When renting an apartment in Japan, you may be told that you need to use a rent-guarantee company. A rent-guarantee company is a private company that guarantees rent and certain other payments to the landlord or property management company if the tenant fails to pay.
Traditionally, rental contracts in Japan often relied on a personal guarantor, usually a parent, sibling, or other relative. However, if rent is actually left unpaid, relying on an individual guarantor alone can make the situation difficult to handle. For that reason, many rental contracts now require a guarantee company as protection against unpaid rent.
The tenant pays a guarantee fee when signing the contract. Depending on the agreement, additional fees may also be charged when the guarantee is renewed. This is an extra cost on top of the rent, but the guarantee company is taking on the risk that the rent may not be paid.
One important point is that if the guarantee company pays the landlord, the tenant’s obligation does not disappear. The company can later demand repayment from the tenant for the amount it covered. It is not a service that pays the tenant’s rent for free.
There can also be an advantage for the person renting the property. Some people have no family members they can ask to act as guarantors, or they may be estranged from their family. In such cases, a guarantee company can make it possible to rent a home without relying entirely on a personal guarantor.
The exact requirements vary from property to property. In some cases, using a guarantee company means that no personal guarantor is needed. In others, the landlord may require both a guarantee company and a personal guarantor.
For landlords, a rent-guarantee company provides protection against unpaid rent. For tenants, it can provide another way to rent a home when finding a personal guarantor is difficult. Despite the word “guarantee,” however, it does not erase the tenant’s responsibility to pay. Its role is to guarantee payment to the landlord when the tenant does not pay, while the tenant remains responsible for the amount owed.
