“Zero-zero” properties refer to apartments that require no security deposit and no key money. For those looking to save on initial costs, zero-zero properties may sound appealing. However, some properties may come with specific conditions, so it’s important to check the details in advance.
In this article, we’ll explain the advantages and disadvantages of zero-zero properties, key points to watch out for, and alternative ways to reduce initial costs.
At Village House, we do not require a security deposit, key money, handling fees, or renewal fees（※）. If you’re looking to keep your initial costs down, be sure to check out our website!
（※）A security deposit may be required depending on the contract details and screening results.
What is a zero-zero property?
Zero-zero properties are said to have been introduced by major real estate companies in the late 1980s. When renting an apartment, various initial costs are required. Among these, the “security deposit” and “key money” paid to the landlord are generally the most significant financial burdens.
The security deposit is used as compensation in case of unpaid rent or to cover room repair costs. Any unused deposit is refunded upon moving out. On the other hand, key money is paid as a gratuity to the landlord, so unlike the security deposit, it is non-refundable.
Although it varies depending on the region, the standard amount for both the security deposit and key money are said to be typically about 1 to 2 months’ rent each. In addition to these, brokerage fees, guarantor fees, key replacement fees, fire insurance fees, and the first month’s rent are incurred at the time of signing the contract. As a result, the total initial costs can often add up to 4 to 6 months’ worth of rent.
However, with zero-zero properties, there is no need for a security deposit or key money, so the initial costs can be significantly reduced.
Merits of zero-zero properties
▶ Lower initial costs
Since zero-zero properties do not require a security deposit or key money, the initial costs are significantly lower compared to regular rental properties. Typically, the initial costs of renting a property are around 4 to 6 months’ worth of rent. However, for zero-zero properties, the average initial costs are reduced to approximately 2 to 4 months’ worth of rent.
▶ Fully furnished
Many people assume that zero-zero rental properties have outdated facilities or small floor plans. However, many of these properties are fully furnished and offer modern amenities. The reason landlords offer zero-zero properties is to eliminate vacancies and encourage occupancy.
In other words, even fully furnished properties can become zero-zero properties if they have been vacant for a long time. Therefore, instead of assuming that zero-zero properties are of lower quality, it’s best to keep an open mind when searching for rental properties.
Demerits of zero-zero properties
▶ Potentially higher rent
Some zero-zero properties have rents set higher than the market price. This is because landlords compensate for the lack of security deposit and key money by adjusting the rent.
However, even if a property has no security deposit or key money, if the rent is significantly higher, you may end up paying higher overall costs in the long run. To avoid this, it’s important to confirm the average rent in the area before choosing a property to make sure whether the rent is reasonable.
▶ Potential issues with the quality of the tenants
In zero-zero properties, guarantors may not be required and the screening process for guarantor companies may be relatively lenient. As a result, there may be concerns about the quality of the tenants, which can lead to a higher risk of noise problems and other issues that could disrupt daily life.
To avoid potential problems after moving in, make sure to conduct a viewing of the property at different times of the day and on different days of the week before moving in.
Are zero-zero properties dangerous? 4 important points to watch out for
Before renting a zero-zero property, be sure to consider the following points:
① Initial costs other than the security deposit and key money may be high
While Zero-Zero properties do not require a security deposit or key money, other costs may be set higher, resulting in the total initial costs comparable to a standard rental property.
For example, some landlords may charge for items like fire extinguishers or disaster preparedness kits. Before agreeing to these fees, make sure to check whether you really need them. By eliminating unnecessary charges, you can maximize the benefits of choosing a Zero-Zero property.
② Unexpectedly high move-out costs
When renting a property, tenants are responsible for restoring the unit to its original condition upon moving out, a process known as “restoration to original state”. In standard rental properties, these restoration costs are usually deducted from the security deposit.
However, since Zero-Zero properties do not require a security deposit, tenants must pay the full amount of the restoration costs upon moving out. To avoid unexpectedly high charges, make sure to keep the room clean and use it with care throughout your stay.
③ Move-out notice must be given at least 2 months in advance
For most rental properties, the move-out notice period is typically one month in advance. However, some zero-zero properties may require move-out notice at least two months in advance.
If you forget to notify your landlord about your intention to move out, you might end up paying rent for both your current and next residence, leading to unnecessary costs. Be sure to carefully review the details of your lease agreement in advance in order to avoid unnecessary costs when you move out.
④ Penalty may be charged when moving out on short notice
An early termination fee is a penalty charged when a tenant moves out earlier than the period specified in the contract. The applicable period varies, with some leases stating, “less than 6 months,” “less than 1 year,” or “less than 2 years.”
The reasons for moving out vary from person to person, but since it is a condition agreed upon at the time of signing the contract, you basically have to pay it no matter what the circumstances. To avoid any disputes, be sure to check the early termination policy in your contract before renting a zero-zero property.
How to reduce initial costs without choosing a zero-zero property
▶ Search for free-rent properties
A free-rent property is a rental unit where tenants do not have to pay rent for a certain period of time after moving in. The duration of the free-rent period varies by property, ranging from as little as two weeks, to one or two months, and in some cases, even several months.
One of the benefits of a free-rent property is that it reduces the burden of “double rent.” In standard rental properties, depending on your lease start date and moving schedule, you may have to pay rent for both your current and new residence at the same time. However, with a free-rent property, you can avoid overlapping rent payments as long as you complete the move during the free-rent period.
▶ Move during the off-peak season
There are peak and off-peak seasons for rental properties. January to March is the peak season, as many people move due to students relocating for school and employees moving for job transfers. During this period, landlords have the advantage, making it difficult to negotiate lower rent or discounts on initial costs.
On the other hand, the period from May (after Golden Week) to August, as well as October to December, is considered the off-peak season. During the off-peak season, fewer people are looking for rental properties, so you can expect landlords to be more willing to lower rent or even waive key money.
▶ Look for properties with lower brokerage fees
The brokerage fee is a cost paid to a real estate agency upon successfully securing a rental property. Under the Real Estate Brokerage Act, the fee is set at a maximum of “1 month’s rent + consumption tax.”
In principle, this fee is split equally between the landlord and the tenant. However, if both parties agree, one party may bear the full amount, which often falls on the tenant.
There are also properties where the brokerage fee is free or half the price. This is because the landlord may cover part or all the fee to secure a tenant faster.
Additionally, if you sign a lease directly with the property owner, or rent a unit owned and managed by the real estate company, no brokerage fee is required, keeping your initial costs down.
At Village House, we offer one-month free rent (※). Moreover, there are no security deposits, key money, handling fees, or renewal fees (※). If you want to keep your initial costs down, please feel free to contact us.
※Depending on the contract details and screening results, a security deposit may be required.
※Free rent does not apply to some properties.
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Hello, I’m Machiko Doi, a freelance writer who writes about housing and living in Japan.
I live in an 80-year-old house that I inherited from my grandparents along with my two shelter cats and daughter.
We live a relaxed life while repairing the house.
I like to cook vegetables from the garden and fresh fish caught by my father, and enjoy them with cold beer on a hot day or hot sake on a cold day.