Key Money (礼金) in Japan: How It Really Works
For many foreigners, key money (礼金 / reikin) is one of the most confusing parts of renting in Japan. It is a large upfront payment to the landlord, and unlike a deposit, it is usually never returned.
This guide explains why key money exists, how it works in practice, and when you can avoid it, with a focus on the current rental market in Tokyo.
What Key Money Is – And What It Is Not
When you look at Japanese rental listings, you will often see 礼金 listed together with other initial costs.
Key money (礼金) is:
- A one-time payment to the landlord at the start of the lease
- Non-refundable in almost all cases
- A custom and market practice, not a legal requirement
- Typically equivalent to 1–2 months of rent
Key money is not:
- A deposit (that is 敷金 / shikikin)
- A broker fee (that is 仲介手数料)
- A cleaning or restoration charge
It is important not to confuse 礼金 with 敷金. A deposit (敷金) may be partially returned at the end of the contract after deducting cleaning or repair costs. Key money (礼金) is paid as a “thank you” and does not come back.
Why Key Money Exists (Historical Background)
Key money developed in the post-war period, roughly from the 1940s to 1950s, when Japan suffered from a serious housing shortage. Demand for housing was very high, and landlords had significant power over who could live in their properties.
At that time:
- Housing was scarce, especially in cities
- Landlords had limited legal protections and relied on personal trust
- Tenants offered 礼金 as a gesture of appreciation and to secure a place to live
Even though the housing shortage has long since improved, the culture of key money remained. In some parts of the market it is still considered normal, especially with older private landlords.
Current Market Reality: Do You Always Have to Pay Key Money?
In the modern rental market, especially in cities like Tokyo, you do not always have to pay key money. Whether 礼金 is requested depends on the type of property, the owner, and local competition.
In general:
- Older, privately owned buildings are more likely to charge 礼金
- Newer, professionally managed buildings are more likely to be zero key money
- In competitive areas with many vacant units, landlords often reduce or waive 礼金 to attract tenants
If you use the search filters on major rental websites and select “no key money” (礼金なし), you will usually find many options across Tokyo and other major cities.
Typical Key Money Amounts in Tokyo (2025)
The table below shows typical patterns in Tokyo as of 2025. These are not strict rules, but they reflect what many tenants actually encounter.
| Property type | Typical key money (礼金) |
|---|---|
| Older apartments (small private landlords) | 1–2 months of rent |
| Standard management-company apartments | 0–1 month of rent |
| Newer, high-spec apartments | Often 0 months (no key money) |
| Corporate or large rental buildings | Often 0 months (no key money) |
Is Key Money Legally Required in Japan?
There is no law in Japan that requires key money. It is not a tax, not a government charge, and not a mandatory fee.
In practice:
- Key money exists only because it is written in the rental contract
- You are not legally obligated to accept it if you have not signed the contract
- Different properties have different conditions; some charge 礼金, some do not
Unlike the broker fee (仲介手数料), which has official guidance on the maximum amount, key money does not have a legal ceiling. It is fully determined by the agreement between landlord and tenant.
When You Can Avoid Paying Key Money
In many situations, it is possible to avoid paying key money completely. Below are some typical cases where you have a good chance.
1. Areas with Many Similar Properties
If you are looking in a neighborhood with many similar apartments and noticeable vacancies, landlords are competing for tenants. In this environment, it is common to see:
- No key money campaigns
- “0 礼金 0 敷金” (no key money, no deposit)
- Discounted initial fees for moving in quickly
Using filters like “礼金なし” on major property websites is one of the simplest ways to find such listings.
2. Timing: Low Season and End of Month
Some periods of the year are easier for negotiation:
- February–April: Peak moving season. Harder to negotiate because many people are searching.
- May–July and September–December: Generally better for negotiation, especially for units that have already been empty for a while.
At the end of the month or just before a long vacancy, landlords may prefer a good tenant with slightly lower initial income, rather than leaving the unit empty.
3. Professionally Managed Properties
Large management companies and corporate landlords often use standardised pricing models. Many of them:
- Do not charge key money at all
- Prefer to make money from stable monthly rent rather than large upfront fees
- Offer periodic “no key money” campaigns to fill multiple units quickly
4. Newer Buildings
New construction and recently renovated buildings often compete on initial costs. It is common to see:
- No key money
- Reduced or zero deposit
- Promotions such as “one month free rent”
Because these buildings are designed to attract long-term tenants quickly, they are a good target for people who want to avoid 礼金.
5. Units that Have Been Empty for a Long Time
If a property has been on the market for more than one or two months, there is often room to negotiate. An empty room generates no income for the landlord, so they may be willing to:
- Reduce key money
- Convert it into an extra month of rent instead
- Waive it entirely for tenants who can move in quickly and pass screening smoothly
Can You Negotiate Key Money?
Yes. Key money is negotiable more often than foreigners expect, but the way you negotiate matters.
In Japan, direct aggressive bargaining is usually counterproductive. Instead, it is better to ask your real estate agent to present a polite request to the landlord. For example, you can say (or write) something like:
“If the landlord is open to it, I would like to request a reduction or waiver of the key money (礼金). I am a stable, long-term resident, and I will provide all necessary documents and pay rent on time.”
This approach:
- Shows respect for the landlord’s position
- Makes it easier for the agent to pass on the request
- Gives the landlord a reason to consider you a low-risk tenant
The agent may say negotiation is difficult, but it is still worth asking in a calm, professional way. The worst outcome is simply “no”.
Legal Points to Keep in Mind
From a legal perspective, key money has three important characteristics:
- No maximum amount in law: There is no legal cap similar to the broker fee guidance.
- No refund: Unless explicitly written in the contract (which is rare), key money is not returned at the end of the lease.
- Contract-based only: You only owe key money if you agree to it by signing the rental contract.
Because it is purely contractual, you always have the option to search for another property if you are uncomfortable with the requested amount.
Where Is Key Money More and Less Common in Tokyo?
The presence of key money depends more on the type and age of the building than on the prestige of the area. However, there are some broad patterns.
| Area (example) | Likelihood of key money |
|---|---|
| Meguro, Shinagawa (older walk-up buildings) | Moderate to high |
| Shirokanedai / Shirokane (mix of new and old) | Mixed, depends strongly on building |
| Hiroo, central Minato, Azabu (modern managed buildings) | Often low, many zero-key-money options |
| Shinjuku, Ikebukuro (wide variety of stock) | Mixed; depends on building age and owner |
| Edogawa, Adachi (older rental stock) | More common in older, small buildings |
Higher rent does not automatically mean higher key money. In many high-end areas, landlords and management companies focus on attracting stable, long-term tenants and are willing to reduce initial barriers to entry.
Why Zero-Key-Money Listings Are Increasing
Over the last years, zero-key-money listings have become more common in major cities. Some reasons include:
- More supply: In some areas, the number of rental units has increased, giving tenants more choice.
- Competitive market: Landlords must offer conditions that are attractive compared to other buildings.
- Changing preferences: Many tenants, including Japanese residents, are less willing to pay large initial fees.
For foreign residents, this trend is positive. With careful searching and a bit of flexibility on building type or area, it is often possible to avoid 礼金 entirely.
Should Foreigners Pay Key Money?
There is no single correct answer, but some practical guidelines are:
- You do not have to pay key money as a matter of law.
- If you have time to search, you can often find zero-key-money properties that meet your needs.
- Paying some key money may make sense if the property is ideal (location, size, layout) and alternatives are limited.
The key is to treat 礼金 as one of several factors in your decision, not as something you must accept without question. For many foreign residents, the best strategy is to:
- Start by searching only zero-key-money listings
- Compare the total initial cost and monthly rent
- Consider properties with 礼金 only if they clearly offer better value overall
Related Guide: Renting Without a Guarantor
If you are planning a move and want to reduce both risk and stress, it is also important to understand how guarantors work in Japan. For a deeper explanation of guarantor companies, documents required, and common pitfalls for foreigners, see our detailed guide on renting an apartment in Japan without a guarantor .
Understanding key money is one of the first steps toward navigating the Japanese rental system with confidence. Once you know that 礼金 is not legally required and that you can search for properties without it, you have much more control over your housing costs.