant from tenants is expected. In addition, the new regulations emphasized on mutual consent of both landlord and tenant. Conditions such as ‘’tenant takes liability on the wear and tear or tatami’’, which is normally responsible by landlord, can now be effective upon mutual consent.
With such regulation, it is best for landlords to consult their property management company to amend their lease terms and strengthen their rights as the lessor.
Increasing repairs due to damage or malfunction of in-room equipment?
In the amendment, tenants are granted the right to perform repairs on behalf of the landlord in case of emergency or if the landlord takes longer than usual to repair something.
In addition, instead of ‘’negotiate for rent reduction’’ when there is damage or malfunction, landlords have the obligation to ‘’make a rent reduction”.
With the above terms written, it is expected that more tenants will perform repairs even when it is unnecessary. Increase negotiations of rent reduction is also predicted.
To avoid rent reduction, landlords must answer tenants’ needs in repairing promptly. Including terms such as ‘’fees related to repairs without permission of landlord will not be reimbursed’’, or ‘’rent reduction will only be accepted within xx days of malfunction’’ in the lease agreement can be helpful to landlords.
As long as the terms do not put tenants in total disadvantage, they will be effective with both parties’ signatures.
Will it be more difficult to secure a guarantor for commercial lease?
Under the new regulations, guarantor for a commercial lease must be informed with the financial statement of the lessee. If the lessee (commercial use such as store or office) of a lease is under the name of a company or an association, the individual guarantor must be aware of the financial details of the company in order for the lease to be legally effective.
However, if company dormitory is considered as ‘’commercial use’’, there might be a hard time to secure a guarantor.
Often times, the tenant himself is assigned as the guarantor of a room rented by his company. In this case, it is hard to imagine that the company will inform the employee about its financial statement. Thus, we are expecting that securing a guarantor for a commercial lease will become more challenging.
How are the obligations of a guarantor changed?
In this amendment, an upper amount of rent guaranteed is set for the guarantor.
This makes sense to everyone. However, this is also a blind spot to this regulation – the cease of obligation as a guarantor.
The obligation to guarantee further overdue rent will ceased at the time of
①The lessee’s death
②The guarantor’s death.
For example, a couple is living in an apartment where the husband is the lessee (name on the lease contract). One day the husband passed away but the wife continues living in the apartment. The obligation for the guarantor to guarantee the rent has ended upon the death of the husband. In this case, if the wife decides to stop paying rent, there is no one to guarantee the rent for the landlord.
Another scenario is, if the tenant committed suicide in the room and was only found a certain period later, the landlord cannot ask the guarantor for restoration fees.
While there seem to be a need to revise the current terms and conditions and adjust to the new change, the use of guarantee company is a way to avoid the above risks as a landlord.
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