Key Money in Japan: What Is Reikin and Can You Negotiate It?
Moving to Japan is exciting, but for many expats, the apartment-hunting process quickly turns into “sticker shock.” Unlike many Western countries where you simply pay a deposit and the first month’s rent, renting in Japan often requires upfront costs equal to four to six months of rent.
The two most confusing and misunderstood fees are Shikikin (security deposit) and Reikin (key money).
Understanding the technical, legal, and practical differences between them is essential — especially if you want to reduce your initial rental costs.
Before diving into reikin, it is also important to understand how security deposits are returned when moving out in Japan.
👉 【Moving Out in Japan: 5 Essential Rules to Protect Your Security Depositined】
What Is Shikikin (Security Deposit)?
Shikikin (敷金) is a refundable security deposit paid to the landlord at the beginning of your lease. It is legally recognized under Japan’s Civil Code as a guarantee fund designed to protect the landlord.
Its primary purposes are:
- Covering unpaid rent
- Covering repair costs beyond normal wear and tear
- Covering cleaning expenses at move-out
When you move out, restoration costs are deducted from the shikikin. Any remaining balance must be returned to you.
The standard amount is usually 1 to 2 months of rent, although high-end properties may require more.
Importantly, because shikikin has a clear legal basis, landlords must handle it according to law. It cannot simply be kept arbitrarily.
To better understand what counts as repair costs and what falls under normal wear, I will explain more detail in a separate article.
What Is Reikin (Key Money)?
Reikin (礼金), literally translated as “gratitude money,” is completely different.
It is a non-refundable payment made to the landlord when you sign the lease. Unlike shikikin, it is not a deposit and is never returned.
It is typically 0 to 2 months of rent, though in central Tokyo or new luxury buildings it may be higher.
Unlike shikikin, reikin:
- Is not used for cleaning or repairs
- Is not deducted at move-out
- Is never refunded under any circumstances
For many foreigners, this feels like paying money “for nothing.” And legally speaking, that feeling is not entirely wrong.
Is Key Money Required by Law in Japan?
No. There is no Japanese law that requires tenants to pay key money.
Shikikin has a legal foundation under the Civil Code.
Reikin does not.
Reikin exists purely as a contractual condition based on custom.
Because Japan follows the principle of freedom of contract, landlords are free to set rental conditions. If the contract states that reikin is required and you agree to it, it becomes enforceable.
However, the absence of legal obligation is what makes negotiation possible.
Understanding this distinction is essential for anyone researching tenant rights in Japan.
For your reference, the Tokyo Metropolitan Government’s official housing FAQ, key money is described as a unique Japanese custom rather than a legal requirement.
(Source: Tokyo Metropolitan Government)
Why Does Key Money Still Exist?
To understand reikin, you must understand its historical roots.
After the 1923 Great Kanto Earthquake and again after World War II, housing in Japan was extremely scarce. Tenants competed fiercely for available units. Offering “gratitude money” to landlords became a way to secure a place.
In the 1960s and 1970s, when students moved from rural areas to major cities, parents would often give extra money to landlords as a way of asking them to “look after” their child.
Although housing shortages are no longer severe in most areas, the practice remains in high-demand neighborhoods such as central Tokyo. In premium buildings or newly constructed properties, landlords often maintain reikin as a standard condition simply because market demand allows them to.
If you are still deciding where to live, comparing the best areas in Tokyo for expats may help you understand where reikin is more common.
👉 【Best Areas to Live in Tokyo for Foreigners】
Regional Differences in Japan
Japan is not uniform when it comes to rental customs.
In Tokyo and most of the Kanto region, the standard model includes shikikin and reikin.
In Kansai (Osaka, Kyoto) and parts of Kyushu, the “shikibiki” system is common. Under this system, a non-refundable portion of the deposit is automatically withheld when you move out.
Interestingly, Hokkaido largely avoided the reikin tradition.
Understanding regional variation can open opportunities to reduce costs.
Shikikin vs Reikin: The Real Difference
Although both payments are made upfront, they serve entirely different legal and financial purposes.
Shikikin is legally grounded collateral, refundable after deducting repair and cleaning costs.
Reikin is a non-refundable gratitude payment with no legal basis beyond contract.
Shikikin protects the landlord against risk.
Reikin rewards the landlord for granting access to the property.
Shikikin is reconciled at move-out.
Reikin disappears on day one.
This distinction is critical when calculating your true initial rental cost in Japan.
Summary Table for Renters
| Feature | Shikikin (Security Deposit) | Reikin (Key Money) |
|---|---|---|
| Legal Basis | Yes (Civil Code) | No (Custom only) |
| Refundable? | Yes (minus cleaning/repairs) | No |
| Main Purpose | Collateral for damages/rent | “Thank you” gift to landlord |
| Standard Amount | 1–2 months of rent | 0–2 months of rent |
Can You Negotiate Reikin (Key Money)?
Yes — and this is where strategy matters.
Because reikin is not legally required, it is purely a contractual condition. That means it can be negotiated.
Landlords are more likely to reduce or waive reikin when:
- The property has been vacant for some time
- The move-in date is during the off-season (April to August)
- The building is older
- You show strong intent to sign immediately
- The rental market in that area is competitive
In contrast, brand-new buildings, luxury apartments, and properties near major stations in central Tokyo are much less flexible.
Your real estate agent plays a critical role here.
If you want to better understand how the rental screening process works before negotiating, read this guide:
👉 【How to Rent An Apartment in Japan―A Step-by-Step Guide for Foreigners】
What About “Zero-Zero” Properties?
Some apartments advertise “zero-zero” conditions, meaning zero deposit and zero key money. Landlords may have a specific reason for setting the key money to zero, and in some cases, they may be compensating for it in other ways.
For example, they sometimes come with:
- Higher monthly rent
- Short-term cancellation penalties
- Strict renewal fees
- Higher restoration charges
Zero reikin does not always mean cheaper in the long run.
How Much Does It Really Cost to Move In?
In central Tokyo, upfront costs may include:
- First month’s rent
- Shikikin (1–2 months)
- Reikin (0–2 months)
- Agency fee
- Fire insurance
- Lock exchange fee
- Guarantor company fee
This is how total initial costs often reach four to six months of rent.
FAQ: Key Money and Rental Costs in Japan
Is key money mandatory in Japan?
No. There is no law requiring it. It is a contractual condition set by landlords.
Can foreigners avoid paying reikin?
Yes. By searching for “No Reikin” listings, negotiating, or targeting older buildings, many foreign tenants reduce or eliminate it.
Why is key money still common in Tokyo?
Because landlords in high-demand areas maintain leverage and can set stronger conditions.
Is shikikin refundable?
Yes. It must be returned minus legitimate repair and cleaning costs.
Can I dispute key money after signing?
No. Once agreed in a signed contract, it becomes enforceable.
Professional Insight from a Tokyo Real Estate Agent
As a licensed real estate agent based in Tokyo, I regularly see foreign tenants misunderstand Japan’s initial rental structure.
The biggest mistake? Assuming all upfront fees are legally required.
They are not.
Shikikin is legally grounded.
Reikin is contractual custom.
Negotiation is possible, but it largely depends on the property’s level of demand and overall market conditions. In many cases, you should be prepared for the possibility that the landlord may not respond positively to the request.
However, understanding how the system works is essential if you want to avoid paying unnecessary costs. Understanding the system is not just about culture — it is about leverage.
If you’re unsure whether certain fees are reasonable or negotiable, feel free to reach out before signing a lease. A quick consultation can help you make informed decisions and potentially save a significant amount on your upfront expenses.