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Japan: Housing Rental Business Act

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Narai-juku, Japan. Picturesque view of old Japanese town

The Diet passed the Housing Rental Business Act (an official translation is yet to be determined) on June 9 2017. The Act, which will take effect in June 2018, defines and regulates vacation rental businesses such as Airbnb.

Before this new Act, lodging businesses in Japan were basically limited to four business categories: hotels, Japanese inns, hostels and boarding houses. Anyone who wished to start a lodging business was required to obtain permission from a local governor. This process was accompanied with high hurdles for individuals and companies who wished to operate a vacation rental business.

Under the new Act, a housing business is defined as a business that is operated by any individual/company, other than a lodging business operator under the existing Hotel Business Act, to rent out an existing room/house to tourists on a daily basis, repeatedly and continuously, for compensation, and where the total time that the room/house is for rent does not exceed 180 days per year. Where a room/house is rented for more than 180 days per year, it will be regarded as a traditional type of hotel business that requires permission.

Anyone who wishes to start letting out his or her room/house to tourists (typically, an ordinary citizen who wishes to be a provider of a room/house through a vacation rental business) will be required to submit advance notification to a local governor subject to several regulations for the purpose of the protection of the tourists who will stay at the room/house. For example, anyone who rents out his or her room/house must take appropriate measures to protect tourists' sanitary and safety requirements, and must provide information in foreign languages to foreign tourists. The new act also deems it mandatory that a room/house provider deal with complaints or enquiries emanating from the neighbourhood surrounding the rented property since problems have occurred between unregulated room/house providers and neighbouring residents. Under the act, if a room/house provider is absent while renting out his or her room/house, that provider must outsource the management of the room/house to another individual/company that provides management and organisation services.

Additionally, this new act regulates any individual/company that wishes to start a business that manages and organises housing businesses or that acts as an intermediary for them. To start a business that manages and organises housing businesses, registration is required with the Ministry of Land, Infrastructure, Transport and Tourism. To start a business that acts as an intermediary for housing businesses, registration is required with the Japan Tourism Agency. Operators of these businesses will be subject to the supervision of the governing agencies mentioned above.

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Yuki Matsumiya

Nagashima Ohno & Tsunematsu