Joint Guarantors and Guarantor Companies in Rental Contracts—How They Work, Key Differences, and How to Rent Without One

The Role of Guarantees in Rental Contracts

When renting a property in Japan, landlords face risks: "Will the tenant reliably pay rent?" and "If damage occurs at move-out, can I recover the costs?" To mitigate these risks, Japanese rental contracts have long required a joint guarantor.

In recent years, guarantor companies (rental guarantee companies) have become widespread. Following the 2020 revision to the Civil Code, many properties now require tenants to enroll with a guarantor company instead of providing a joint guarantor.

Joint Guarantors: Understanding the Basics

The Difference Between Ordinary and Joint Guarantors

Ordinary Guarantor:

• •The landlord must first request payment from the tenant before pursuing the guarantor
• •Can claim "Please request payment from the tenant first" (right of prior recourse)
• •If the tenant can demonstrate ability to pay, the guarantor can avoid liability (right of investigation)

Joint Guarantor:

• •Bears the same responsibility as the tenant
• •The landlord can demand payment directly from the joint guarantor without first requesting from the tenant
• •Has no right of prior recourse or right of investigation
• •Jointly liable with the tenant for full payment, creating substantial risk

In Japan's rental market, "joint guarantor" is the standard requirement—far heavier responsibility than an ordinary guarantor.

Scope of Joint Guarantor Liability (2020 Civil Code Amendment)

Under the Civil Code amendment effective April 2020, when an individual becomes a joint guarantor, the contract must clearly state the "maximum guarantee amount" (liability cap).

Before this change, some interpretations held that joint guarantor liability was unlimited. Now, with a set cap, the guarantor's risk is clearly defined.

Typical Maximum Guarantee Amounts:

• •Most properties set a limit of 2 years' rent (24 months)
• •Example: ¥100,000/month → ¥2.4 million maximum guarantee

Who Can Serve as a Joint Guarantor

Common eligibility requirements:

• •Relationship: Close relatives (parents, siblings, grandparents) are typically required; friends may be difficult to arrange
• •Income: Must have stable income above a certain level (unemployed or pension-only may be rejected)
• •Age: May be rejected if too elderly
• •Job Tenure: Must demonstrate stable employment history

Guarantor Companies Explained

How Guarantor Companies Work

A guarantor company (rental guarantee company) steps in to cover rent payments to the landlord if the tenant defaults. This allows the landlord to mitigate default risk, and the tenant avoids needing a joint guarantor.

The Process:

1. Tenant applies for guarantor company enrollment and undergoes screening
2. After passing, tenant pays a guarantee fee
3. If rent goes unpaid → guarantor company pays the landlord on the tenant's behalf
4. Guarantor company pursues the tenant for reimbursement (subrogation rights)

Critically: Enrolling with a guarantor company does not eliminate rent payment obligations. The company merely "temporarily covers" the payment; the tenant remains liable for the full amount.

Guarantor Company Screening

Guarantor companies typically assess:

• •Income: Standard requirement is monthly income at least 3× the monthly rent
• •Employment Type: Full-time employees and civil servants are most easily approved; part-time and freelance work face stricter conditions
• •Credit History: Past rent arrears or credit card defaults may result in rejection
• •Visa Status: For foreign nationals, residency status type and remaining duration are verified

Typical Guarantee Fees

Example: For a ¥100,000/month property with a monthly-fee plan (100% initial), you'd pay ¥100,000 upfront and ¥10,000–¥20,000 annually for renewal.

Major Guarantor Companies

Renting Without a Guarantor or Guarantor Company

1. Choose Properties Without Guarantor Requirements

Some owner-managed properties or those explicitly marked "guarantor not required" allow rentals without a joint guarantor or guarantor company. However, your property options will be limited.

Use searches on SUUMO or HOME'S filtered for "no guarantor required" (保証人不要) to find these properties.

2. Leverage Public Housing Guarantee Programs

For those unable to arrange a guarantor, several government-backed schemes exist:

Housing Security Support for Vulnerable Households (Rent Guarantee):

• •Administrative support for recipients of housing security grants, welfare, or low-income earners
• •Available through local prefectural housing centers and resident support councils

Safe-Net Housing:

• •Properties registered nationally as committed to accepting seniors, low-income earners, and foreign nationals
• •Can be paired with public rent guarantee schemes
• •Search via the Ministry of Land, Infrastructure, Transport and Tourism's "Safe-Net Housing Information System"

3. Use Guarantor Companies Specializing in Vulnerable Populations

Companies like Nippon Safety and Global Trust Networks (GTN) specialize in reviewing foreign nationals and seniors. Consider these if a standard guarantor company rejects your application.

4. Consider UR or Public Housing

UR Urban Corporation (formerly Japan Urban Development Corporation) rentals typically require no guarantor, charge no key money, and have no renewal fees. If you meet income requirements, you can move in.

Prefectural and municipal public housing also often have lenient guarantor requirements.

Risks of Being a Joint Guarantor and How to Decline

What to Confirm If Asked to Be a Joint Guarantor

When family asks you to be a joint guarantor, verify:

• •The property's rent, location, and lease term
• •The maximum guarantee amount (how much you could owe)
• •The tenant's income and employment stability
• •The property management company

Being a joint guarantor carries serious responsibility, and declining is a right you can exercise.

How to Decline

Simply explain that your financial situation makes it difficult to assume such responsibility. There is no legal or moral obligation to agree. Understand that becoming a joint guarantor may affect your own credit history and assets, and decide accordingly.

Key Points from the 2020 Civil Code Amendment

Liability Caps for Individual Guarantors Are Now Mandatory

For rental contracts signed on or after April 1, 2020, setting a maximum guarantee amount for individual joint guarantors is required. Guarantor contracts without a stated cap are void.

Landlord Must Inform Guarantors

If a tenant fails to inform the guarantor of rental status, the guarantor can cancel the guarantor contract (Civil Code Article 465-10). The tenant must notify the guarantor annually of any arrears or other relevant information.

Summary: Smart Ways to Handle Rental Guarantees

• •Guarantor company enrollment does not eliminate rent obligations (they merely cover temporarily)
• •Joint guarantors carry heavy responsibility (both parties must fully understand the terms)
• •If you cannot arrange a guarantor, explore public support and UR housing
• •The 2020 Civil Code amendment requires liability caps (confirm limits before signing)
• •Foreign nationals, seniors, and freelancers should seek guarantor companies that serve these groups

Rental guarantee systems are complex, but understanding how they work gives you confidence when signing a contract.