As Japan's declining birthrate and aging population progresses, the rental market is entering a major turning point. Not only in rural areas but also in urban centers, oversupply of properties is advancing, and vacancy countermeasures have become an urgent challenge for many property owners. Meanwhile, the number of foreigners residing in Japan for work or study continues to increase year after year, and the rental demand is expanding to a scale that cannot be ignored. However, in reality, many property owners are hesitant about accepting foreign residents due to concerns about language barriers and cultural differences.
In this article, based on the real estate management expertise INA&Associates Co., Ltd. has cultivated over the years, we explain specific operational know-how for successfully accepting foreign residents and achieving vacancy reduction and occupancy rate improvement. We provide information that members of the property owners' association can put into practice starting tomorrow — from data-based market trend analysis to specific methods for tenant screening, contract practice, and trouble prevention. Through this article, we hope you will understand that accepting foreign residents is one of the effective strategies in rental property management.
Why Accepting Foreign Residents Becomes the Ace Card for Vacancy Countermeasures
As Japan's total population enters a declining phase, maintaining demand for rental housing solely from domestic residents is predicted to become increasingly difficult going forward. In this market environment, the presence of foreign residents becomes an extremely important element in aiming for stable rental property management.
According to statistics from the Immigration Services Agency of Japan, the number of foreign residents as of the end of 2023 reached approximately 3.41 million, renewing an all-time high. In particular, the increase in medium-to-long term residents for the purpose of employment is conspicuous, and they are seeking stable housing. This increasing trend is expected to continue, and the rental market for foreigners will continue to expand.
In addition to the direct benefit of filling vacancies, accepting foreign residents has the following advantages:
| Advantage | Specific Content | Management Impact |
|---|---|---|
| 1. Cultivating a New Demand Group | Vacancies that couldn't be filled with only Japanese residents can be filled by the growing foreign demand. | Directly leads to shortening vacancy periods and securing stable rental income. |
| 2. Possibility of Long-Term Tenancy | Unlike foreign students or technical intern trainees, foreigners building careers in Japan as professionals or highly skilled talent tend to reside stably for long periods. | Restoration costs and recruitment advertising costs associated with tenant turnover can be reduced. |
| 3. Relatively High Rent Setting | Properties specialized for foreigners are still in short supply, and particularly in urban centers, demand exceeds supply. Therefore, tenants may be found even at slightly higher rents than market rates. | Effects of improving the profitability of the property and shortening the investment recovery period can be expected. |
As described above, accepting foreign residents has the potential to not only address vacancies but to improve the quality of rental property management itself.
Practical Key Points for Smoothly Accepting Foreign Residents
To smoothly proceed with accepting foreign residents, it is essential to accurately understand the unique practical key points that differ from those for Japanese residents and to follow appropriate procedures. Here, we explain in detail the specific approach for the four particularly important steps.
How to Verify Residence Status
First and most important is residence status verification. If an illegal resident is allowed to move in, there is a risk that the property owner themselves may be held legally responsible. Always require applicants to present their residence card and confirm the following points:
- Type of residence status: Confirm whether the status permits employment, such as "permanent resident," "long-term resident," "engineer/specialist in humanities/international services," etc.
- Period of stay (expiration date): Confirm that the rental contract period does not exceed the stay period. Even when renewal is anticipated, the principle is to judge first based on the expiration date.
- Restrictions on employment: For those who have obtained special activity permission for out-of-status activities such as "student" or "family stay," there are restrictions on working hours, so ability to pay rent must be carefully screened.
Setting Tenant Screening Standards
Tenant screening should not be based on nationality but must be conducted fairly based solely on the individual's ability to pay and reliability. Setting the following standards enables objective screening:
- Proof of income: Request submission of an employment certificate issued by the employer and pay stubs to confirm stable income.
- Japanese language ability: Whether the tenant has enough Japanese language ability to understand contract contents and in-tenancy rules is important for smooth communication. Confirm through simple questions and answers.
- Joint guarantor: Ideally a Japanese person residing in Japan with stable income, or a foreigner with permanent resident status, would serve as joint guarantor. If that is difficult, make use of a rent debt guarantee company, as discussed below, mandatory.
Utilizing Rent Debt Guarantee Companies
For foreign residents for whom securing a joint guarantor is difficult, we recommend making use of a rent debt guarantee company a mandatory condition of the contract. This can significantly reduce the risk of rent arrears. In recent years, guarantee companies specializing in foreign national residents have also increased, and they have multilingual support and unique screening know-how.
Multilingual Contract Documentation
While the rental contract and important matters explanation document are originals in Japanese, it is desirable to prepare translated versions in major languages (English, Chinese, Vietnamese, etc.) to facilitate understanding of the contents. Using the multilingual versions of the "Standard Rental Housing Contract for Foreigners" provided by the Ministry of Land, Infrastructure, Transport and Tourism is also an effective approach.
These practical flows are organized in the following table:
| Step | Items to Implement | Confirmation/Notes |
|---|---|---|
| 1. Application Receipt | Fill out rental application form, request submission of required documents | Residence card, passport, proof of income, etc. |
| 2. Document Verification | Confirm residence status, stay period, employment restrictions | Attention must also be paid to counterfeit residence cards |
| 3. Tenant Screening | Screen ability to pay, Japanese language ability, and whether there is a joint guarantor | Be careful not to engage in discriminatory treatment |
| 4. Guarantee Company Use | If there is no joint guarantor, provide information about joining a guarantee company | Select a guarantee company that can handle foreigners |
| 5. Contract Execution | Explain contract contents (using multilingual versions), sign and seal | Also explain rules and manners carefully |
Operational Know-How for Preventing Problems Before They Occur
Many property owners are concerned about trouble prevention after accepting foreign residents. Misunderstandings arising from cultural and lifestyle differences can sometimes develop into unexpected troubles. However, these risks can be sufficiently managed through advance countermeasures and appropriate communication.
Common Trouble Cases and Their Causes
First, understanding what kinds of problems can occur is the first step. The following summarizes representative cases and the cultural differences in their background:
| Trouble Case | Main Causes / Cultural Background |
|---|---|
| Noise issues | Differences in sensibility about noise, such as inviting friends to parties at night or living while wearing shoes indoors. |
| Garbage disposal | Lack of awareness of rules such as complex sorting rules being difficult to understand, or not following the days and times for garbage collection. |
| Unauthorized subletting and co-habitation | Cases where room sharing with friends or relatives — which is common in their home country — is done without permission. |
| Restoration at move-out | Poor awareness of the "restoration" concept, and difficulty distinguishing between damage from intention or negligence and natural deterioration. |
Most of these troubles are not caused by residents acting in bad faith, but simply from not knowing Japanese rules and customs.
Specific Countermeasures for Trouble Prevention
Careful explanation and follow-up at the time of contract and during tenancy is key to preventing problems. Please refer to the following checklist and take countermeasures:
| Countermeasure Item | Specific Actions |
|---|---|
| Multilingual rule specification | Particularly important rules such as garbage disposal, noise, and use of common areas are made multilingual with illustrations and photos, and explained and distributed at the time of contract. |
| Move-in orientation | Build trust by providing living information such as giving the local garbage collection calendar and guiding the location of nearby supermarkets and hospitals. |
| Establishing a communication system | Clearly communicate contact points (telephone, email, SNS, etc.) where residents can easily consult the management company or property owner, and communicate regularly. |
| Bridging to the community | Introduce local international exchange events and neighborhood association activities to support residents in blending into the local community. |
Management Structure for Successfully Accepting Foreign Residents
Responding to foreign residents through self-management requires a lot of effort for language support and emergency responses to problems. This is where entrusting to a real estate management company with a track record in rental management for foreign residents is effective.
Criteria for Selecting a Management Company
Rather than simply having a large number of managed properties, selecting a management company from the following perspectives holds the key to success:
| Selection Criterion | Points to Confirm |
|---|---|
| Track record with foreign residents | Confirm specific figures on how many foreign residents they have brokered and managed to date. |
| Multilingual capability | Whether staff are available who can handle major languages such as English, Chinese, and Vietnamese. |
| Trouble response system | Whether they have a 24-hour call center or a dedicated trouble-resolution team. |
| Leasing capability | Whether they have partnerships with universities and companies with strong networks of foreign students and workers. |
Comparison of Self-Management and Entrusted Management
Both self-management and entrusted management have their respective merits and demerits. Please choose the optimal management structure based on your own situation:
| Management Method | Merits | Demerits |
|---|---|---|
| Self-Management | · Higher profitability as no management consignment fee · Can communicate directly with residents |
· Much effort required for language support and trouble response · Specialized knowledge and know-how required |
| Entrusted Management | · Peace of mind with little effort as professionals handle it · Services such as rent arrears guarantee and equipment guarantee are comprehensive |
· Management consignment fee (generally around 5% of rent) is incurred · Service quality varies by management company |
Summary: Accepting Foreign Residents Is an Investment in the Future
In this article, we explained how accepting foreign residents is an effective vacancy countermeasure in modern rental property management, and the specific know-how for its practice.
In the major tide of demographic change, foreign residents are no longer a "special presence." They are important members supporting the local community and a high-quality customer group in the rental market. Rather than being overly fearful of language and cultural barriers, by engaging with appropriate knowledge and preparation, trouble prevention is sufficiently possible.
Thorough residence status verification, objective tenant screening, use of rent debt guarantees, and careful communication. Faithfully implementing these basics leads to occupancy rate improvement. We believe that accepting foreign residents, rather than being limited to vacancy countermeasures, is an "investment in the future" to increase the value of properties by embracing diversity and realizing long-term stable rental property management.
Please use this article as a reference and take the first step. If you have any concerns about specific procedures or individual cases, please participate in the property owners' association we operate (INA Network). As long as rules are observed, we will answer all of your questions and provide full support.
Frequently Asked Questions
Q1. What is the greatest risk when accepting foreign residents?
A1. The greatest risks are rent arrears and troubles due to insufficient communication. Regarding rent arrears, making it mandatory to join a rent debt guarantee company can significantly reduce this risk. Also, since most troubles arise from misunderstanding of cultural and customs differences, extremely important is careful advance explanation — such as providing a rule book created in multiple languages at the time of contract.
Q2. How should I verify residence status?
A2. At the time of rental application, always have the applicant present the original "residence card" and keep a copy. The three points to confirm are "type of residence status," "expiration date of the stay period," and "whether there are restrictions on employment." The Immigration Services Agency of Japan's website also provides a service to confirm the validity of residence card numbers, so we recommend using this as well.
Q3. How should I handle situations where communication doesn't work?
A3. Utilizing translation apps on smartphones and management companies with multilingual call centers is effective. Also, for particularly important precautions such as garbage disposal rules, preparing a pointing confirmation sheet making extensive use of illustrations and photos will help facilitate smooth communication.
Q4. What is the method for reducing the risk of rent arrears?
A4. The most reliable method is to make it mandatory to join a rent debt guarantee company. In addition, it is fundamental at the screening stage to thoroughly confirm the stability of the employer and documents proving income. Setting up automatic bank transfer from a salary deposit account also leads to arrears prevention.
