Govt wants cheaper accommodation for foreign tourists

The Japanese Government is working towards making it easier for vacant apartments in urban areas to be let out as cheap short-term rentals to foreign tourists. The target areas lie within the recently announced National Strategic Special Zones. 

The goal is to provide cheaper accommodation options for foreign visitors which will encourage them to stay longer.

Under the current hotel business law, any accommodation let out for less than 30 days at a time must meet certain requirements, such as having a front desk, furnished apartments, laundry facilities and linen change service. These rules may be relaxed for properties located within the special zones, and any rental terms over 7~10 days (and even as low as 4 days in the Tokyo metropolitan area) may be exempt from the hotel business code requirements.

Will this work?

In a typical scenario, a real estate company rents an unfurnished apartment on a long-term lease from a private landlord in a condominium building. After receiving approval from the landlord to sublease the apartment, they then furnish it and advertise it as a short-term rental. They expand their business by renting more and more apartments in their company name.

There are already a number of real estate companies that specialise in leasing normal apartments, furnishing them and subleasing them out on a monthly basis. However, the majority are Japanese companies and do not provide services in English. They may also require the tenants to have guarantors, which is not usually possible for foreign tourists.

The only way for it to work is for English-speaking real estate companies to be the ones renting the individual apartments from the landlords and then offering them as serviced apartments to foreigners. There are already several companies in Tokyo that do this.

They will need the capital required to rent additional apartments, have to find landlords that are accepting of their subleasing arrangements and will also have to compete with the Japanese-oriented subleasing companies. Unless they are aggressively renting apartments, this might not lead to a noticeable increase in the supply of relatively affordable short-term rentals available to foreigners.

In 2013, over 10 million foreigners visited Japan. The government hopes to increase the number of annual foreign visitors to 30 million by 2030.

The special zones offer incentives for foreign investment, including easing restrictions on medical professionals and other foreign employees. Initial plans suggested that all of Tokyo, Kanagawa and Osaka would fall under the zoning, but so far only 9 wards in Tokyo have been announced (Chiyoda, Chuo, Minato, Shinjuku, Bunkyo, Koto, Shinagawa, Ota and Shibuya).

Source: The Nikkei Shimbun, April 15, 2014.

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