Tenant Retention in Japan

1. Turnover cost, honestly

Monthly rent:              ¥100,000
Vacancy 1.5 months:        ¥150,000  (national average for Tokyo studios)
Restoration cost:          ¥80,000   (basic clean + wallpaper touch-up)
Brokerage (AD 1 month):    ¥100,000  (advertising fee to bring the new tenant)
Total per turnover:        ¥330,000

At 25% annual turnover:    ¥82,500/year drag  ← 6.9% of gross rent

2. What Japanese tenants actually value

• Fast, polite responses to repairs (within 24h)
• Clean common areas, especially the entrance/mailbox area
• Building smell (musty entrance = they move at renewal)
• Predictable renewal terms (avoid raising rent at renewal unless market is meaningfully higher)
• Wi-Fi included (¥3,000/mo cost, massive retention effect for singles)

3. Restoration cost rules (原状回復)

MLIT guidelines apply: normal wear and tear is the landlord's cost, tenant-caused damage is the tenant's. Wallpaper depreciates over 6 years — you cannot bill full replacement to a 5-year tenant.

Aggressive restoration billing is a top complaint on tenant review sites and correlates with lower renewal rates from prospective tenants doing pre-signing research. Play fair.

4. Rent renewal (更新料)

Traditional 2-year renewal fee is 1 month rent to the landlord. Increasing share of landlords waive this or spread it as small monthly increment. Waiver + no rent bump = the single strongest retention lever.

5. Building-level moves

• Repaint common area every 5–7 years (~¥1M for a small building)
• Replace entrance lighting to LED (¥30K, hugely improves perception)
• Update mailboxes if 20+ years old (¥200K)
• Pest control contract (¥30K/year, prevents move-out cascade)

Every 5% reduction in turnover offsets ~35 bps of gross yield. Compound this over 10 years and it's the single biggest owner-controlled lever.