A fixed-term building lease is a rental agreement that ends after a predetermined period. For owners, it allows more flexible property management, while for tenants, it offers the benefit of living in a high-quality property at a lower rent. In this article, we explain practical ways to use this structure from the perspective of rental management professionals.
What kind of contract is a fixed-term building lease?
It is a lease agreement with a fixed term, and when the term expires, the contract ends without renewal.The term can be set freely, from several months to several years.
Formation requirements
- The contract must be executed in writing, such as by notarized deed
- The landlord must provide the tenant with a written notice and explanation stating that the contract will not be renewed and will end upon expiration of the term
What are the benefits for owners?
Generate rental income through temporary leasing
It can accommodate demand for weekly and monthly apartments, allowing you to secure income rather than leaving the property vacant.
Lease the property in line with a planned demolition schedule
Because tenants can be required to move out before the demolition date, there is no need for eviction negotiations.
Reduce losses from rent delinquency
You can decide on the next contract while reviewing the tenant's rent payment status.If there is delinquency, the contract can be ended at the expiration date.
Transitioning a property to allow pets
As a vacancy countermeasure, it is possible to temporarily allow pets and, if no issues arise, transition the property to a standard lease contract.
What are the benefits for tenants?
Affordable rent
In many cases, rent, security deposits, and key money are set lower than under ordinary rental market conditions, making this a recommended option for those who want to keep costs down.
A favorable living environment
Many of these properties were built for the owner's own residence, so they often offer attractive locations and well-equipped living spaces. As introduced in Practical Approaches to Human Capital Management and Values-Based Management, INA&Associates places importance on management that respects tenants' living environment.
Frequently Asked Questions (FAQ)
Q. Can a fixed-term building lease be terminated mid-term?
As a general rule, mid-term termination is not permitted. However, for residential buildings under 200 square meters, a tenant may request termination if there are unavoidable circumstances such as a job transfer, medical treatment, or nursing care for a relative.
Q. Can the contract be renewed after the fixed-term building lease ends?
Recontracting is possible if both the landlord and tenant agree. However, this is not a renewal but a new contract.
Q. In what situations are fixed-term building leases commonly used?
Typical examples include making use of one's home during a job transfer, temporarily leasing a property before reconstruction, and allowing pets as a vacancy countermeasure.
