When renewing your rental housing contract, you may be notified of a rent increase by the management company or landlord. This is not uncommon during times when prices, property taxes, and surrounding market prices are rising, but this does not mean that the tenant must accept the offer as is.
Rent is part of the terms of the contract. The landlord can propose a price increase, but as a general rule, both parties must agree to change the amount. If an agreement cannot be reached, the appropriate amount will be confirmed through mediation or litigation, as a request for an increase or decrease in the rent based on Article 32 of the Land and House Lease Act.
In this article, we will summarize what tenants should check regarding rent increases at the time of renewal, the conditions under which they can refuse or negotiate, and the grounds on which landlords should explain.
Consider a rent increase at renewal as a “proposal” rather than a “notice”
If the renewal notice states, ``The rent will be increased by 10,000 yen per month from the next renewal,'' it may seem like a decision. However, under a normal lease contract, it is not possible to unilaterally change the rent to a new one without the tenant's consent.
Article 32 of the Land and House Lease Act stipulates that when the building rent becomes unreasonable in comparison to the tax burden, the land/building price, economic circumstances, or the rent of similar buildings in the vicinity, the parties concerned can request an increase or decrease in the future. This means that the landlord has the right to increase the amount, and the tenant has the right to request a reduction. However, it is not a structure in which the other party will simply accept the offered amount just by making a request.
| Situation | Tenant's perspective | Explanation requested from the landlord |
|---|---|---|
| Surrounding market prices are clearly rising | In some cases, it may be reasonable to increase the price | Examples of solicitation and closing of similar properties |
| Fixed asset tax and repair costs are increasing | Check the extent of the increase | Tax amount, repair plan, and common area improvement details |
| Rent has been left unchanged for a long period of time | Look at the difference between the current rent and the market price | When did the difference start and how much |
| The only reason is "owner's intention" | There is little need to agree directly | Presentation of legal/market basis |
Main terms that the tenant can refuse or renegotiate
When a tenant receives a proposal for a rent increase, it is better to review the rationale and renegotiate rather than reject the offer emotionally. The following cases have greater scope for refusal or renegotiation:
No specific reason given for price increase
If it only says "due to price increases" or "to match the market price," it is difficult to understand how much the rent has increased and how unreasonable the current rent is. The tenant should confirm in writing the reason for the price increase, the desired amount of the change, and the desired date of the change.
It cannot be said that the current rent is too low compared to the surrounding market price.
If you look at properties that are within walking distance of the same station, have the same floor plan, similar building age, and facilities, and find that the current rent is within the market price, the justification for raising the price will be weak. On the other hand, if the current rent is clearly low, it is more realistic to focus the discussion on the appropriateness of the price increase.
There is a special clause in the contract to defer rent for a certain period of time.
Article 32 of the Land and House Lease Act also states that if there is a special agreement not to increase the building rent for a certain period of time, that provision will be followed. Please check the contract first if there are any special provisions for deferment during the contract period or conditions for rent after free rent.
The price increase is too large compared to the market price
Even if there is a valid reason for the price increase, if the amount offered is extreme, you may not be granted the full amount. For example, if the surrounding market price of a property is around 120,000 yen per month, and you are asking for 180,000 yen per month without any basis for the same conditions, there will be doubts about its validity.
Verifications for Borrowers in the First 7 Days
Immediately after receiving a price increase notice, it is important not to rush to any conclusion over the phone. While keeping records, check in the following order:
- Save notifications/emails
- Check the rent revision clause, renewal clause, and special agreement in the contract.
- Sort out the proposed new rent, effective date, and impact on renewal fees
- Check the asking rents of 3 or more similar properties in the surrounding area
- Request a written explanation of the reason for the price increase
- Divide your desired conditions into
maintaining the status quo,''partial increase,'' and ``step increase.''
The important thing at this stage is not to deny the landlord, but to gather materials that can be agreed upon. Rent revisions affect not only the landlord's income and expenditures, but also the tenant's continued residence. The more evidence both sides provide, the easier it will be to reach a compromise.
How to think about negotiation sentences
Even if the tenant does not agree with the price increase, it is not a good idea to simply respond by saying, ``I will never pay.'' Calmly request renegotiation, including the following elements:
| What to include | Example |
|---|---|
| Confirmation of receipt | Notice of renewal rent revision has been received |
| Current intention | I would like to renew at the current rent |
| Check the basis | Could you please provide the reason for the increase and local market data? |
| Alternative plan | I would like to discuss including gradual revisions if necessary |
| Recording | Could you please send future communications by email or in writing? |
In negotiations, factors such as long-term tenancy, no delinquent payments, and polite living are also factors to consider. For landlords, the eviction of stable tenants leads to costs such as vacancy periods, restoration of properties, recruitment advertisements, and brokerage fees.
What to do in case of disagreement
If the landlord and tenant cannot reach an agreement, the tenant will continue to pay the rent that he or she deems appropriate. Article 32, Paragraph 2 of the Land and House Lease Act stipulates that if an increase cannot be reached through negotiation, it is sufficient for the person receiving the request to pay the amount that the person deems appropriate until a court decision justifies the increase.
However, if a court determines that the landlord's request for an increase is justified and there is a shortfall in the amount paid, the shortfall must be paid with interest. Therefore, it is not a simple matter of ``you don't have to pay.'' Even during periods where agreement cannot be reached, it is important to keep records of conventional rent payments, payment records, and negotiations.
Things to consider before proceeding to mediation/litigation
Disputes over increases or decreases in rent are a subject that is often resolved through discussion and mediation, rather than suddenly settling the matter in court. In civil mediation in summary court, a mediation committee member works together to find a point of agreement based on market data and circumstances.
Proceeding to mediation and litigation takes time and money. Tenants also need to compare the total cost of continuing to live in the home and moving, including moving costs, impact on commuting to work or school, renewal fees, guarantee company fees, replacement of furniture and appliances, etc.
| Options | Suitable cases | Points to note |
|---|---|---|
| Continuing negotiations at current rent | Weak basis for price increase | Keeping records |
| Agreed on a partial increase | The market price has risen, but the offered amount is high | Create an agreement |
| Gradual increase | One-time increase in burden is large | Clarify when and how much it will increase |
| Moving | It's reasonable to compare the new rent and moving costs | Check the initial costs and lifestyle |
| Mediation | Parallel discussion | Material preparation and time required |
Procedures that landlords and management companies should avoid
Landlords should also treat price increases at renewal with caution. Unilateral notices with weak grounds, too short response deadlines, and expressions that demand eviction if the tenant does not comply with the price increase will damage the relationship of trust with the tenant.
The proper way to proceed is to explain market prices, tax burdens, repair plans, and the need for building maintenance, and provide a sufficient period for consultation. Even if the price increase is reasonable, if the communication is too forceful, it could lead to eviction or dispute. In long-term rental management, profits may be better protected by prioritizing stable occupancy and trusting relationships rather than raising prices by the full amount.
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INA&Associates' philosophy
Rent revisions are a situation where the interests of landlords and tenants tend to conflict. However, rather than being a procedure to intensify conflict, it is also an opportunity to reaffirm the conditions that will allow the building to be maintained for a long time and the tenant to continue living there with peace of mind.
We believe that landlords should place emphasis on grounded explanations, and tenants should place importance on calm confirmation and records. Finding a point of agreement that takes into account not only the short-term rent difference but also the balance between vacancy risk, trust, and building maintenance will lead to the most realistic solution for both parties.
FAQ
Q. Will I be evicted if I refuse the price increase at the time of renewal?
Just because you don't agree to a price increase doesn't mean you have to leave immediately. There are separate valid reasons for refusing renewal or canceling a contract. However, if a dispute over the amount of rent remains, it is important to continue to pay and record rent.
Q. If I accept a price increase over the phone, can I cancel it?
It depends. Rent changes should be made clear in the written or electronic contract to avoid disputes later. If you only gave a vague verbal response, there is room to confirm the formal agreement.
Q. What market data should I look at?
View recruitment examples of the same station, walk from the station, floor plan, building age, equipment, and number of floors. Since the asking rent differs from the contracted rent, if possible, we will ask the management company to provide examples of successful contracts and the basis for appraisal.
Q. Will the renewal fee also increase at the same time?
Renewal fees depend on the terms of the contract. If you want to change the renewal fee, an agreement is required in the same way as with the rent. Do not confuse rent revisions with renewal fee revisions; check the basis for each.
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