Do you know what the purpose of the "deposit" charged as an initial cost when signing a lease for a rental property is?
A security deposit is a deposit used to maintain the room and building facilities. It is normally refunded if there are no problems when you move out.
However, there are many problems arising regarding security deposits.
This time, we will explain the role of the security deposit, the average cost, how to get it back when you move out, and how to avoid any problems.
What is a security deposit?
The deposit is a security deposit used to restore the room to its original state if any fixtures or fittings are damaged. In the Kansai region, it is also called a guarantee deposit.
It is also an essential money for maintaining the property, and can be used to cover overdue rent payments.
Features of Deposit
Here are the three main features of a security deposit.
- Used to restore the property to its original condition
- When rent is overdue, the security deposit will be used
- Refunded when you move out
Used to restore the property to its original condition
Each room is equipped with various facilities necessary for daily life, such as water, gas, and electricity.
Air conditioning, water heater, and unit bath are also included in the room facilities.
If any of these facilities are defective, the owner will use the deposit to make repairs to restore the property to its original condition.
For example, if you intentionally break air conditioners or heating appliances, or if mold grows on the wallpaper due to lack of ventilation, repairs will be made using your deposit.
When rent is overdue, the security deposit will be used
Property owners manage their properties to make them livable environments in exchange for monthly rent.
Therefore, if rent payments fall behind, the deposit will be used to pay the rent.
However, tenants cannot request that their security deposit be used to offset their rent. It is the property owner's decision whether or not to use the security deposit.
Refunded when you move out
The deposit will be refunded if the property is restored to its original condition when you move out.
If a cleaning fee or house cleaning fee is required to restore the property to its original condition when you move out, this amount will be deducted and the remaining amount will be refunded.
According to Article 622-2, Paragraph 1 of the Civil Code, the landlord is obligated to refund the deposit.
However, there are cases where the deposit is not refunded even if the property has been restored to its original condition when you move out.
I will explain this in more detail later, but to avoid any issues, the Ministry of Land, Infrastructure, Transport and Tourism has established "Troubles and guidelines regarding restoration to original condition".
If your deposit is not refunded, ask the landlord for an explanation based on the "Guidelines and Troubles Regarding Restoration to Original Condition" and discuss who will cover the costs.
The difference between deposit and key money
Key money is money paid to the landlord as a token of appreciation. Unlike a deposit, it is not refundable when you move out.
It is said that the custom of paying key money began in the days when there were no rental housing options, when the parents of tenants from rural areas would give it to landlords as a token of appreciation.
This custom still remains, but with the current trend of more and more housing being rented, there are fewer properties that charge key money.
Some properties do not require a deposit but do require a key money, so it's a good idea to know their role when looking for a house.
The following article explains key money in detail, so please refer to it if you would like to know more.
The difference between a security deposit and a guarantee
In the Kansai region, it is customary to collect a security deposit when concluding a rental contract.
Its purpose is the same as a security deposit, and it is used as collateral for the maintenance of the property and for overdue rent.
The average amount of the deposit is 3 to 6 months' rent. However, in Western Japan, it is not customary to collect a renewal fee when renewing an apartment, so the total cost will be cheaper if you live there for a long time.
The difference between this and a security deposit is how you handle it when you move out. Like a security deposit, a security deposit is refundable when you move out, but this refund is subject to the property being restored to its original condition.
There is also a special clause called a security deduction, which allows for about one month's worth of the security deposit to be deducted, and this is deducted separately from the cost of restoring the property to its original condition.
For example, if the rent is 50,000 yen and you pay a 150,000 yen deposit when you move in, and a 50,000 yen deposit and 50,000 yen restoration costs are deducted when you move out, the amount refunded will be 50,000 yen.
The number of properties with deposit special clauses is decreasing, but they are still listed as special clauses in property advertisements, so be sure to check carefully.
Please refer to the following article for more information on security deposits:
About the average deposit amount and properties without a deposit
What is the average deposit amount?
The average deposit amount varies depending on the area and the property, but a rough guideline is one to two months' rent.
Some properties, such as family properties and detached rental houses, require a deposit of three months' rent or more.
For properties where pets are allowed, an additional fee of 0.5 to 1 month's rent is charged.
If you have pets, be sure to check the terms of the contract before signing it.
If you want to keep initial costs as low as possible, you may want to consider a property where the deposit is about one month's rent.
Recently, there are more and more properties with no deposit required.
Recently, there are more and more properties that do not require a deposit.
Due to Japan's declining population in recent years, there has been a high supply of rental housing and an increase in vacant rooms, so property owners are actively looking for tenants without a deposit.
In addition, there are not only older properties but also newly built properties that do not require a deposit.
However, since a deposit is also a security deposit, please be aware that there are some properties that do not require a deposit when you move in, but instead require you to join a guarantor company or pay house cleaning fees.
In some cases, the total amount paid in fees may be more than the deposit.
Since the deposit is used as a cost to maintain the room, it cannot necessarily be said that properties without a deposit are better.
Cases where the deposit is not returned
Although we have explained that the deposit will be refunded when you move out, there are some cases where it is not refunded.
It is important to be aware of these cases before signing a lease.
Next, we will introduce three cases in which your security deposit will not be returned. Please refer to the following three cases.
- If the room facilities are severely damaged or soiled
- If you have rent arrears
- In case of short-term departure
If the room facilities are severely damaged or soiled
If you damage any equipment in your room, we will use your deposit to repair it.
When you move out, you must restore the property to its original condition, which is the state it was in before you moved in.
For example, if you cause mold or other stains on the wallpaper that are difficult to remove, the cost of repairs will be deducted from your deposit and the remainder will be refunded.
Depending on the extent of the damage, the repair costs may exceed the deposit, in which case you will have to pay the remaining repair costs as well, so be careful.
If you have rent arrears
If you are behind on your rent, the overdue rent will be offset against your security deposit and will not be refunded.
Property owners use the rent they collect from tenants to pay for running facilities and cleaning costs of common areas, and to maintain the building.
If tenants fail to pay their rent, we will not be able to manage the property, so if rent is in arrears, we use the money from the security deposit to cover operating costs.
Please note that if you have unpaid rent when you move out, the unpaid rent will be deducted from your rent payment.
In case of short-term departure
Depending on the property, a penalty may be incurred for early termination.
If you move out within one or two years, the deposit and short-term cancellation fee will be deducted and you will receive half of your deposit back or no deposit at all.
The reason for setting a short-term termination penalty is that it is in the owner's interest to have tenants live in the property for a long time.
If a tenant moves out after a short period of time, you won't make a profit and you'll incur vacancy costs.
In such cases, the special terms of the rental agreement and the important information explanation document will always state that "If you cancel within one year, you will have to pay a penalty of one month's rent."
When considering a property that incurs a short-term cancellation penalty, we recommend that you consider whether you intend to live there for years before signing the contract.
Guidelines for restoring properties to their original condition to avoid issues with refunding security deposits
Restoration Guidelines
Returning the property to its original condition when you move out is called restoring it to its original condition, and under the Civil Code, tenants are obligated to restore the property to its original condition when they move out.
However, because the standards for restoring properties to their original condition are not clear, a discrepancy in understanding has arisen between tenants and landlords, giving rise to problems.
According to a survey by the National Consumer Affairs Center of Japan, the number of complaints regarding issues with security deposit refunds has been increasing year by year, as shown in the table below.
| 2019 | 2020 | 2021 | |
|---|---|---|---|
| number | 14,675 results | 15,313 Results | 16,767 Results |
In order to avoid the above-mentioned troubles, the Ministry of Land, Infrastructure, Transport and Tourism has enacted the "Guidelines for Restoration to Original Condition," and the Tokyo Metropolitan Government has enacted the "Ordinance for Prevention of Rental Housing Disputes."
Since there is no obligation to restore rooms to their original condition if they become dirty due to deterioration over time, the guidelines clearly state the standards for restoration to the original condition, including the definition of deterioration over time and the conditions for tenants to cover the costs.
Here are some important points about these guidelines.
Basic principles of restoration
The basic principles of restoration are as follows:
[Landlord's burden]
- Aging
- Repairs damage caused by normal use
(Examples) Waxing flooring, removing black spots from walls due to TVs and refrigerators, removing pin and thumb tack holes in walls, disinfecting various areas, etc.
[Burden on the part of the tenant]
- Intentional or negligent acts by the lessee or use contrary to normal usage
- Damage or scratches caused by the tenant
- The cause is neglecting a malfunction or defect or neglecting maintenance.
- Damage or scratches that have occurred or expanded
(Examples) Stains from spilled drinks on carpets, mold on wallpaper caused by condensation, scratches caused by moving, cigarette tar, scratches and stains caused by pets, oil stains on kitchen ventilation fans, etc.
The cost of restoring the room to its original condition for wear and tear caused by normal daily use will be borne by the landlord.
Any malfunctions caused by the tenant's negligence or failure to perform daily maintenance will be the responsibility of the tenant.
The following article provides more detailed information about the guidelines for restoring property to its original state. If you would like to know more, please also refer to the following article.
To avoid problems with refunding your deposit
No one wants to have trouble with their security deposit when they move out.
So, here are some ways to avoid issues with getting your security deposit refunded:
We will introduce this information at four different times: before moving in, during moving in, before moving out, and when moving out. Please refer to this information as it is very important for renting an apartment.
Things to do before moving in
Before moving into a property, be sure to inspect the property on-site and carefully check the condition of the room and the terms of the contract.
Some people decide based on their own intuition without going to the property, or do an online viewing, but it is important to check the property in person and be on the same page with the owner about any damage to the room at that point.
In particular, you won't know about stains around the bathroom or scratches inside the room until you go to the property. If you see something that looks even a little different from the photos, don't make a decision.
If possible, we recommend that you go to view the property with someone who is knowledgeable about property searches.
Once you have decided on a property to rent, you will then sign a lease agreement, which contains important rules for renting a property.
If you have any questions, be sure to check with your real estate agent.
When writing a contract, people tend to focus on what will happen when you move in, but you should also check in advance the costs that will be incurred when you move out.
It is difficult to change the terms of the contract after it has been signed, so to avoid regrets later, be sure to check it carefully and ask any questions you have.
What to do during your stay
Take good care of your room
Please take good care of your room and facilities while you are staying there.
The room and facilities are the property of the owner. If you damage the water heater, air conditioner, etc. while you are living in the apartment, be sure to contact the management company or the property owner.
If a malfunction is discovered when you move out, you will have to pay for the repairs from your deposit. If there are any other problems with the room, be sure to contact the management company.
Thoroughly clean and ventilate the room
Cleaning is also necessary if you are renting.
If dirt or mold that cannot be removed occurs due to neglecting cleaning and ventilation, the cost of house cleaning may be deducted from your deposit.
As an example of neglecting cleaning, grease stains in the kitchen will accumulate and become difficult to remove if not taken care of. Also, if you do not ventilate the bathroom, mold will grow.
By keeping in mind regular cleaning and ventilation, your room will not become excessively dirty.
To avoid any issues with your deposit refund, be sure to keep your room clean by regularly cleaning and ventilating it.
What to do before moving out
There may be costs involved in moving out of a rental property, so be sure to check what costs you may incur before you move out.
When you move out, you will be charged a house cleaning fee to restore the property to its original condition, and if you move out on a short notice, a short-term cancellation fee will be charged.
If a security deposit is refundable, these costs will be deducted and the remaining amount will be refunded.
It is important to understand the costs of moving out along with your move-out offer.
If you are charged a fee that you do not agree with, be sure to negotiate with the property owner or management company based on the "Guidelines for Restoration to Original Condition" until you are satisfied.
There are cases where the price was reduced by nearly 100,000 yen through negotiation. If you are not satisfied with the price, it is important to talk about it and not just give in.
What to do when moving out
Once you have decided to move out of a rental property, you must restore the property to its original condition by the move-out date.
To avoid being charged a restoration fee, be sure to clean up the room before leaving it.
You also need to check that your air conditioner and water heater are working properly.
If you are unsure of what restoration to original condition entails, please use the "Restoration Guidelines" below as a reference for self-check.
summary
The security deposit is an important deposit for managing the room. It will be used to cover repair costs to restore the room to its original condition, and to cover any overdue rent payments.
The deposit will be refunded when you move out if no repairs are required to restore the property to its original condition. However, because the standards for restoring the property to its original condition are unclear, there have been many problems with refunds.
To avoid any issues with refunds, it is important to view the property, check the contract details, and take good care of the rented room before moving in.
When moving out, be sure to confirm the moving out fees and check for any dirt or malfunctions in the room.
If the moving-out fees are high even though there are no problems with the room, check with the management company or property owner.
If the conversation still doesn't work, I would recommend seeking professional help.
