What Is Key Money? Market Rates, Differences from Deposits, and Risks of No-Key-Money Rentals

Anyone searching for a rental property will inevitably come across the term “reikin.” What is reikin, why do tenants pay it, and how is it different from a security deposit? This article explains the key questions first-time renters often have.

What Is Reikin?

Reikin is a non-refundable payment that a tenant gives to the landlord as a gesture of thanks. Its origin is often traced back to the aftermath of the 1923 Great Kanto Earthquake, when people who had lost their homes showed gratitude to landlords who rented to them. Another theory is that it developed from the “tip” parents gave landlords when their children moved away for school or work. This custom has since become an established part of the rental system.

What Is the Difference Between a Security Deposit and Reikin?

• Security deposit: A deposit held to cover restoration costs at move-out or unpaid rent. Any remaining balance is returned.
• Reikin: A gratuity payment to the landlord. It is not refunded.

What Is the Typical Amount for Reikin?

The standard amount for reikin is typically “one month’s rent”. Security deposits are also often set at one month’s rent, so initial move-in costs commonly exceed two months’ rent. Practices also vary by region. In Hokkaido, reikin is almost nonexistent, while some parts of western Japan use a different structure known as “hoshokin” and “shikibiki.”

Is It Possible to Negotiate a Lower Reikin?

If a property has remained vacant for a long time, it may be possible to negotiate a lower reikin through the real estate company. However, negotiation is often difficult for popular properties, such as those near train stations or newly built units.

What Should You Watch Out for in No-Reikin Properties?

Properties advertised as “no reikin” can help reduce initial costs, but there are several points you should review carefully.

There May Be Issues With the Living Environment

A no-reikin property may indicate that it has been difficult to find a tenant. The reason may be an older building, poor sunlight, neighbor-related problems, or other issues affecting the living environment, so it is important to confirm details during the viewing.

Cleaning Fees May Be Charged When You Move Out

If there is no security deposit, you may be charged a separate house-cleaning fee at move-out. Before moving in, confirm the expected cost with the landlord or management company.

The Monthly Rent May Be Set Higher

In some cases, the lack of upfront fees is offset by adding costs to the monthly rent. Check whether the rent is higher than similar nearby properties with comparable conditions. If you plan to stay long term, the total amount you pay could end up being higher.

Frequently Asked Questions (FAQ)

Q. Why do tenants have to pay reikin?

Reikin is not a legal requirement. It is based on the custom of paying a gratuity to the landlord. However, if it is set as a condition of the lease agreement, payment is required.

Q. Can reikin be reduced through negotiation?

It may be possible to reduce reikin for properties that have been vacant for a long time or where there is room to negotiate. In practice, a polite discussion through the real estate company is usually the most effective approach.

Q. What do “hoshokin” and “shikibiki” mean in western Japan?

In western Japan, instead of reikin and a security deposit, tenants may pay several months’ rent as “hoshokin,” and a fixed portion is deducted at move-out as “shikibiki.” As with reikin, part of the payment is not refunded.

Q. What is the single most important point when choosing a no-reikin property?

The two most important points are confirming that the monthly rent is not above the market rate and checking the move-out cleaning fee in advance.