Only 1 applicant for Ota-ku’s new short-term letting license system

On January 29, Tokyo’s Ota Ward introduced relaxed rules for short-term letting that allows ordinary homes and apartments to be rented to tourists. Licensing requirements still apply, however, although the terms are not as strict as they are under the hotel licensing law.

In the lead up to the regulation change, Ota’s city office received over 120 inquiries from companies interested in opening accommodation facilities under the new system. Information sessions held in January were attended by over 200 people at a time. Since January 29, they have handled an additional 220 inquiries.

Despite the strong interest, there has only been one applicant, a Tokyo-based company called Tomareru.  Tomareru were approved for two properties – a 65-year old traditional Japanese house, and a 26 sqm studio apartment.

The house can sleep up to four guests (futons only), and has a total floor area of 50 sqm. It is a 14 minute walk from Kamata Station. Rates start from 20,000 Yen per night, with a minimum stay of 6 nights. In order for the house to pass the fire inspection, Tomareru had to spend 120,000 Yen on fire alarms.

The apartment is a single room and can sleep up to 3 guests (two on the bed and one on the floor). Rates start from 12,000 Yen per night, with a minimum stay of 6 nights.

Kamata Ota ku
Tomareru’s 65-year old renovated house.

One of the possible reasons for the lack of actual applications at this stage may be due to the complicated and time consuming application process. The list of requirements includes having rooms over a certain minimum size, being in a location zoned for hotels/ryokans, issuing notice to neighbours, obtaining permission from the building owners association if the property is an apartment, obtaining a certificate of compliance from the fire department, and leasing the property for no less than 6 nights at a time. A representative from Ota City Council said the current lack of applications is most likely due to the time required to prepare the paperwork, but are expecting to receive over 100 applications by the end of March.

There is also a possibility that companies are waiting to see what moves the the national government makes over the next few months. The government is currently discussing potential options to completely remove the minimum stay and room size requirements, which has been the biggest hurdle for many operators. These rules could be lifted as early as April, but could easily take longer as debates continue.

Property owners should be aware that they may find themselves with a higher tax bill if their property is used as accommodation, rather than residential use. Deductions apply for properties used for residential purposes, but there is a possibility that the tax office may determine that a property used for short-term letting is considered business use.

Sources:
The Tokyo Shimbun, February 13, 2016.
The Nikkei Shimbun, February 13, 2016.

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