Can Tokyo’s rental market be made friendlier to foreigners?

Towards the end of last year, Japanese prime minister Fumio Kishida gave a speech to business leaders in New York announcing new measures to attract asset management companies to the country.

The initiative includes the formation of special business zones in which administrative procedures can be completed entirely in English and a commitment to an improved “living environment”, better suited to the needs of staff relocating from abroad.

Japan’s rental market is notorious for the pitfalls it presents to unsuspecting expats. The language barrier can hamper the search for a home. Online listings can be vague, with photos grainy and videos very rare. Many landlords refuse to rent to foreigners; those who do can deluge prospective tenants with time-consuming application forms that must be completed before viewings can be arranged. Moving costs are typically equivalent to between four and five months’ rent.

Some arriving from overseas have sought the help of specialised companies, whose services range from finding a home to organising schooling

The prime minister’s initiative comes at a time when, following the relaxation of pandemic-era entry restrictions and the growing popularity of Japan for global investors and companies, the numbers of people moving to Japan are rising. The 3.2mn foreign nationals in the country at the end of June last year was an all-time high, according to government data; with permanent residents the largest group of these, at just over 880,000.

And rents are rising — albeit far more slowly than in other global cities, many of which are in the grip of a rental crisis. The average rental price between October and December was up 3.5 per cent compared with the same period in 2022, according to Savills. Between 2019 and 2022, rents fell by 3.1 per cent.

Some of those arriving from overseas have sought the help of specialised companies, whose services range from finding a home to organising schooling. “Those at higher income levels often use these dedicated relocation specialists,” says Tetsuya Kaneko, head of research and consultancy at Savills Japan.

But their high fees place them beyond the budget of many movers, such as Paul Capodanno, who moved to Tokyo from Austin, Texas, in October, to open a subsidiary of his healthcare and dental business. “The [specialist] companies are helpful but expensive,” he says.

To address the dearth of information provided by property listings, he instead sought the help of his partner, who was already living in Tokyo and speaks Japanese.

“My partner would go [to homes] and take pictures, basically doing what a real estate [listing] would do in the US,” he says. “Having someone in Japan while I was still in the US accelerated the process.”

When it came to signing his lease, Capodanno had to pay fees equivalent to two months’ rent — one month’s worth for estate agent fees and the same amount as a one-off “key money” fee to the landlord — as well as a deposit of one month and two months’ advance rent payment.

So, to make life easier for five of his staff who will move to Tokyo by February, once their visas are granted, he will pay the agents’ and landlords’ fees.

“Budget considerations are important when you are moving, especially when you have to drop five months’ rent to get the key. This will help to make the moving costs a little less prohibitive,” he says. He has also created a how-to guide for moving, with useful links and resources, and compiled a shortlist of agents who speak English, have experience of dealing with employee relocations, and will provide employees with virtual visits to up to five properties of their choice.

Cormac Fagan, 30, found he could share the administrative burden with his co-workers. He moved from Dublin to Tokyo with his wife in August — one of five staff moving to the city after the energy trading company they work for set up a subsidiary in Tokyo in 2022.

“We could figure out things together, such as registering our addresses at the local ward office, getting phone numbers set up and so on,” he says.

As for finding a home, Fagan, who signed a lease before he arrived without visiting Tokyo, tapped his social and professional network to collect information that he would have been unable to find himself because he doesn’t speak Japanese.

My partner would go to homes and take pictures, basically doing what a real estate listing would do in the US

His wife is pregnant with their first child so they were keen to be based near a maternity hospital. A friend in Dublin whose first child was born in Tokyo provided a list of hospitals that had English sections on their websites and where a sufficient number of doctors and nurses spoke English.  

“Others provided tips that would be tricky to figure out without actually being here,” he says — identifying child-friendly neighbourhoods with usable green spaces, or sections with popular nightlife spots where noise might be a problem.

In Japan, rental homes typically come unfurnished; sourcing and buying furniture from the city’s large number of second-hand shops without Japanese language skills is difficult. So Fagan and his wife ordered furniture online, arranging delivery for two days after they arrived. They rent their fridge-freezer, washing machine and TV (the fee for the three appliances is about $220 per month).

“There are also specialised furniture rental companies, who typically speak English,” says Kaz Harada of local agent Hikari Home, “but if you’re staying for longer than two years, it works out cheaper to buy items.”

For those who can negotiate the hazards of Japan’s rental market, however, a move to Tokyo provides much to recommend it.

Stephen Leung prefers the mild, seasonal climate of Japan compared with Hong Kong, from where he moved in April — and thinks the pollution is better controlled too.

I left my desk at 5.30pm today and was back by 5.55pm. The transport system is way better than I expected

The two-bedroom flat in Kinshichō, which he rents for ￥230,000 ($1,600) a month, is quiet and well located for his commute. One of Tokyo’s 23 wards, lying to the east of the city, Kinshichō is still just eight minutes by train to Tokyo Station — a terminal for Japan’s Shinkansen, or bullet train, network — and the business district of Marunouchi.

The area boasts plenty of cheap izakaya, informal drinking spots that also serve small plates of food, a range of restaurants and karaoke bars, and a large shopping district, which includes the 11-floor Arcakit building.

Tokyo’s efficient transport system means quick and comfortable commutes in many cases.

“I left my desk at 5.30pm today and was back by 5.55pm,” says Fagan. “The system is way better than I expected: quick, reliable, and there are loads of subway or ground train lines to navigate the city wherever you need.”

He chose the Minato neighbourhood, a central area containing the famous Tokyo Tower, which is popular with expats thanks to its good transport links and range of western as well as Japanese restaurants. Despite its inner-city location, he has been struck by the number of families living there. “You see them all the time in cafés, walking or picnicking in Shiba Park or going to or from the next door Zōjō-ji temple,” he says.

Besides a smoother rental experience, another change new arrivals will be hoping for is a fall in inflation. After more than a decade during which prices grew below 1 per cent per year on average, inflation has been above the Bank of Japan’s 2 per cent target for more than 18 months, and was 2.5 per cent in November.

Leung has seen price rises on groceries since he moved. “I notice it since, while my salary is higher than in Hong Kong, Japan’s higher taxes mean what I take home is lower than before I moved,” he says.

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