Anyone who has rented in Japan knows the requirement: You must provide a guarantor as a security for the landlord. While traditionally a renter’s guarantor was a parent or boss, most landlords now require renters to sign up with a guarantor company. This is not so property owners or real estate agents can cash in on extra fees. In fact, they do not receive a dime of the guarantor agency fee. The simple rationale is that, until recently, it was almost impossible to legally force a personal guarantor to pay up in case of rent delinquency as the law in Japan strongly favours the renter.

Worst case scenario, trying to collect unpaid rent could result in a lengthy and expensive court case  for a landlord. Usually only after half a year of unpaid rent can a landlord forcefully evict a renter.

Do you really need a guarantor agency?

While rent delinquency in Japan is low, hovering around 1.6 % for tenants who haven’t paid for 2 months or more, it's in the best interest of landlords to protect themselves by accepting only renters that sign up with guarantor agencies, as personal guarantors do not provide enough security.

In April 2018, a bill that amends regulations regarding contracts and debts was approved. It also covers the point of guarantors on real estate contracts.
 
The new regulation distinguishes between regular guarantors (hoshōnin) and joint guarantors (rentai hoshōnin). Joint guarantors are now legally obligated to pay the debt of the parties to a contract, which was previously not the case. In reality, this probably means that fewer individuals will agree to become guarantors, as they could be sued for a non-paying renter. So it can be expected that the new law will create more business for guarantor agencies. Such an agency will step in and pay rent in the renter’s stead. All a landlord has to do is contact the guarantor agency usually within 10 days of the missed pay date to receive the rent in full while the guarantor agency will chase down the renter for the money.

The history behind guarantors and a system favouring the renter

While renters, especially international ones, will often moan when presented with a rental agreement that demands a guarantor company, this is not another way to extract even more money from renters–on top of the already high move-in costs in Japan that can add up to around 4 months’ worth of rent.

It is believed that the Japanese legal system strengthened the position of the renter during the war periods of the last century. The reason was probably so that cold-hearted landlords could not simply evict war widows that were waiting for a husband missing in action to return, which would have meant a spike in homelessness and desolation in post-war Japan. The law permitted them to stay if several months of rent remained unpaid. Times now have certainly changed, but the system did not and delinquent renters can abuse it, to the justified horror of landlords. 

Arranging a guarantor company

Whether you are renting or leasing an apartment, usually the real estate agent you work with will recommend a trusted guarantor company. The standard fee is half a month’s worth of rent for the period of your rental agreement, which is usually 24 months. The cost is borne by the renter.

In general, there is no need for a renter to communicate with the guarantor company after signing the documents, given you pay your rent every month on time. The landlord would also only need to contact the lessee’s guarantor company in case of rent delinquency, usually within the following 10 days, depending on the contract. So in most cases, neither renter nor lessor need to worry about exclusively enlisting an English-speaking service and going with the agency recommended by your realtor is usually a safe and easy choice. Guarantor companies will usually accept anyone who is willing to pay the fee, but in rare cases, foreigners or freelancers might be refused.

Guarantor agencies in Japan with English service 

Should you need an agency that offers services in English; here are three options:
 
iSmile by iThinkRent offers English support and allows tenants to pay their rent with a credit card. The fee is one month’s rent for a one-year contract.
 
GTN (Global Trust Network) specialises in guarantor services for internationals living in Japan to reassure landlords weary of renting to foreigners. Support is available in Japanese, Korean, Chinese, English, Vietnamese and Nepali. Fees are 30-100% of one monthly rent (depending on property) for a one-year contract, to be renewed annually.
 
Nihon Safety is another provider with services in English, Chinese and Korean. The contract runs for one year and no restrictions on nationality apply as long as you can pay your monthly rent. Enquire for fees.

By Mareike Dornhege

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