Security Deposits, Key Money, and The Osaka Rules

The upfront financial structure for renting an apartment in Osaka is notoriously complex for foreign investors. It involves unique historical customs—most notably "Key Money"—and is heavily restricted at the exit by the rigorous, pro-tenant Osaka Rules regarding restoration and deposit returns.

Disclaimer: This guide provides general legal information for educational purposes only and does not constitute legal advice. Deductions from security deposits are the most litigated area in Osaka residential property management. Always seek qualified Japanese legal advice. Last verified: March 2026.

Primary Upfront Fees in Osaka

When a tenant moves into a residential unit in Osaka, they are typically required to pay a combination of the following initial costs, which can total up to 4 to 6 months' worth of rent:

1. Shikikin (Security Deposit)

• Standard Amount: Typically 1 to 2 months' rent.
• Nature: This is a refundable deposit held in trust by the landlord to cover unpaid rent or tenant-caused damages upon move-out.
• Trend: To attract tenants in competitive suburban parts of Osaka, "Zero Deposit" properties are increasing, though they usually mandate a Guarantor Company and a separate move-out cleaning fee.

2. Reikin (Key Money / "Gratuity")

• Standard Amount: Typically 1 month's rent, sometimes 2 months for highly desirable built-to-rent (BTR) assets or luxury units in Minato or Shibuya wards.
• Nature: This is a non-refundable "gift" to the landlord. It is pure, upfront profit that the landlord pockets on day one.
• Legal Status: While entirely a cultural custom (originally designed to "thank" the landlord for renting out a scarce home after WWII), the Japanese Supreme Court has upheld Reikin as a legally valid and binding contractual payment.

3. Koshin-ryo (Renewal Fee)

• Standard Amount: Typically 1 month's rent paid every 2 years.
• Nature: In an Ordinary Lease, when the 2-year term expires, the tenant automatically pays this non-refundable fee to the landlord just to "renew" the paperwork. It is a critical component of a property's NOI (Net Operating Income) in Osaka.

The "Osaka Rules" (Move-Out and Restoration)

For decades, Osaka landlords routinely used the tenant's security deposit to pay for new wallpaper and professional cleaning to prepare the unit for the next tenant. This resulted in endless small-claims lawsuits. To stop this, the city introduced the Osaka Rules (Ordinance for the Prevention of Rental Housing Disputes).

The fundamental premise of the Osaka Rules (and national MLIT guidelines) is simple: "Restoration to the original condition (Genjo Kaifuku) does NOT mean returning the room to a brand-new state."

Landlord's Burden (Natural Wear & Tear)

The landlord must pay for any deterioration that occurs naturally through standard living. You cannot deduct these expenses from the security deposit:

• Fading/discoloration of wallpaper or tatami mats due to sunlight.
• Minor indentations on carpets or flooring caused by normal furniture (like a bed, desk, or TV stand).
• Small pinholes in the wall from hanging standard calendars or posters.
• The depreciation and replacement of built-in appliances like air conditioners or water heaters that reach the end of their lifespan.
• Standard, professional whole-unit "cleaning fees" at move-out (unless explicitly agreed upon via a valid Special Clause).

Tenant's Burden (Negligence or Intentional Damage)

You can only deduct from the deposit if the tenant caused damage beyond normal use:

• Leaving rain blowing through an open window, causing floor rot.
• Deep scratches to the floor from dragging heavy objects or keeping unauthorized pets.
• Yellowing/staining of wallpaper and lingering odors strictly due to heavy indoor cigarette smoking.
• Holes smashed in doors out of anger.

The Power of the "Special Clause" (Tokuyaku)

Given the Osaka Rules, landlords must pay for professional move-out cleaning out of their own pockets. However, Japanese law permits a Special Clause (Tokuyaku) to override this, shifting specific costs back to the tenant—provided the clause passes a strict 3-step test established by the Supreme Court:

1. Specific and Clear Basis: The exact nature and financial burden must be explicitly clear. (e.g., "The tenant agrees to pay a mandatory, non-refundable move-out cleaning fee of precisely 55,000 JPY regardless of the room's condition.")
2. Prior Explanation: The property manager must explicitly explain this exception before the lease is signed.
3. Explicit Consent: The tenant must usually sign or affix their seal (Hanko) specifically acknowledging that they understand they are giving up their rights under the Osaka Rules for this specific item.

If a Special Clause is vague (e.g., "The tenant pays all cleaning costs"), a Osaka court will instantly strike it down as invalid under the Consumer Contract Act, and the landlord will be forced to refund the entire deposit.

Return to Osaka Residential Overview.