Meeting Japan's cyber homeless

Sounds near the point where landlords are incentivized to have a high turnover rate. At a 1 year average turnover & the higher key money estimate, that's >50% extra revenue (then indefinite tenants) with <10% extra cost (assuming finders fee & insurance goes to finders & insurers).

Here (Melbourne) You usually need approximately 3X1 month to rent (more if you include average contact breaking costs). Deposits get held by bureaucrats so no one is incentivized in any way.

Yeah, those are relevant details and I take your point. Another issue is that Japanese tend to be highly conservative/risk-averse and would tend not to enter into contracts they were not sure they could uphold in the future. If an unemployed westerner found himself with funds available only to pay the first six months of a one-year contract, they might enter into it anyway on the assumption they would be able to find a solution in time. A typical Japanese would tend to be far more hesitant, even if the consequences for breaking the lease are not severe.

Hm, key money. Well firstly, there's 2 types, as you would know. There's 礼金 (reikin), the one you mentioned, and 敷金 (shikikin), which is basically the equivalent to a bond in the west. The first is a non-returnable "gift", the second is refunded in part depending on the condition of the house upon the tenant's departure. Of course they always find something to deduct but I've always got most of it back. They can vary according to area - in Tokyo you'd typically pay 1 or maximum 2 months gratuity and 2 for the security deposit. I've heard it's much higher in Kansai. There could be local differences in getting back the deposit as well, I haven't lived anywhere outside Kanto, but that does seem strange - I would certainly try to get it back if I were you!

As for the "gift" part, although it's annoying to have to pay up front, it's best to treat it as just paying part of the rent up-front, instead of amortised over the life of the tenancy. If it's a 12 month lease and 1 month key money, just imagine you're paying forward part of the rent, but then getting an 8% discount for the rest of the year. Works out the same; it all goes to the landlord, so it's just part of the price.

The key money also does have a couple of main reasons, or at least so I have been informed. Firstly, before you move in, the landlord has (hopefully) performed some maintenance - typically replacing the tatamis, repairing any damage, etc - and of course making the key. Since a lot of his expenses have been incurred in a big bang, he would like upfront payment for them, and then you can both settle down to a lower regular payment - you for rent, and he for his own bills. So it's kind of like a cash-flow smoothing gambit to cover pricey periodic maintenance, which you might have noticed, is often done at the last minute - upon receipt of the money to pay for it!

The second and perhaps more important reason is that "gifts" are taxed under a different category, and at a lower rate, than rental property income. It is in the landlord's interest to get as much of the rent as possible up-front in the form of a "gift".

As for the finder's fee .. well even this is maybe not as bad as it might seem. All rental agencies take fees; it's just a question of whether you have their service fee deducted from the (inflated to compensate) rent each month, or just pay them up front. It's probably a wash in the end. If anything, the prospect of an imminent, and big, payday seems to spur the agencies to extraordinary levels of service to get you into one of their places.

So yeah anyway, there are reasons. Those reasons suck and benefit the other side, not you, but there are reasons! : )

And you are completely right to point out that the "ticket price" is only part of the story. Including everything it can definitely be 20% more all told. I should have mentioned that.

Oops, turned into a bit of an essay, sorry. Anyway I agree with what you said.

People will probably still have sentimental attachements to souveniers. But apart from that, you may be right --- taking the current the lifestyle of some rich people as an indicator.

Of course we'd have to dramatically lower the transaction costs for short term rents of various goods that you may want to us.