Minpaku is a business model in which private homes or investment properties are rented out for a fee. It has attracted attention amid growing inbound demand, but minpaku in condominium buildings is, in many cases, prohibited in principle by law and by building management rules, and starting without accurate knowledge can expose an owner to legal risk.
What is minpaku? Start with the basic definition
Minpaku refers to staying overnight in part of a private residence, an unused vacation home, or a vacant condominium unit made available for lodging. As online intermediary platforms have become widespread, the term "minpaku" has come to be used as a general label for businesses that rent private homes or investment properties to tourists for a fee.
What does the new Minpaku Law (the Residential Lodging Business Act) regulate?
Under the previous Hotel Business Act, rentals of private homes that did not meet the legal requirements increased, and illegal minpaku expanded rapidly. As a result, the Residential Lodging Business Act (the new Minpaku Law) was enacted in 2018. Its main features are as follows:
- Eligible buildings: Limited to “residences” (actually used as a person’s principal home, currently being offered for occupancy, or occupied by the owner or equivalent person on an intermittent basis). Newly built condominiums dedicated exclusively to minpaku are not eligible
- Operating days: There is an annual cap of 180 days. The framework positions minpaku as a side business or supplemental venture
- Regional regulations: Local government ordinances may impose additional restrictions, so operation is not automatically permitted in every area
Can minpaku be operated in condominiums? What are the restrictions?
Restrictions under the law
Under the Residential Lodging Business Act, a property qualifies only if it is either “a house used as a person’s principal home,” “a house for which occupants are being recruited,” or “a house that the owner or equivalent person uses for residential purposes on an intermittent basis.” It is therefore important to note that newly built condominiums intended exclusively for minpaku, as well as properties with no actual residential use, fall outside the scope of the law.
Restrictions under the standard condominium management bylaws
The standard condominium management bylaws published by Japan’s Ministry of Land, Infrastructure, Transport and Tourism include a provision stating that “exclusive-use areas shall be used exclusively as residences.” After the bylaws were revised in 2017, model clauses were expressly provided both for permitting minpaku and for prohibiting it. Many condominium buildings have bylaws that prohibit minpaku use.
Why do condominiums impose their own restrictions on minpaku?
In addition to laws and bylaws, individual condominium buildings often impose their own controls on minpaku for the following reasons:
- Preventing disputes: Problems arising from differences in lifestyle habits and garbage disposal manners
- Noise: Nuisance to neighboring residents, including late-night noise
- Security: Even with auto-lock systems, the coming and going of unspecified numbers of people can increase security concerns
- Decline in asset value: Damage to the condominium’s brand and asset value caused by repeated trouble
Related reading
- What are “leasing operations,” and why do they determine the success of rental management? A thorough guide to vacancy countermeasures and strategies for maximizing revenue
- Reducing vacancies by accepting foreign tenants | Practical know-how and an implementation guide for improving occupancy rates in rental management
Frequently Asked Questions (FAQ)
Q. Is minpaku in condominiums completely prohibited?
Not in every case. It is possible in condominiums whose management bylaws explicitly permit minpaku, but many buildings that follow the standard management bylaws prohibit it. You should always confirm the management bylaws in advance.
Q. Why is there an annual 180-day limit under the new Minpaku Law?
The limit is intended to distinguish minpaku from a full-time lodging business comparable to operations regulated under the Hotel Business Act. If operations exceed 180 days, a permit under the Hotel Business Act becomes necessary.
Q. What does a condominium owner need to do to start minpaku?
The owner must first confirm that minpaku is not prohibited under the management bylaws, and then file the required notification under the Residential Lodging Business Act with the prefectural governor. Any additional restrictions under local ordinances should also be checked.
Q. What penalties can apply in cases of illegal minpaku?
A fine of up to 1 million yen may be imposed for violations of the Hotel Business Act, and business suspension orders or other penalties may also be imposed for violations of the Residential Lodging Business Act.
