January 18, 2008...10:43 pm
Explaining the “No Foreigners” policy
The issue of “No Foreigner” policies that some landlords in Japan tack on to their rental ads is a hot topic. On the surface it looks downright racist, and in some cases it probably is, but there is another side to the issue that has only become very apparent to me recently, having had the experience of running my own business.
As you may already be aware of, my wife and I have been running a modest hotel in South Korea for about half a year now. Being a hotel owner is much like being a landlord, only at a very accelerated rate. We rent most of our rooms on a daily basis, but we do a significant amount of business on a weekly basis, and we even have monthly-rates going on at least two rooms at any given time. Renting out rooms daily isn’t a problem at all, because we get the cash up front. But when it comes to guests who want to extend their stays, it’s a different matter because, often, they’ll “pay us tomorrow.”
We’ve had two “runners”. I’m not talking about no-cash for a night - It was two or three weeks of non-payment on each. We went to the police, as we have the name, mobile number, and place of employment of one of the criminals “guests”. The cops tell us that, since they paid at first without the intention of flat-out stealing from us, it was out of their hands. The “guest” may have come under financial hardships, and the only thing to do is hire an attorney. The thing is, the fee for an attorny is going to be well over the $300 that they owe us. What’s left for us to do except hire a yakuza?!
Coming back to landlords in Japan - It’s the exact same thing. The law protects the renter, not the owner. Legally, a person can stay in an apartment without paying rent for up to six months before being evicted. In the case of foreign residents who are not bound to the country, it’s very easy for them to become runners in the eyes of the landlords. They just pack up and get on a plane and the landlord is left without rent. Furthermore, landlords prefer stable income from long-term residents, which is something that foreign renters are typically not, and the ability to track down renters who don’t pay is much easier when it remains a national issue.
This system isn’t limited to foreigners, either. Japanese citizens with a questionable background or insecure employment can be denied housing as well. That’s why there is a guarantor system, and it’s the reason a lot of rental agencies require customers to provide their employer as the guarantor on the paperwork. The first step towards a solution to all of this isn’t to make laws that require the landlords to be non-discriminatory, but to make laws that protect the landlords from terrible residents. Hopefully this will open up more housing to foreigners. If it remains an issue, then there can be talk of fair-housing. But would you really want to rent a place from a racist landlord, anyway? You know they’d jack you on your security deposit for non-existent problems.
Of course, as a foreigner, it’s not very fun seeing advertisements that read “No Foreigners”. Your first thought will inevitably be, “DISCRIMINATION!” (I know mine was) But foreigners with a long history in an area and respectable jobs might change the minds of some landlords.
10 Comments
January 19, 2008 at 7:22 am
The discrimination against foreigners is present, but it is normally not so much that the tenant is a foreigner, but that foreigners typically don’t fit into the “model tenant” that landlords expect: the salaried employee with three years of experience under his belt. There is some actual descrimination, and I have experienced numerous times. Oh the stories I have…but I don’t want to get into it. That isn’t what I wanted to reply about.
You mention “runners”, but that just doesn’t offer a good explanation for real estate system in Japan. If someone “runs” out and doesn’t pay rent and somehow the landlord takes a financial loss, that is entirely the fault of the landlord for not collecting a security deposit (敷金) to begin with. In fact, most rental agreements require the first month of rent in advance, so the tenant is always paying for the next month’s rent. The landlord doesn’t lose out at all if the tenant skips town. The landlord still has the rent, and if the place is worth renting then he has the security deposity. If there are no security deposits or key money, that is normally because the landlords don’t bother keeping up the place and can’t usually fill the rooms.
I’d like to see some documentation somewhere that says that if the tenant fails to pay rent you can’t remove them from the rental property. It is a breach of contract on the tenant’s end, and the six months mentioned in the contract is there if the landlord wants to replace the tenant with another or close the rent property for rennovations or what not. It protects the tenant when the landlord wants to terminate the contract, and I think it is reasonable since it can take quite a while to find a new place to live in Japan. Anyone who read about the Nova school closures has probably heard about the eviction notices and what not.
The rental law protects the tenant, but the rental contract and the real estate industry as a whole act to protect the landlord.
What it comes down to is the stability you mention. You are correct about this, and in a country that is facing a lot of economic and financial issues (stagnant wages, falling purchasing power for the public, rising fuel prices, non-existant interest rates, social insurance funding problems, etc.), the real estate system is really showing how it, along with the banks, has failed to keep up with the times. Due to the relatively small amount of usuable land and the large populations of urban areas, I suppose that it can’t be helped that landlords have a lot of power. It would be interesting to see some numbers comparing the political activity of landlords and property owners to that of renters.
It used to be that young employees lived in a company dorm or in company-sponsored housing. When they married they then moved into their own apartments. At this point they’re in their late twenties and have worked for a few years and are stable model salarymen. This is who landloard want to rent to. But the reality is that the face of employment is changing rapidly in Japan. There was a great article in the Economist about it in Demceber actually. The numbers of salarymen are steadily declining, and the numbers of contractors are steadily increasing. Nevermind that life-long employment is fading away and that many people actually change jobs. The landlords are living in the 1980s still. I don’t know what it will take to wake them up, perhaps it will never change.
January 19, 2008 at 7:49 am
I really don’t see any reasonable excuse for having an official “no foreigner” policy. If a landlord does not want to deal with having tenants flee without paying rent, he/she can simply require that all tenants have their employers act as guarantor. It’s a fair solution that protects landlords from terrible tenants.
January 19, 2008 at 11:22 am
Bryan: About the six-months-no-eviction deal, I’ve only seen it referenced in English on various advice sites, but the validity of it is strengthened by the actual need for yakuza “sevices”; the guys who intimidate non-paying residents into moving out.
James: There is no excuse, but I’m just trying to make people aware that it isn’t always racism that’s behind the policy, and a lot of it could be changed with tighter laws protecting the landlord. Again, this is just from the point-of-view of someone operating a hotel who gets no assistance from local authorities against non-paying guests. Their economical burden becomes my economical burden, and I don’t see that it’s justified.
But, like I mentioned in the write-up - Would you even want to live under a racist landlord? The nonracist landlords who still adhere to a no-foreigner policy are possibly missing out on a lot of legitimate, stable income from upstanding foreign residents, but that’s something that they have to figure out on their own, and I think rental agencies (エイブル, アパマンショップ, etc.) have the potential to be a major driving force behind this change. A lot of the agents simply state, “見込み客は外国人なんですが,” and the landlord says, “それはちょっと…” and then the agent just gives up without offering any sort of reassurance about the stability of their client.
January 19, 2008 at 11:52 pm
This is the second article in a row from your site that I’ve shared. Ha ha. Good stuff, Alex. Only recently has the law come into my brain as a source for some of the frustration. That’s due to the stalker situation. I was given some good legal advice by a male teacher at a different school who was stalked a long time ago. He was really frustrated, and wound up ranting a bit about Japan’s system, saying “Japan is always yelling about human rights. Human rights! Human rights! But whose rights are they yelling for? The criminals! Not the victims! Useless.” Of course, it’s not the same situation really, and what with Japan’s insane conviction rate, I’m sort of glad that there are some things in place to soften the railroad effect. But I am understanding more and more. How’s business, by the way? Was this entry spurred on by a recent problem?
January 20, 2008 at 9:37 am
Alex: I am just curious, where in the rental system in Japan do you find that the landlords are not protected? The rental contract is more than enough protection when it requires rent up front and security deposits. Are you referring to the fact that the room becomes open and the owner has to get another tenant, which means that the two years of easy income doesn’t come as easy as expected? As a hotel manager I can see how runners affect your business, especially if payment is received upon checkout. Maybe the rental system is differentin other parts of Japan, but in Tokyo, Kanagawa, and Saitama I’ve never seen a “whole” that allowed landlords to be screwed by non-payment.
In my personal experience, the problem has not been the landlords who advertise “no foreigners”, but the ones actually implement such a policy but don’t admit it. I always tell the rental agents up front, “Please verify that foreigners can live here before I spend time looking at the apartment.” It never fails though that the majority of the time I get turned away for being a foreigner by the property owner. I can pass the background examination and the management company will even accept me, but when it comes from the final “yes” or “no” from the owner that is where I am turned away. Landlords always have some sleazy reason why because they are not allowed to say it is because of nationality, but off the record the rental agents have told me it was because of nationality and I’d just have to accept it.
I really could care less if the owner doesn’t want foreigners, I just wish that I did not have to waste an hour at the rental agency talking about the apartment, going and seeing it, and then waiting 24 hours for the background review to process. I’m just sick of owners wasting my time.
January 20, 2008 at 10:11 am
Deas: Business is good, actually, except dealing with this thorn-in-my-side of a “customer” who refuses to pay for 11 days of an extended stay. The police won’t do anything about it, and we’re forced to just give up on the issue.
Bryan: The security deposit is usually only two months of rent as I’m sure you’re aware of, and you pay ahead of the month you live in the apartment which is another month covered, but there are still 3 months of possible non-payment before they can legally have you evicted (as in forcefully removed from the apartment). Again, this is just what I’ve heard on several occassions. I’ve never actually seen genuine documents written in Japanese about these laws.
And I’m not denying that there are racist landlords, but I’m just trying to reduce the sensationalism on the issue. I always see this statistic that, “4 out of 5 landlords don’t accept foreigners,” and, if this figure is even true, it doesn’t mean that 4 out of 5 landlords are racist.
January 22, 2008 at 9:49 am
In Japan, wouldn’t it be the case that foreigners are safer bets than Japanese renters since they are only allowed to work in Japan if their employer sponsors their visa?
It’s been my understanding that, if a foreigner defaults on his rent or damages property and runs out of the country, their sponsor is responsible for the tab. Also, though I know it isn’t the case with all landlords, mine got 5 months of rent right up front (first, last, 2 months for cleaning/security, gift). It’d be awfully hard for him to get screwed over if we cut and run.
January 22, 2008 at 10:54 am
I was under the impression that although work visas are sponsored by a company, they aren’t the property of the company, and unless the company signs on as the renter’s guarantor, they are not responsible for any non-payment on the part of the foreigner. Consider how many people land a visa with a company and just run once they get out of the airport. I don’t see how any apartment they rent from that point on would be the liabilty of the company that initially sponsored their visa.
Then you’ve got companies like Nova who couldn’t even secure their employees wages…but that’s an entirely different beast.
This is just what I’ve heard through word-of-mouth, as I’ve never actually looked at documents of the laws themselves. If I have time, maybe I’ll run a search this evening.
By the way, Shari, I like your word choice for 礼金. Makes you wonder where the term “key money” came from and why it stuck. I prefer calling it an “introduction fee”.
January 22, 2008 at 11:10 am
礼金, 敷金, and 紹介料 are all different.
敷金 is basically what we would call a “security deposit” in the West. This is to cover repair of damages, etc. Technically you are supposed to get some of this back, but such is not the case in Japan.
礼金 is basically a mandatory bribe..er, gift to the landlord for letting you live there. There is a trend to eliminate this rather questionable practice. JA operates a rental agency that has no 礼金.
The introduction fee is called 紹介料. This is what you pay to the rental agency for introducing you to a place to live.
January 22, 2008 at 6:19 pm
Alex:
Just to make things more clear, here is a section from my current rental agreement:
「乙」の家賃の遅滞が支払い期日より1ヶ月以上及ぶ時、又は1ヶ月に及ばない遅滞でもそれが常習的に行われる場合は敷金・保証金の有無に関わらず「甲」は何等の通知・要せず「乙」に対して本契約を解除することが出来る。
乙 is the tenant and 甲 is the property owner, which is stated at the beginning of the agreement. My previous rental contract had the same type of clause, so I think it is rather standard. I suppose there are some contracts out there that put the property owner at risk, but I think they are quite rare.
Shari:
Not all employees will sponsor their foreign workers. The large foreign-owned financial institutions (at least the ones I have hade experience with) in Minato-ku will not do sponsorships, contracting companies like Adecco and what not do not sponsor, and sometimes small companies are just too small to even be considered as sponsors. It is something to consider.
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