What Is A Rental Guarantor And Why Do You Need One?
By Rebecca Quin
On May 21, 2015
Aside from lots of cash, determination and some soothing medication, to rent an apartment in Japan you need something called a guarantor. A guarantor or co-signer, hoshonin 保証 in Japanese, is a person or company that acts as the insurance for your rental contract, promising to cover any rent or damage costs if you can’t pay or suddenly terminate your contract by leaving the country.
In most cases, landlords will only accept a Japanese national as your guarantor which is where things can get tricky if you’re a foreign renter. Being a guarantor is a huge responsibility, so unless you have Japanese family or a very trusting friend it’s understandably difficult to find somebody willing to do it.
Even for Japanese people, the guarantor system can be a major obstacle in securing an apartment given the strict financial requirements that guarantors must fulfill. Many Japanese people ask their parents to be the guarantor (landlords typically prefer relatives) though they must be able to prove that the rent is not above 30% of what they earn. So this system excludes parents who work part-time or are retired, which is increasingly becoming a problem for older non-homeowners.
Thankfully there are a number of options for providing a guarantor that won’t involve begging, blackmail or faking your own death…hopefully.
1. Ask your employer or University
You may be able to ask your employer or education institution to act as your guarantor. If you’re coming from overseas, an employer might set up an apartment for you and form a lease on your behalf in which case they will become co-signer. This is often the case for established exchange programs like the JET teaching program or overseas transfers within major companies.
Already working in Japan? There’s a chance that your employer will consent to be the guarantor and then it’s up to the realtor to convince the landlord that they are suitable. However, if you lose your job during the tenancy you could lose your apartment too since the company would no longer act as your guarantor.
For students, some schools and Universities offer guarantor services in Japan. If the institution you’re planning to study at is approved by the JEES (Japan Education Exchanges and Services) they should offer something called ‘Comprehensive Renters Insurance for Foreign Students Studying in Japan’.
2. Use a guarantor company
A guarantor company (hoshonin-gaisha, 保証人会社) could be the best option. In fact, many Japanese people are choosing to use guarantor companies to avoid burdening their parents or relatives. A guarantor company acts in the same way as a personal guarantor, covering any losses incurred from late payment or sudden termination of the contract.
You have to pay the company a one-off fee for the service, usually half a month’s rent or more, as well as an annual renewal fee of around 10,000 yen. Your realtor will likely have a company that they recommend to potential tenants, in which case you won’t have to deal with them directly as the agent will organize all the paperwork for you. You can also search for a company online; Nihon Safety specializes in guarantor insurance for foreign renters with a website in English, Korean and Chinese. Be aware though that guarantor companies are largely unregulated so check to make sure it’s all legit before you hand over the cash.
To apply to a guarantor company you will need an emergency contact and most companies will accept any Japanese or sometimes foreign resident. In an example of extreme unhelpfulness, some companies do require a personal guarantor before they will act as your guarantor, and this person might even have to be a Japanese family member – wait…what?
3. Apply to share housing or find a short-term rental
One way to avoid finding a guarantor and to significantly reduce moving fees is to live in a shared house (シェアハウス). You have your own room but share the common areas like kitchen, living room and bathroom. It’s a great way to meet people if you’re new to the country (especially in the big cities) and there are tons of different kinds of share houses ranging from college-basic to super-luxury. Often share houses don’t require all the costly set-up fees of a private apartment and rooms can be rented on short-term monthly contracts.
Some housing companies like Leopalace provide short-term, furnished rentals for small apartments with no need for a guarantor though this depends on the exact type of contract. This is a good temporary option that will allow you to settle in and get your bearings in a new country, especially if you’re a young couple or need more privacy.
It seems that the Japanese government is (slowly) beginning to reassess rent regulations as the rate of home ownership continues to decreases and the age of renters gets older. Hopefully in the near future before we’re too old to know where we’re living anymore restrictions will be eased. In the meantime good luck finding a guarantor!