Locating Vacation Rental Investment Properties in Japan: Can Rentals Be Approved for Vacation Rental Permits?

Vacation rental investments are gaining traction in the real estate market, offering higher profitability compared to traditional rentals, especially with the increasing number of international tourists visiting Japan. However, not all properties qualify for vacation rentals.

To operate a vacation rental, various permissions are required, and many properties may not meet the necessary criteria for such operations.

Before investing in a property for vacation rental purposes, it’s crucial to understand the specifics of vacation rentals, including eligible properties and effective strategies to find them.

This guide is tailored for foreign investors looking to delve into the Japanese real estate market, offering insights on locating ideal vacation rental investment properties in Japan.

Navigating Legalities and Requirements for Vacation Rental Properties in Japan

When it comes to vacation rentals in Japan, many may think of them as an easy entry into the lodging business. While vacation rentals offer a more accessible approach, they are still regulated accommodations and must meet specific criteria to ensure guest safety and compliance.

Understanding Eligible Properties for Vacation Rentals

The foremost concern when acquiring vacation rental investment properties is their compliance with legal standards.

For instance, the Japanese Housing Accommodation Business Act outlines several requirements for properties to qualify as vacation rentals:

【Facility Requirements】

• Must have four essential amenities: a kitchen, a bathroom, a toilet, and a washbasin.

【Residency Requirements】

• The property must be:
  (1) Currently used as a primary residence.
  (2) Open for new occupants.
  (3) Available for use by its owner, renter, or subletter (e.g., vacation homes or second homes).

Additionally, properties registered under the Housing Accommodation Business Act are treated as fire safety targets similar to inns, hotels, and lodgings (though conditions differ for properties where the operator is always present and the total floor area for guest sleeping is under 50㎡).

Therefore, it’s crucial to carefully check property information and your operational plans against legal requirements.

Understanding Subleasing Permissions for Vacation Rentals

Surprisingly, it’s possible to operate vacation rentals in rented properties, provided subleasing is permitted.

If planning to rent a property for vacation rental purposes, ensure that subleasing is allowed to avoid potential legal issues, including possible termination of the lease under civil law for unauthorized activities.

Given the nature of vacation rentals being used by numerous guests, properties that permit subleasing are not common. Be prepared for this as you search for suitable properties.

The Three Key Types of Vacation Rental Operations in Japan: A Guide for Foreign Investors

When it comes to vacation rentals in Japan, it’s not a one-size-fits-all scenario.

The type of permission system under which you apply significantly influences how you operate your business.

Even aspects as crucial as the annual operational days vary among the systems.

Depending on the area where you wish to operate, the applicable system may differ. So, it’s essential to be well-informed before diving in!

Simple Lodging Business Under the Ryokan Business Law

The Simple Lodging Business is the traditional system of vacation rental permissions.

Its notable features include:

• No restrictions on minimum stay or operational days.
• A minimum of 33㎡ floor space (3.3㎡ per person for under 10 guests).
• Mandatory installation of safety and fire prevention equipment.
• High threshold for obtaining permission.

It’s similar to personally running an inn or hotel, offering high operational freedom with the right facilities.

Special Zone Vacation Rentals in National Strategic Special Zones

Special Zone Vacation Rentals are exclusive to areas designated as National Strategic Special Zones with specific ordinances.

They feature:

• No limit on operational days, but a minimum guest stay of 2 nights, 3 days.
• Generally, a minimum of 25㎡ per room (subject to local jurisdiction).
• Mandatory safety and fire equipment.

The minimum space requirement tends to be more relaxed compared to other systems. However, regulations are heavily influenced by local ordinances.

Residential Lodging Business Under the New Housing Accommodation Business Act

Enacted in June 2018, the New Housing Accommodation Business Act, colloquially known as the “New Vacation Rental Law,” marks a significant shift.

Its key characteristics are:

• No minimum stay, but a cap of 180 operational days per year.
• Minimum of 3.3㎡ per person.
• Safety and fire equipment required (waived if the owner is present and the sleeping area is under 50㎡).
• Easiest to obtain permission, as it requires merely a notification to the administration.

Currently, this is the most accessible method to start a vacation rental. However, the limitation on operational days may impact revenue growth.

As a foreign investor interested in Japan’s real estate, understanding these varying regulations and systems is vital for successful investment in vacation rentals.

Always check the legalities and requirements specific to the area of your interest to ensure a compliant and profitable venture.

Unlocking Japan’s Vacation Rental Market: How to Find the Perfect Property

For foreign investors keen on Japan’s real estate, venturing into vacation rentals can be rewarding. However, with a vast array of properties on the market, knowing where to start can be daunting. To make your search more efficient, here are the recommended ways to find ideal vacation rental investment properties in Japan.

Utilize Specialized Vacation Rental Portals

For a comprehensive collection of listings, vacation rental-focused portals are your go-to.

These sites allow for tailored searches, aligning with your specific needs. While these listed properties generally have permission from owners and are sublet-able, legal compliance is often not guaranteed.

It’s crucial to personally verify if the property meets all legal requirements for vacation rentals.

Consult Real Estate Agencies

Real estate agencies hold a wealth of property information, making them a valuable resource.

When consulting them, clearly state your intent to operate a vacation rental.

This face-to-face interaction allows for detailed communication of your requirements, and you might even access listings not available online.

While their primary focus might not be on vacation rental properties, a visit could be well worth it.

Engage with Vacation Rental Management Companies

Another option is to consult vacation rental management companies. Although they may have fewer properties, their specialization in vacation rentals means the options they provide are highly relevant.

With their extensive knowledge in the field, they offer reliable assistance in selecting the right property. Some even sell properties that are already generating profit under their management.

Discover the Key to Successful Vacation Rental Investments in Japan

Vacation rentals offer a lucrative investment opportunity in Japan, blending ease of start-up with promising returns.

However, navigating the rules of this accommodation business is crucial. Identifying properties eligible for vacation rental permits is a vital step from the very beginning of your investment journey.

Our company specializes in vacation rental operations, backed by years of experience and expertise. We provide comprehensive support, ensuring even real estate investment beginners can confidently proceed with property selection and other related decisions.

If you’re interested in vacation rental operations or seeking advice on vacation rental investments, don’t hesitate to contact us.

Our team is ready to guide you through the complexities of the Japanese real estate market, helping you find and secure the ideal property for your investment goals. Let’s embark on this profitable journey together in Japan’s dynamic vacation rental landscape.