Japan's "key money" is a unique custom that's often puzzling to foreigners. This guide covers the historical background of key money, current market rates, regional differences, how to find properties without key money, and negotiation strategies for waiving it.
Reviewed by: Nobuyuki MoriPresident, M-Assets Co., Ltd. / Licensed Real Estate Transaction Specialist (Miyagi #018212)
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Key money (reikin) is a one-time "gratitude payment" made to the landlord (property owner) when moving into a rental property. In English, it's translated as "Key Money," meaning "non-refundable gratuity paid to the landlord." It typically amounts to 0–2 months' rent and, importantly, is not refunded. This is a uniquely Japanese custom rarely seen in most other countries and ranks among the most surprising rental costs for foreign residents.
Legal Nature: Key money is a voluntary payment made by mutual agreement between tenant and landlord and carries no legal obligation. While in practice you may be unable to sign a lease without paying it, theoretically it's a negotiable fee. Unlike the security deposit (shikikin), key money is never refunded upon move-out—this is its defining characteristic.
Key money originated in post–World War II Japan during a severe housing shortage. In the years following the war, when homes were desperately scarce, tenants began offering gratitude payments to landlords as a gesture of thanks for being allowed to rent their properties.
During Japan's high-growth period from the 1970s to 1990s, "2 months' key money + 2 months' security deposit" was the Tokyo standard. However, key money has been declining gradually due to population decline, increasing vacant properties, and the growing number of foreign residents. Since the 2010s, particularly in urban areas, properties advertised as "zero key money" have become more common, creating a market environment increasingly favorable to tenants.
Foreign residents often find the distinction between key money and security deposit most confusing.
Security Deposit (shikikin):
Key Money (reikin):
In English, the security deposit is translated as "security deposit (refundable)" and key money as "key money (non-refundable, uniquely Japanese)." However, since "key money" has different meanings in different English-speaking countries, it's more accurate to explain it as "non-refundable gratuity paid to the landlord."
Tokyo (23 wards): One month's key money is the standard. Since the 2020s, properties without key money have been increasing. Properties requiring 2 months' key money are gradually declining. However, in popular areas like Minato-ku and Shibuya-ku, 1–2 months' key money is still commonly required.
Regional Cities (Sendai, Nagoya, Fukuoka, etc.): Zero key money properties are more common than in Tokyo. In Sendai and Nagoya especially, more than half the market features zero key money or 0.5 months' key money. Regional cities have higher vacancy rates, prompting landlords to lower upfront costs to attract tenants.
Osaka and the Kansai Region: In Osaka, instead of "key money," tenants typically pay a "guarantee money" (hoshoukin) deposit at move-in. While guarantee money resembles a security deposit (it is refunded after deductions for repairs), a practice called "shikiebiki" (a non-refundable deduction from the guarantee) often applies, effectively creating a non-refundable portion similar to key money. When searching for properties in Kansai, it's important to confirm the total of guarantee money plus shikiebiki.
Okinawa: Zero key money properties are common, and security deposits are typically 1 month or less. Housing costs are relatively affordable in this region.
On SUUMO, Homes, and At Home, you can use the advanced search to filter for "zero key money" properties, displaying only listings without this requirement.
Conditions more likely to yield zero key money properties:
Services catering to foreigners (such as GaijinPot and Sakura House) often carry many zero key money properties and are ideal for foreign residents looking to minimize upfront costs.
Since key money is not legally required, it's negotiable. Your chances of success improve in these situations:
A direct proposal like "If you waive one month of key money, I can sign today" often works. Present your case through the real estate agent to the landlord. If full waiver is not possible, you can also negotiate to convert key money into "one month's rent paid in advance," which is effectively refundable at move-out.
Share Houses and Guest Houses: These typically require no key money or security deposit. Popular options include Sakura House and OAKHOUSE. These offer active foreign communities and are commonly used as temporary housing by newly arrived expats.
UR Rentals (Urban Renaissance): Systemically guarantees zero key money and no guarantor required. Available in many major urban centers nationwide. Rent is comparable to market rates, but zero key money and agency fees are significant advantages.
Public Housing (Metropolitan and Municipal): Available to low-income residents with zero key money. However, competition is fierce, and eligibility requirements for foreign applicants should be verified.
Monthly Apartments (Mansions): Designed for short-term stays with zero key money. Rent is higher, but upfront costs are typically zero. Contracts are available monthly, and address registration is possible, making them convenient for newly arrived expats.
Q: What does "Key Money" mean? A: Key Money is the English term for Japan's reikin, meaning "a non-refundable one-time payment made to the landlord at move-in." In some countries, "key money" refers to refundable deposits, but Japan's key money is fundamentally non-refundable. Refundable deposits at move-out are security deposits (shikikin), a separate cost from key money.
Q: Can I cancel after paying key money? A: If you cancel before the contract is finalized, part of your application deposit may be refunded, but key money is generally non-refundable once the contract is signed. It's crucial to confirm all terms before signing.
Q: Can I pay key money by credit card? A: It varies by agency, but most require bank transfer or cash. Some real estate companies do accept card payments.
Q: Will I receive a receipt for key money? A: You have the right to request a receipt. If you need it for tax filing or expense documentation, be sure to obtain one.
Q: Can foreigners negotiate key money? A: Absolutely. Key money is customary, not legally mandatory, and is negotiable for both foreigners and Japanese nationals alike. If negotiating in Japanese is difficult, consider working through a real estate agency with multilingual support.
Key money is a uniquely Japanese custom and represents a non-refundable expense. However, zero key money properties are becoming more common, negotiation is possible, and alternatives like UR Rentals and share houses provide ways to avoid it altogether. Foreign residents should understand how key money works before arriving in Japan and factor it into initial cost calculations. Combined with security deposits and agency fees, key money can total 4–5 months' rent, making advance financial planning essential.
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