What Is Key Money in Japan? Understanding Shikikin, Reikin, and What Foreigners Should Know

What Is Key Money? The Difference Between Reikin and Shikikin

When renting a property in Japan, you will almost always encounter the terms “shikikin” (security deposit) and “reikin” (key money). In English, they are sometimes grouped together under the term “key money,” but in reality, they are very different types of fees. For foreigners, this can be confusing, so let’s clearly break down the basics.

Reikin (Key Money, non-refundable fee)

Reikin is a non-refundable fee paid to the landlord as a gesture of appreciation for renting the property. The most important point to know is that it will not be returned after you move out. It is a one-time payment made at the start of the lease and is unique to Japan—it is rarely seen in other real estate markets.

The amount is usually equivalent to one or two months’ rent, though it can vary by region and property type. That said, reikin is not universal across the country. For example, “no key money” rentals are common in Hokkaido and Okinawa, as well as in parts of Tohoku (such as Aomori and Akita) and Fukuoka in Kyushu. By contrast, reikin remains deeply rooted in regions like Tokyo, Kyoto, and Osaka, where tenants are still often expected to pay it.

Shikikin (Deposit, refundable)

Shikikin is a refundable deposit that covers potential repair or cleaning costs when you move out. Typically equal to one or two months’ rent, it is collected at the time of signing. As with reikin, the standard amount is generally one to two months’ rent, though some landlords may set higher or lower rates depending on the property.

After you leave, the landlord deducts any necessary restoration expenses and refunds the remaining balance. In this sense, shikikin functions as a form of guarantee, making it fundamentally different from reikin.

Other Initial Costs

In addition to reikin and shikikin, there are several other upfront costs to be aware of when renting in Japan. These may include an agency commission fee (paid to the real estate company), prepaid rent for the first month (or partial month), and fire insurance premiums. For many foreigners, these fees may feel unfamiliar and are sometimes mistaken for “key money.” However, each has its own distinct purpose.

Later, we will also explain rent guarantee companies, which act as a guarantor service.

Why Does Japan Have a Key Money Tradition?

Post-WWII Housing Shortages

The custom of reikin became widespread in the aftermath of World War II, when Japan faced a severe housing shortage, especially in urban areas. With demand far exceeding supply, landlords could prioritize tenants who offered larger payments as a gesture of appreciation. Over time, this practice evolved into the standardized system of reikin, which—though the housing crisis has long since been resolved—remains today as a deeply rooted tradition.

A Culture That Values Trust and Respect

In Japan, interpersonal trust often matters just as much as what is written in a contract. Rental agreements are not viewed purely as transactions but as relationships between landlord and tenant. Reikin developed as a symbolic gesture of gratitude—essentially a “gift” to say, “Thank you for letting me live here.” Its non-refundable nature reflects Japan’s cultural emphasis on trust and respect within these relationships.

Common Challenges Foreigners Face with Key Money

Confusion Over Reikin Refunds

One of the most common problems is confusing reikin with shikikin. Unlike a security deposit, reikin is non-refundable. However, many foreigners mistakenly expect to receive it back after moving out, which often leads to disputes with landlords or agencies. To avoid such issues, it is essential to confirm in advance which fees are refundable and which are not.

Excessive Security Deposit Deductions

Although shikikin is intended to be refunded when you move out, some tenants face unexpectedly high charges for cleaning or repairs. In Japan, the Ministry of Land, Infrastructure, Transport and Tourism has established official guidelines on “restoration to the original state (genjō kaifuku 原状回復)”, often explained as “returning the property to its original condition.” Being aware of these standards can protect you, as landlords cannot legally charge tenants for ordinary wear and tear resulting from normal daily use.

Language Barriers and Contract Risks

Another common challenge is signing contracts without fully understanding them. Rental agreements often contain complex legal terms, and foreigners who are not familiar with Japanese may unknowingly agree to unfavorable conditions. The safest way to avoid this risk is to work with real estate agencies that provide clear English support and can explain contract details before signing.

Can Key Money Be Negotiated? Recent Trends and Strategies

Growth of Zero-Key-Money Apartments and No-Deposit Rentals

In newly built apartments and rental properties aimed at foreigners, it is becoming increasingly common for landlords to waive reikin altogether. Since key money adds significantly to upfront costs, eliminating it helps attract tenants more easily. In cities like Tokyo and Osaka, listings advertising “zero key money” are now far more visible than before.

There May Be Room for Negotiation

Key money is not always a fixed, non-negotiable expense. In some cases, landlords may agree to reduce or waive reikin if the tenant commits to a long-term lease or is ready to sign promptly. Success depends on the property and circumstances, but it can be worthwhile to attempt negotiation before finalizing a contract.

Choosing the Right Real Estate Agent Is Crucial

Successful negotiation often depends on having the right support from a real estate agency. Agencies experienced in working with foreign clients can provide valuable advice and negotiate terms on your behalf. By using specialized platforms like Japan Property, you can connect with trusted partner agencies who understand the needs of international tenants and improve your chances of securing a favorable deal.

What Are Rent Guarantee Companies in Japan?

When renting a property in Japan, most landlords require a “joint guarantor”—someone legally responsible for paying the rent if the tenant defaults. This is a uniquely Japanese system that often surprises foreigners, as it is uncommon in many other countries. To address this challenge, Japan has developed rent guarantee companies, also known as guarantor services (similar in some ways to a cosigner system). Here’s how they work.

Feature 1: Renting Without Needing a Guarantor

For foreigners who don’t have family or close acquaintances in Japan, securing a guarantor can be a major obstacle. By using a rent guarantee company, you can bypass this requirement and sign a lease smoothly. In this sense, the system functions somewhat like a cosigner arrangement in Western countries, but is provided by a professional company rather than an individual. For many international tenants, this service provides a crucial solution that makes renting in Japan feasible.

Feature 2: Coverage of Missed Rent Payments and Landlord Assurance

If a tenant delays or fails to pay rent, the guarantee company temporarily covers the payment to the landlord. This system reduces risk for property owners, making them more willing to rent to foreigners. As a result, applications from international tenants are often more likely to be approved when a guarantor service is in place.

Feature 3: Smooth Contract and Renewal Procedures

Although using a rent guarantee company requires an application and contract, in most cases the real estate agency handles the paperwork on the tenant’s behalf. Choosing an agency with English-language support makes the process even easier and less stressful. Renewals are generally straightforward, making this option suitable for long-term residents.

Why Japan Property Is the Best Choice for Foreign Renters

Japan’s rental system includes unique customs that can feel overwhelming or confusing for foreigners. This is where Japan Property becomes an invaluable resource. The platform allows you to search listings in English and connect with trusted real estate agents, enabling you to find a home without worrying about cultural or language barriers. Here are its key advantages:

• Neighborhood Guides: Discover areas by lifestyle, commute, and budget to narrow down where to live.
• Partner Agencies: Work with vetted, foreigner-friendly agents who can negotiate and explain contracts in English.
• Latest Listings: Start browsing properties right away in English.

Conclusion: Understanding Key Money Is the First Step to Navigating Japan’s Rental Market

Shikikin and reikin are defining features of Japan’s rental system. While these costs may seem unfamiliar to foreigners, they are rooted in Japan’s unique history and culture. By understanding them properly, you can approach property hunting in Japan with clarity and confidence.

Appreciating the cultural background leads to better agreements: shikikin and reikin are not just financial obligations—they reflect Japan’s traditions of trust and social customs. By understanding this cultural context before signing a lease, you can avoid unnecessary disputes and begin your new life in Japan on a solid footing.

Get accurate information to start your property search with confidence. For more practical tips on living and renting in Japan, check out our Neighborhood Guides, explore the latest listings, or connect with trusted real estate agencies. If you’re considering buying in the future, visit our Guides & Resources to learn the process step by step.