When I first moved to Tokyo to start my job in corporate recruitment, my salary was approximately $35,000 per year. I began apartment hunting and after being turned down by several nice locations for not being Japanese (unfortunately this still happens), I was lucky to find a few good options. Many people chose to commute 30–40 minutes by train from the city (my office was downtown), and while it takes them longer to get to work, their apartments are reasonably priced and spacious.
I could have found a nice place in the boonies, but I was adamant on living in downtown Shibuya, a thriving central district most famous for the droves of people shuffling across the scramble crossing. I craved to be in the center of the action — bars, clubs, restaurants — and a stone’s throw from the office. It just seemed like a chance I couldn’t pass up as a bachelor in Tokyo.
The standard protocol for getting an apartment is that your rent could be no more than one-third of your monthly salary. In my case, I was making 340,000 yen per month before taxes, which meant that I could spend a maximum of 113,000 yen per month on an apartment. I’m not sure if this was a legally enforceable rule, but it sure came off as rather strict when I spoke to the real-estate agents.
I did some back-of-the-napkin calculations and concluded that I’d be fine to max-out the limit and find an apartment that was 113,000 yen. My reasoning: I’d still have a decent chunk of money for bills, food, going out, and even a bit to save. My rather poor attention to detail, failure to grasp high-school algebra, and unwavering optimism probably blinded me to a couple of simple facts; 1) it’s hard not to spend money in the center of Tokyo and 2) don’t forget that you have to pay taxes, dill weed!
Not to mention, I had to borrow money in order to put up 3 months rent to cover the upfront fees (it’s typical in Japan). Ultimately, I found a great bachelor-pad (by Japanese standards) in Shibuya, about 5 minutes from the station. I borrowed some money from my parents, and signed the 2-year rent contract knowing I was barely affording it…and didn’t look back.
I’ve learned a lot since then from my own experiences, friends, and from moving to a new apartment, buying property and subletting my own apartment. I wanted to share everything I’ve learned below, what to avoid, recommendations, and links that might be useful if you’re thinking about renting an apartment in Japan!
A typical 25-30 sqm2 apartment in Tokyo
The Rental Market
Japan has an over-supply of apartments because of the rapid construction of new apartments, the declining population leaving vacant rooms… and yet more construction of apartments. The vacancy rates for apartments in Tokyo is 30%. Over 5 million properties are up for rent as of last year. This means there are lots of apartments and lots of choices, if you know where to look.
The real estate market is also affected by the current monetary policy in Japan. In order to stimulate the economy through lending of bank loans (so people can buy more stuff/borrow more money and companies can build more stuff), Japan’s central bank charges banks a fee to keep their money, resulting in negative interest rates. This means that banks are losing money by not lending. While it’s easier to get a home loan, this actually causes an inflation in prices and not surprisingly we have talks of a housing bubble.
Now, why does all of this matter to you? Well, we know that there is an abundance of properties and that real estate agencies are basically dying (losing money) to either sell or rent their properties. This gives you, the buyer/renter, a big advantage. But as a foreigner coming into Japan, particularly without the language skills, it’s easy to get duped.
Let’s break down the upfront costs (pulled from realestate.co.jp):
Rent (Chinryō, 賃料) In apartment listings in Japan, the rent (chinryō, 賃料) is always stated as a monthly amount.
Maintenance Fee (Kanri-hi,管理費) or Kyōeki-hi,共益費). The maintenance fee pays for the maintenance of the common areas (hallways, elevator, trash room, etc.) in your building.
Key Money (Reikin,礼金). Key money is a non-refundable gratuity you pay to the landlord. This is a custom peculiar to Japan. In recent years, more and more landlords do not charge key money, but it is still common throughout the country. On average, key money is equal to one month’s rent.
Deposit (Shikikin, 敷金). The deposit is a refundable sum you pay to the landlord. Your landlord holds your deposit throughout the term of your lease, and will use the money to pay for repairs beyond normal wear-and-tear, when you move out. On average, deposit is equal to one month’s rent, but for high-end properties, the deposit may be equal to two or three months’ rent.
Agent’s Fee (Chūkai tesūryō,手数料). What the ad above doesn’t say is that your agent will also charge you on average one month’s rent as commission for helping you find and apply for the apartment. Some agents cut this fee to half a month’s rent, but one month is the average agent’s fee.
Guarantor Fee (Hoshōgaisha riyō-ryō,保証会社利用料). You will also be required to have a guarantor to rent an apartment. A guarantor is a person or company in Japan who will vouch for you as a tenant. If you fail to pay your rent, your landlord will go to your guarantor to collect.
First Month’s Rent or Pro-Rated First Month’s Rent. In almost all cases when you lease an apartment in Japan, you will have to pay the next month’s rent before the last day of the current month.
Towers in Odaiba, Tokyo
As you can tell, upfront cost for moving into an apartment can be huge in Tokyo. Even if you find something reasonable (20–35 square meters) near central Tokyo (shinjuku, shibuya) for, let’s say, 80,000 yen per month, you’ll have to usually pay the following (at minimum).
- Key Money: 80,000 yen
- One month deposit: 80,000 yen
- Agent’s commission: 80,000 yen
- Guarantor Fee: 10,000 to 80,000 yen
- Lock exchange fee: 10,000 yen
- Maintenance and insurance fees: 10,000 yen
- Total: 260,000-330,000 yen, up front in cash
There is rarely a way to completely avoid all of the fees — things like insurance are pretty important and you can’t just have them waived (nor would you want to!). However, there is a trend among certain real estate agencies moving away from charging key money and 1 month deposits. You can save money or have most of the big fees waived (key money and deposit), essentially bringing you down to 50,000 yen or so in up front costs. That’s significant. It could be the difference between living out in the boonies for a year vs. in a nicer apartment near the city.
How do we find these properties? All we have to do is ask. Most people assume they have to pay whats on the paper, but with some basic negotiation, we can get pretty far. To try this out, I sent an email to 3 real estate agencies asking them about properties without the above-mentioned upfront costs. Within 24 hours two of them told me they didn’t have anything at the moment — bummer. But one of them got back to me saying they have some properties. Here’s an email exchange with that real estate agency I had.
M: Hello, I’m moving to Tokyo this September and looking for an apartment. My criteria: 1 bedroom, within a 45 minute train ride from Shinjuku station, no upfront costs, and up to 80,000 yen per month rent.
Real estate agent: We have properties that meet your criteria. No key money and deposit is possible, but there won’t be a huge amount of options. The lowest guarantor fee is 30% rent of house.
M: Sounds great!
Not bad. A 24,000 yen guarantor fee on top of maintenance/insurance/commissions fees will put me to something like 50,000-100,000 yen for upfront costs — a heck of a lot less than 300,000! Perhaps I won’t get the snazziest apartment (“not a huge amount of options”), but hey, we’re staying flexible here right?
Housing Discrimination is Inevitable
As a foreigner even if you are fluent in Japanese probably 8–9 times out of 10 you will face a glaring fact: “We can’t rent to gaijin, the owner doesn’t allow it.” There is no such thing as housing discrimination laws in Japan, and there are lots of apartment owners who are afraid to rent mainly because of the language barrier. Of course, if you speak fluent Japanese, it’ll widen your options.
Although I am not trying to justify it, there is some logic for this madness. One of the biggest fears companies have when hiring foreigners is the possibility of a “flight risk.” When we had the Fukushima earthquake, tsunami and nuclear meltdown, thousands of foreigners fled Japan. People referred to them not as gaijin, but as ‘flyjin.’ Many of them packed up their bags without telling their land lords and just went back to their countries. Just like that. Real estate agencies couldn’t reach many of them and it all left a pretty bad taste in their mouths, not to mention the negative financial repercussions. The way they saw it: they got screwed over by foreigners. And they basically did.
But look, there are trade-offs to everything. In Japan you don’t have to worry about expensive health care costs or whether or not the person next to you is carrying a gun. Your bus will never be late. You don’t even need to buy a car, because transportation is so good. People are not going to go on strike and protests are uncommon. Cars don’t honk their horns. People don’t yell loudly. Tokyo is a huge city, but one of the quietest I’ve ever been to. It’ easy to relax. Hot springs are everywhere — they help decrease your anxiety and add a few years to your overall life span. There is a massage parlor on every street corner, a convenient stores every few steps and enough vending machines to keep us hydrated for a thousand years. A little bit of discrimination is a small price to pay, from my perspective.
Factors to Consider
Don’t move away from the city looking for cheapness. Tokyo and surrounding area hosts more people than some fairly large countries. Which means that moving away from city centre to the sticks is not a solution at all. Pretty much anyone does that, therefore prices along popular train lines, such as Toyoko, Den-En-Toshi or Keio are sky high even pretty far from the central area. You have to go really far to feel the price difference, but then the transportation costs and time will become inexcusable.
Look for an area which is central, yet have a modest transportation nearby. These tend to be surprisingly affordable, mostly because the absolute majority chooses by the nearby station, therefore the significance of the station moves the price high.
Most agencies will show your their worst and non-selling properties at first, no matter what you do unless you pay a lot. Just endure it, enjoy like a visit to a museum and wonder how do people live there. Some agencies have targets on shown apartments per day and will bring you around showing totally unrelated stuff just to hit the targets, then drop off unexpectedly when the agent feels like his daily plan is done. Go away immediately, such agencies are useless and there are more of them than you think.
Proximity to stations or buses. You’ll find that prices go up the closer you get to bus stops and train stations. If you don’t mind taking a bike or walking a few minutes you can save a lot of money living a little further from the station.
If the landlord says “no foreigners”, do not try to haggle and increase price, just go to a different landlord. There are more apartments than foreigners and many good apartments stay empty for years. Besides, you want to go to a place you are welcomed rather than have to finagle your way into an apartment where you’re not really welcome.
Don’t be afraid from the “bad” areas. There are really no bad areas on Tokyo to live. For example, higashi-shinjuku and okubo areas are avoided by the Japanese, but there’s no good reason for that. Their reason is that there are many Asian foreigners living around, which is not a bad thing at all.
Always check the final price you will have to pay for the apartment. There are many interesting fees such as the guarantor fee which I mentioned above. These can get really high, and if you can’t totally avoid it, you have to pay a decent money up front.
Choose the age of the building wisely, if you want a low price. This is almost like art, but it affects your choices seriously. Many good-looking apartments are located in very old (from seventies) buildings. It is not a good idea to choose them, because they have somewhat worse earthquake stability and use worse materials. Do not choose the newest buildings too, because they are expensive just because of their newness. Do not choose the buildings from the nineties, if you can, because it was an era of recession and buildings tended to be really shabby then, up to the late 200x’s. However, the buildings built during the bubble, between 1986 and 1991 or so, tend to be almost absurdly sturdy, therefore almost always the best choice.
Look at the infrastructure and history. Very often a nice apartment is cheap for a very good reason: absent or very primitive bath, weird layout, windows with a view of a wall, someone hanged themselves in the room, lack of or very old air conditioner, shabby locks and much-much more… There are really cheap rooms around but some are cheap for a very good reason. If you are okay with the reason, go ahead.
The Rental Process
It goes something like this.
- Submit an inquiry to a real estate agent/firm, specifying your budget, desired location, visa status, and all of the stuff outlined below in the next section.
- Wait a few days for them to get back to you…
- Go see a bunch of apartments.
- Agree on a place, make an offer.
- Make sure you have a bank account and phone number — you’ll need it before setting anything up.
- Get your documents ready: Withholding slip, or employment contract to show your ability to pay the rent, identification （Passport＆VISA, certificate of alien registration, contact information in your home country, contact information in Japan: company or your relatives. Guarantor information (if not, many agencies can introduce you to partner guaranty companies)
- Go through a laborious process of stamping and signing papers and paying a bunch of upfront money.
- Get the key and move in!
What Real Estate Agents Will Ask You
Most of them are going to request the same information, so you might as well start filling this out now and have it ready for your apartment hunt.
- Reasons you would want to move ( any problems for your current apartment / house )
- Number of resident(s)
- Area of where you wish to live
- Area of your office / school
- Total Commute time
- Favorable Train line
- Walking distance from the closest station
- Floor plan
- Required space ( in square meters )
- Age of the building
- furnished or unfurnished
- Expected date of move-in
- Advance notification period to your current owner for moving out ( 1 or 2 month )
- Monthly budget ( including management fee )
- Initial costs ( Is key money acceptable? )
- Approximate annual income ( your monthly salary needs to be more than 3 times of the monthly rent to pass the screening test for most of the owners )
- Do you have a Japanese guarantor
- Relationship with your guarantor
- Signer ( yourself or your company or your embassy )
- Visa status
- Pet ( if you have one, dog or cat / size )
- Car parking space ( if you have one, size and weight of the car )
- What you would like to avoid such as ground floor, tatami room, etc.
- Priority ( area, size, monthly rent, age of the building, etc. )
- How many years you have lived in Japan
- How many years you plan to stay in Japan
- Have you visited apartments / houses
- Can you visit apartments on weekdays
- Japanese language ability
My Favorite Neighborhoods
These are some of my top picks based on years living here, proximity to stations, price, convenience, and attractions. These are just my personal preferences and might not be suitable for everyone!
Daikanyama has been ranked one of the best places to live in Central Tokyo. It is known for its elegant town setting and famous gardens Saigoyama Park and Sugekari Park. It’s a bit fancy and definitely seen as “upper class” in Tokyo, but I found a place here for 150,000 yen per month. There are many luxurious boutiques, chocolate ice cream shops and restaurants scattered along the streets. There’s a big municipal pool, gyms, and everything you’d ever need. And away from the main streets are luxurious residential neighborhoods with stately houses including Aobadai and Nanpeidai. Surrounded by Shibuya, Ebisu and Naka-Meguro, it used to be a quiet traditional residential area, however many new luxury apartment blocks have increased in recent times.
With “Ebisu Garden Place” as a famous landmark, it’s a popular and stylish town that is attracting many new residents every year. There are also many restaurants and drinking spots to suit all genres and tastes. It’s a stones throw from Shibuya and Daikanyama and has tons of amazing wine bars. The area is named after Yebisu beer. A popular brand that was originally brewed in the area since 1890. Yebisu beer itself is named after Ebisu, one of the seven Japanese gods of fortune. Yebisu beer is no longer brewed in Ebisu. However, The Museum of Yebisu Beer remains in the old brewery building. The Ebisu area is also known for its pleasant small restaurants, izakaya, pubs and tachinomi standing bars. Ebisu is decidedly quieter than nearby neighborhoods such as Shibuya and Roppongi. The area draws an older, well-heeled crowd. It’s also popular with foreign residents of Tokyo.
Futako-Tamagawa Station (二子玉川駅 Futako-tamagawa-eki) is located in Setagaya, Tokyo, Japan, on the north-east bank of the Tama River. This area is up and coming because of it’s proximity to Rakuten, which is basically the Amazon of Japan. Most of the people living around here are employed by Rakuten (kind of like what Seattle is to Amazon!), so there’s a lot of family-friendly activities, a bustling shopping center, but it’s far enough away from the center of Tokyo to provide some peace and quiet. There are also gleaming shopping malls, a sizeable park, and in a sign of gentrification, a host of third wave coffee roasters and cafes.
This is in West Tokyo accesible by the Inokashira Line and Chuo Line. The famous park, Inokashira Koen, is rather icon and is often portrayed in anime and manga! Also home to the Ghibili Museum. It’s relaxed, creative and bohemian, popular with young people. Located just outside of Tokyo’s central wards but with easy access to Shibuya. Regularly voted as one of the most desirable places to live in Tokyo. I love the yakiniku here.
According to HOME’S, a Japanese real estate listing site, the average rent for an apartment near Meguro (as of March 2016) is:
- Studio (1R, 1K, 1DK): 110,200 yen ($1,100 @ 100 JPY = 1 USD)
- 1BR to 2BR (1LDK, 2K, 2DK): 224,100 yen ($2,241)
- 2BR to 3BR (2LDK, 3K, 3DK): 181,400 yen ($1,814)
- 3BR to 4BR (3LDK, 4K, 4DK): 224,400 yen ($2,244)
This station is further out in the boonies than my other recommendations, but I lived here for a year during university during my exchange program and loved it. There’s everything you’ll ever need and it’s about 40 minutes West of Shinjuku station via the Chuo line. It’s very residential but right next to a huge park, gym, and a central train line that let’s you get on the “commuter express,” one of the faster trains in Tokyo. If you want to live closer to nature, while still being within commuting distance of central Tokyo and enjoying lower average rent than in the city center, Kokubunji is worth considering.
The average rent for an apartment near Kokubunji Station (as of September 2018) is:
- Studio (1R): ¥53,900 ($484 @ 110 JPY = 1 USD)
- Studio (1K): ¥62,300 ($561)
- 1BR (1LDK): ¥120,800 ($1,087)
- 2BR (2LDK): ¥190,000 ($1,709)
- 3BR (3LDK): ¥230,800 ($2,076)
Fun factoid: Haruki Murakami got married and opened a jazz bar in Kokubunji.
How Your Company Can Help Reduce your Tax Burden
If you are making under 20,000,000 million Japanese yen per year you do not have to file taxes, your company simply takes care of it. Everything is deducted from your paycheck automatically on a monthly basis, including tax readjustments at the end of the year. The typical way to handle your expenses is to get paid a salary and then each month separately deduct payments for your rent, gas/water, phone bills and so forth.
One simple trick to reducing your tax burden is to ask your company to pay your rent directly to your real estate agency or apartment owner. This means you are getting paid the same salary, however, instead of having to deposit your rent money after receiving your monthly paycheck, your company has already paid the rent for you. In Japanese this is referred to as “Kyuyou tenbiki” (給与天引き）.
How does this work? Let’s take an example. Let’s say you are making 6,000,000 yen per year and live in an apartment that costs you 84,000 yen a month, or roughly 1,000,000 yen per year. After taxes, every month you would get a paycheck for (6 million/12 minus insurance, pension, residence and income taxes) = roughly 389,000 yen. From this 389,000 yen you then have to withdraw money to pay your rent for 84,000 yen, so you’re left with 389,000-84,000 + 305,000/month, or 3,675,000 per year. Let’s not include phone bills and other expenses for now. (By the way, you can use this Japan Tax Calculator to play around with different figures). Here’s my calculation below:
Great, now what if your company paid the rent directly instead? They would pay out the 1,000,000 yen directly for your rent, and then you would be taxed on the remaining 6,000,000-1,000,000 = 5,000,000 yen. The income you would be taxed on is less (5m), therefore your tax is less. Here is the calculation.
The money you could be saving by having your company pay rent directly would thus be 3,937,000 – 3,675,000 = 262,000 Japanese yen. That’s a decent chunk of cash that you could be saving on taxes simply by having your company pay rent directly. Of course not every company will allow you to have this setup, as it requires a certain degree of flexibility in how they structure their finance department. It’s also not something you bring up in a job interview, of course, and would be an arrangement that you discuss with your employer after getting a job offer, or even after having started the job already. Whether or not this will be possible for you just depends on your company. The easiest way to find out is simply to ask — you might be surprised!
Another point to consider: You can register your company’s address, at your home, friend’s home or virtual office. However, if you are planning to apply for Business Manager visa, basically your office need to be at the different place from your home. However, if you’re freelancing, or if you have a visa other than the business manager visa, you can register your office and home as the same place. In which case it comes with an added benefit: you can deduct something like 30% (or more) of your monthly apartment rent.
What I Wish They Would Have Told Me Before I Moved to Tokyo
- Japan has a residence tax that you have to pay yearly. The price depends on where you’re living, but it comes to around 10% of your income. However, you don’t have to pay it the first year you’re here, so it’s easy to forget the following year. It doesn’t go into effect until the second year of living in Japan so be careful not to forget to factor this in to your budgeting.
- If you’re working for a company as a full time employee and making under 20m yen per year, they will file your taxes for you, so you don’t have to do anything. However, as a US citizen you still have to file in the US, so don’t forget to do this. H&R block is the easiest as they have some competent international accountants that can do it for like $100, and what I personally use.
- When you go furniture shopping, if you’re price conscious you can get a lot of free stuff at Sayonara Sales. Plenty of foreigners leave Japan and basically give away their stuff for free or at a discounted price. I got my washing machine for like $50 here and delivered for $20. Not bad.
Furnishing Your Apartment for Practically Free
There are few places that I’ve found in Japan where you can get free stuff and very, very cheap stuff. It requires a little bit more effort and time than pressing “1 click purchase” on Amazon Prime, but you’ll save a lot more money. Perhaps you’re moving to Japan for the first time, already live here and are relocating apartments, or maybe you just want to get cheap stuff.
There is a flee market almost every day in Tokyo. In Japanese flee market is フリーマーケット or フリマ。Going to a flee market first thing in the morning will allow for a much larger selection of products, and some rare finds.
But going at the end of the day will allow for much more negotiation power. This is when I personally prefer to go, and where I’ve had the most luck. The last 30 minutes of the flee market when everyone is packing up, the sellers are basically in a panic to get rid of all of their stuff. If they can get 100 yen – something, anything — for the remaining stuff they couldn’t sell, then they’re usually happy. Who says you can’t barter in Japan? You definitely can! Here’s a link to the most popular flee markets in Japan, you can pretty much find something going on every day.
There are always foreigners packing up and leaving Japan. They usually rush to sell all of their stuff last minute and often times end up giving away their things for free. You can get fridges, couches, microwaves, and everything you’d need to have a comfortable life moving into the country. You’d have to go pick up the things yourself or arrange for pick up with a moving company for larger objects, which would often be your only cost. Here are a couple of links where you can find these kind of sayonara sales going on:
The “Jimotee” App (ジモティー）
Jimotee is the Japanese version of Craigslist. Check out their home page here. All of the products on the home page cost 0 yen. The catch is that you have to go pick up the stuff. I certainly wouldn’t mind considering it’s free. Outside of basic household items, they sell everything else, from cars to swimsuits. Also you can get Japanese tutoring and even find part time work. The kicker is everything is in Japanese, so you’ll have to get around that if you don’t speak the language. Google translate it or get a friend to help out– it’ll be worth it considering the massive discounts and deals that you can get.
Links and Resources
All of the real estate agencies in Japan share a common database. That means technically they ALL have access to the same apartments, so be cautious when someone tells you they have “exclusive” properties — they’re probably lying. You’re better off finding a good English speaking agent that can help you maneuver and secure a place quickly.
Here are some resources to get you started:
Gaijinpot apartments https://apartments.gaijinpot.com/en/rent/listing
Tokyo apartment 81 http://www.tokyoapartment81.com/
Real Estate Tokyo http://www.realestate-tokyo.com/rentalapartment/apartment-house/daikanyama/
Real estate area guides (great resource to get a feel for each neighborhood!) https://resources.realestate.co.jp/area-guide/kokubunji-area-guide/
Tai apartment http://tokyoapartmentinc.com/
Metroresidences (furnished) https://metroresidences.com/jp-en/expat-life/housing/tips-on-renting-an-apartment-in-tokyo-recommended-by-gaijinpot/
How to Rent an Apartment in Tokyo: A Cheapo Guide https://tokyocheapo.com/lifestyle/rent-an-apartment-in-tokyo/
Kaz Harada is an independent real estate agent and helped me find a place when I moved to Tokyo. He’s also helped several of my non-Japanese friends find great locations, lived in the US for a long time, speaks perfect English, and knows the Tokyo area very well. I couldn’t recommend him enough, and if you’d like to reach out to him you can do so below.
Contact Kaz Below