Leasing apartments in Tokyo: what is a “Guarantor company”?

It’s so difficult to lease an apartment in Japan, uh! What is a Guarantor company?

Not only tradition or languages reflect cultural differences, even fields like real estate can do that. Sometimes when foreigners apply for an apartment in Japan there are expenses they find hard to understand (Before I wrote about the Japanese “key money” “But first, it was necessary to set my life in Tokyo…” 3 reminders and 1 conclusion for all those who dream about life in Japan).

There is another element I would like to introduce to you today. It consists in another expense, that if understood, may help you proceed confidently through the process of leasing an apartment in Japan. It is a necessary condition when you sign a leasing contract, it is called Guarantor company. Have you ever heard about that?

The Guarantor company has the same role of a guarantor in case the tenant for some reason doesn’t pay the rent.
It is a sort of “insurance service” chosen by the landlord who imposes it as a necessary condition to sign the contract. The Guarantor company service requires an initial fee that in most cases amounts to the 50% of the monthly expense for the apartment: the rent + the maintenance fee. The Guarantor company fee amount is decided case by case, that’s why sometimes it can even amount to the entire monthly expense.

For example (50% of the monthly expenses):

The initial expense for the Guarantor company may sound pretty much expensive but it is part of total moving-in costs. There are several Guarantor companies in cities like Tokyo, so depending on the company the initial fee may cover 1 or 2 years; therefore, since standard Japanese contracts are for 2 years, it may happen that the tenant needs to pay a Guarantor company renewal fee after 1 year. This renewal fee most of the times is about 10000 JPY. It is definitely cheaper than the initial fee.

The exact calculation for the initial Guarantor company fee is decided on the basis of a documents screening called in Japanese “審査 (Shinsa)”; it is known for being a crucial point when applying for a house. During the documents screening the Guarantor company views your personal information you have previously submitted through an application form and the copy of your identity document. When you fill the application form you are supposed to provide an emergency contact too, because it might be necessary during another step of the shinsa: The Guarantor company will call you and your emergency contact to verify the authenticity of the information in the application form.

If after 1 year, as I mentioned above, you will need to pay for the Guarantor company renewal fee a second documents screening won’t be necessary.

Why Japanese landlords choose Guarantor companies?

Many of you may think that Japanese landlords are very strict and sometimes diffident. Well, don’t take it personally and instead provide to the landlord and the Guarantor company all the information required. The reason why landlords impose Guarantor companies is just because they would like to prevent any loss of money.
Let’s think about a tenant who is always in late with the payment of the rent: The Guarantor company will provide to the landlord the rent income in time, while warning the tenant for the delayed payment.
Guarantor companies offer their coverage even in case of more complex situation like for instance, a tenant who left the apartment without paying the rent and so on. It will be quite a big trouble!

If you need to move out and leave Japan, please be sure to inform the landlord or the management company of the apartment, but above all be sure to accomplish all the payments!!

Japanese landlords know that only very few people can provide a guarantor. For this reason, a guarantor company appears as the best solution to prevent troubles.

Guarantor companies from tenant’s point of view

I fully understand that the service has a cost that can contribute to make moving-in costs expensive. All of us would like to avoid this expense, above all because this expedient is not used in many countries, but I think there are some advantages even from tenants’ point of view.
The best point lies certainly on the fact that if the landlord of the apartment you want to lease uses a Guarantor company, you won’t need to provide any guarantor. As I mentioned before just an emergency contact is always required. Let’s analyse the differences between these two roles:

– The guarantor;

I have already talked about typical troubles a tenant may cause to a landlord: systemic delayed payments or missing payments. When you apply for an apartment and you provide someone as your guarantor, keep in mind that this person will be responsible for you in terms of money. Although it’s not always like that, since the extent of the liability is relevant, most of the people tend to feel uncomfortable to ask a friend or a colleague to be the guarantor.

-The emergency contact;

During the documents screening that I have mentioned in the introduction of this article, the Guarantor company will call you and your emergency contact to ask some simple questions about you (Does this guy have a job? etc.), in order to verify the authenticity of the information you have provided. In case you are in late with the payment of the monthly rent, the company will try to urge you to pay as sooner as possible. If you don’t answer the phone or don’t reply to any of the letters they may send to you, they will call your emergency contact to know if you are ok, if you are still in Japan, and so on. Your emergency contact won’t be responsible for you in terms of money.
Also, for the forgetful type a Guarantor company could be effective even to remind bills deadline!

Having a Japanese emergency contact could be an asset to pass the documents screening without any problem (I bet you are thinking something like “What? Could I be rejected?” Yes, the Guarantor company always submits the application form to the landlord and if the landlord rejects you… Let’s find another apartment!). However, a co-worker, a friend, a family member, anyone can be your emergency contact. Sometimes it’s even possible to provide a foreign emergency contact as long as this person lives and works in Japan and he/she speaks Japanese proficiently.

Asking to a friend or a co-worker to be your emergency contact is pretty much “lighter” and easier, right?

Well then, let’s get a house in Tokyo!

So, what are you waiting for? Contact JapanLIFE to start the research of the house of your dream in Tokyo!
Do you have any further question about leasing apartments in Tokyo? No worries, just send us a message!

NB: information in this article regard the procedure for individual contracts.