In Japan, there are several hidden costs to obtaining and maintaining a contract with apartment owners. While the trend is dieing, it still persists and quite a few foreigners new to Japan will be sticker shocked at the high cost of renting in Tokyo. First, you are generally required to pay 'Key money,' 'Thank you money,' 'First/Last Months' Rent,' and the 'Real Estate Agency Fee.' What does this translate too? Roughly 6 months of rent up-front just to move in. How much do you get back at the end of you residency? Maybe 1-2 months, if your lucky...sound like a rip-off? Read more to find out if it is....

The concept behind Key Money is the same as the western idea of a damage deposit. The money you pay in advance to the owner in case you break stuff and they need to repair it. Unfortunately the trend in Japan is to pay 2 months of rent for this fee. (There is also a first/last month's fee later).

The problem:
The fee is very difficult to get returned. If you make a scratch on the wall while living in your apartment you can expect to have $100-300 taken out of your deposite to repair that. If you ding the floor, another deduction. Owners will try their very hardest to make sure you don't get your deposit back for minor repairs. You can, though, expect to get at least 1 month back of the 2 months you gave. If your lucky and the owner is nice.

This is the most horrid practice in all of Japan. It's archaic and is purely based on tradition. Hundreds of years ago there was an issue in Japan with housing. The demand FAR exceeded the supply and as a result many people had to bribe landlords to allow them to say. This was considered 'Reikin' or Polite Money. It's what you give to the landlord to say thank you for letting you stay there, because it was so nice of them to give you the apartment over some other shmuck who couldn't pay that fee.

So, how much is this going to cost you? 2 Months rent on average. If your lucky you can find an apartment run by a company who will charge 0 or at most 1 month of this fee. Why is this still around? God only knows, there is a far higher supply now than demand and yet this practice still persists. It's outrageous and everyone foreigner should know about it and try to avoid it when they come to Japan!

Usually you will need to pay some sort of rental deposit, something like First/Last month's rent. Sometimes it's only the first month's rent.

So we're at 5 months of rent now to move into the apartment (remember, month 2 of living there you need to pay rent again). Now we need to pay the Agent for finding you the apartment. They can get up to 1 month of rent as commission for doing you the favor of finding the apartment for you. This is charged even if you found the apartment online and asked the agent to show it to you. They listed it, they get to cash in. SUCK! 6 Months rent to just move in....

So, now let's say you've been living in your apartment for 2 years. Guess what, it's now time to pay even more money to your owner to thank him for letting you stay there. Yes, that's right. There is a Renewal Gratuity in Japan. That comes up to be 2 months of rent. So if you don't move every 2 years you can consider that you pay 13 months of rent per year for the rest of your stay. How fun is that?!

Actually, though, it was deemed illegal recently in Kyoto; so that trend may change in the near future, but don't count on it (Japanese hate change).

 You can use a housing agency that is catering to foreigners, but expect to pay 150% market value for the size of apartment they give you and expect them to bleed you dry. Your best bet is to search long and hard, find a friend and get an apartment with 0 Thank you Money and 0 Key money (just the First month Rent and Agency Fees).

I hope this hub has enlightened those wanting to live in Japan. Be aware, you will need to save quite a bit to live here otherwise you may not be able to eat your first few months living here.