Renewing or Terminating Housing Lease Agreements

Feb 13, 2014

Renewing or Terminating Housing Lease Agreements

A note before we begin. Like so much in Japan, every prefecture and region in Japan has different rules, requirements, and most importantly customs in regards to housing and real estate. Like politics, all real estate is local.  In addition to this, any given contract will have variations.  The particulars of yours will be stipulated in the contract you signed.   If you have forgotten the details you should refer back to the contract paperwork for clarification.

Extending or Renewing a Housing Lease

Renewing a housing contract depends heavily on the contract itself, but there are two types of contract common in Japan that you should be aware of.   Your real estate agent is required to point out the type and details of your housing contract, in excruciating detail, when you sign the lease.  If you have forgotten the details of your specific housing contract you should refer back to your contract paperwork; it will be spelled out there.  Most likely, it will be one of the two following types of contract.

Automatically Renewing Contract

The first type of housing lease contract is a 2-year agreement in which the term automatically renews every 2 years unless a cancellation notice is submitted.  The contract simply be renewed for another 2 years with no requirements placed on the lessee (tenant), and no paper work to be done.  You will wake up one morning under a new contract, like magic!

In some cases, the renewal may require the tenant pay a fee at renewal time, usually between a half and a full month’s rent.  If a fee is required it will be stipulated in the contract and the lessor (landlord) will contact you with a bill.

Automatic renewal contracts are the most common type of contract in Japan generally,but  are uncommon in either Tokyo or Yokohama. If a contract in Tokyo or Yokohama IS an automatically renewing, it will almost certainly require a renewal fee.

In contrast, nearly all contracts signed in Nagoya WILL be automatically renewing, and will NOT require a renewal fee.

Fixed Term Contract

The second type of housing lease contract is a fixed term contract. Extending an agreement with a fixed term is a bit more involved.    Fixed term contracts have a “hard stop” at the expiration date, and when the tenant is nearing the end of the agreement a renegotiation of the contract will be required (initiated by the tenant) to extend it; likely for another fixed term.

If the tenant and  landlord agree on new terms, the tenant will need to sign a new housing lease agreement to renew their contract.  In some cases, the renewal may require the tenant pay a fee, usually between a half and a full month’s rent.

These types of contracts are very common, if not the standard contract, in Tokyo and Yokohama.   One exception to this is the high end market, say over 400,000 yen per month in rent, where automatic renewals are more prevalent.

All this, and potentially much more, will be stipulated in the contract you signed.   If you have forgotten the details of your housing contract you should refer back to your contract paperwork.

Terminating or Ending a Housing Lease Agreement in Japan

In general, 2-year leases, whether fixed or automatically renewing, can be cancelled at any time with 30 days’ notice within either the first or subsequent lease term.  There is usually no fee associated with terminating a lease early if the proper notice is given in this case.  Other arrangements are out there, but they are far less common.

Tokyo is a notable exception to this general rule in Japan.  Tokyo contracts tend to require 60 days notice of intent to vacate, again either within the first or subsequent lease term.  There is still generally no fee associated with terminating a lease early with proper notice.

Changing Tenants within an Existing Housing Lease Agreement

For corporate HR supporting an expat in Japan, there is often an interest in simply rolling over an existing lease agreement signed for an outgoing expat to an incoming expat who is taking their place.  This may be possible, but only if the housing lease agreement is signed by the company and the lessor allows the change in tenant.

A change of tenant, where the Lessee name on the housing lease agreement actually changes is not permitted, as this would require a whole new housing lease agreement, review, etc.

If the housing lease agreement is signed by the company, there are a number of possible scenarios depending entirely on the details of the contract.  If there is a restriction, it will be noted on the housing lease agreement. If there are no outright restrictions, relevant clauses may still exist that must be considered.

The following scenarios may be relevant:

• No restrictions written on the housing lease agreement, hence changing of tenants is not an issue (as long as the property is not used as short term housing for many tenants)
• No tenant change restriction, but notice is required. In this scenario details (i.e. copy of passport and copy of housing insurance certificate) for the new tenant will be required. While the Lessee (the company who signed the lease) is required to provide documentation on the new tenant, no further documentation will be provided by the property Management Company / landlord regarding the change.
• Written consent is required from the Lessor to change tenants.  After making an application the property management company / landlord would approve or reject the tenant using their own internal criteria.
• Tenant changes are not permitted.

This basic primer on renewing, ending, or changing a housing lease agreement was brought to you by Japan Home Search.