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Tips toward an agreeable lease agreement

By on February 27, 2010
Photo © Elena Derevstova
 
Making the most of your move may mean making the most of your new lease agreement.  Here are some things to watch out for in your next move.
 
Who pays the broker?  Many companies pay the property agent only when you are moving into the country or into the company and do not pay for any additional or otherwise elective moves.  Clarify who pays prior to your search, as property agents are paid by the tenant they represent in Japan.

How much is fair?  Japanese law allows a brokerage fee equivalent to one month of rent and no more.  Best practices within the real estate market require that your agent:

a.  represents you in constructing the lease agreement and ensuring that it is within agreed-upon parameters
b. explains the “Important Matters” or jusetsu prior to signing the lease agreement, as a formalized though shorthand due diligence.
And that’s about it.  Everything else your agent does (i.e. the search, the showings, the terms negotiations) are additional services that facilitate the transaction with the rather fortunate consequence of making your life that much easier.  Your agent will likely earn every yen of his or her fee.

What about Key Money?  The Japanese leasing market has not truly begun to rid itself of gratuities to the landlord outside Central Tokyo.  Centrally located, high-end properties for the expats market generally do not include key money; however, many property owners still request key money.  My advice is to simply not include key money in your application.

What should the application look like?  Your application should resemble your wish list.  Discuss with your broker a fair price for what you want and how you would like to proceed with the application.  Most landlords are not terribly used to negotiating and are under the impression that generous discounting resides in the neighborhood of 5 per cent.  Any landlord may reject your application at any time for any reason.  Therefore, pick your priorities (i.e. rent, deposit, key money, move-in, etc.) carefully, and let them be your guide.  Sometimes a good compromise is the best way to win.

When should an application be placed?  You should apply to lease a property the very moment that you know you like it.  Some independent brokers may allow you to apply for more than one property simultaneously if the deciding factor is the deal you can get as opposed to the property itself.

 
Kevyn Johnson is a director with Platinum Real Estate Consulting and a co-chair for the Architecture, Construction and Real Estate committee of the American Chamber of Commerce in Japan.  He can be reached through our editors or directly at www.platinum1000.com

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