What is Key Money?
When renting a Japanese apartment, many foreigners are surprised at the number of fees that you have to pay before moving in. For example, before you move in you may have to pay for agency fees, signing-on fees, renewal fees, maintenance fees, cleaning fees, guarantor fees – the list goes on! One common fee is 礼金, ‘reikin’, or ‘key money.’ But, what is key money?
The origin of key money goes back to the Kanto Earthquake. Housing was in demand after the earthquake had destroyed large portions of Tokyo, and so Landlords had to choose from a vast number of potential tenants.
Savvy renters who wanted to impress the landlords would offer a payment of gratitude, thanking them for letting them live at the property. And so key money is a token of gratitude from the renter to the landlord – ‘reikin’ literally means ‘gratitude money’.
Today, almost 100 years after the Kanto Earthquake, the tradition continues. To help renters, we at Village House aim to discard key money fees. But, traditionally if you rent an apartment in Japan, you would more than likely have to pay key money. Due to it being an (often) non-negotiable gift, many people have stopped seeing the payment as a ‘gift’ – and many foreigners moving to Japan are shocked about the concept entirely. After all, there is nothing like key money in the West!
The most important things to remember about key money are: key money is not a deposit. You cannot receive key money back at the end of your tenancy. Key money does not offset the cost of cleaning and repairs. So, how much is key money?
How Much Is Key Money?
The fee that you will have to pay as ‘key money’ is normally around 2 months’ rent. Of course, in some cases, it is much higher, and in some cases a little lower. So, the question ‘how much is key money?’, is a little difficult to answer, and the fee is different for every property. But, 2 months is the national average. In reality, the fee is entirely up to the landlord to decide.
Do remember that key money can be negotiable. Some landlords might not like you trying to negotiate, but if you are brave then some might lower the price a little. Here at Village House, we have removed the pain of negotiating by trying to remove key money fees wherever we can!
A common technique used by renters who are trying to avoid key money is to try and negotiate increasing your monthly rental fee – in return for the landlord dismissing the key money fee. This practice is becoming so common that many landlords have been known to intentionally raise key money fees, anticipating that a tenant might ask to increase their monthly rental fees.
However, raising your monthly rental fees to get out of paying key money may mean you end up paying more money in the long run. After a year, or two, you will almost certainly have paid more than the initial key money fee.
Nevertheless, if you are renting short-term, then negotiating a higher monthly rent to waive the key money fee, will most likely save you money. So, you have to decide what’s best for you!
Renting Without Key Money
If you do not want to pay key money – then you can consider renting without key money. Rental apartments without key money do exist, and Village House is a great way to find them! We offer many fantastic apartments all across Japan without key money fees. Apartments without key money are highly sought after, and so are not on the market for long, so be sure to get in contact with Village House today and secure your dream apartment.
Whilst it used to be difficult to find apartments without key money, recent trends show that the amount of apartments without key money is increasing, making renting without key money easier. Sources suggest around 40% of rental apartments today do not require key money in Japan. The rise in apartments without key money is thought to be because of the rise in foreigners coming to live in Japan, and so many of the apartments without key money are targeted at foreign nationals.
Another way to begin renting without key money is to live in a shared house. Moving into a shared property – one that is already being lived in – is an easy way to avoid paying key money. Most shared properties waive the key money fee. However, this means that you have to get used to sharing a property, which is not always in people’s best interests.
Nevertheless, shared properties are a great way to meet new people. In shared properties, you can avoid key money, and make new friends!
Paying Key Money
We hope this article helps you understand key money. The next time you hear someone ask ‘what is key money?’ – you might be able to help them out!
For more information about renting apartments in Japan, make sure to check out all of our other fantastic blogs here!