Welcome to the first in a three part series about short term rentals, namely AirBnB in Tokyo. Over the last few months we’ve had many of our clients come to us with questions about finding a place to stay in Tokyo, but more importantly about buying or renting property in order to let it on AirBnB. The topic is at times convoluted and at other times complicated, and we’ve decided to take it upon ourselves to create an English language resource for those hoping to venture into the territory.

Introduction

You might have heard the term minpaku thrown around in recent years in regards to operating an AirBnB in Japan and wondered what it meant. In this installment we hope to explain the difference – in the legal sense – between minpaku, ryokan (including hotels), and rentals: the restrictions and permissions of each designation. The second article (out next week) will breakdown the rules – by ward – surrounding owning and operating an AirBnB in Tokyo, helping you to navigate and prepare your own property fully informed and ready to go. The third article will go into detail regarding alternative routes to consider if you’re looking to turn a profit and discover that running an AirBnB in Tokyo is maybe more hassle than it’s worth. Without further ado, let’s get into it.

There have been rumors circulating for a long time that AirBnBs were made illegal in Japan. Although this is not true per se, the introduction the Private Lodging Business Act, aka. “Minpaku law”, in June 2018 is what sparked the rumor. Prior to the introduction of this new law there were no defined conditions or requirements for those operating AirBnBs and similar enterprises – any rental under 30 days was technically illegal. The new law sought to define, regulate, and better quantify the short-term rental space. As frustrating as the bureaucracy Japan concocts is, the law was introduced to legalize home-sharing and make the experience safer for everyone concerned.  In recent months there has been talk of revisions, however there have been no changes nor new laws introduced since 2018, and given there seems to be no official move to change the law any time soon, we would like to focus on the current state of affairs. (We’ll break down the rules for each ward in Tokyo in part two).

The introduction of the new law was sparked by a couple of important factors:

1. Overcrowding and Safety Concerns: As the popularity of platforms like Airbnb grew, the number of short-term rentals in Japan surged, leading to overcrowded neighborhoods, noise complaints, and issues with sanitation and fire safety. Many of these properties were not subject to the same regulations as hotels or traditional guesthouses, causing concerns for both residents and tourists.
2. Unregulated Properties: Prior to the new law, anyone could list their property on platforms like Airbnb without any oversight. This created issues around illegal rentals, with many owners not following safety regulations, tax laws, or proper reporting to local authorities. The lack of enforcement of rules posed safety risks for guests and neighbors.
3. Impact on Local Communities: Many residents in popular tourist areas began to complain about the influx of short-term rentals, arguing that it led to a loss of neighborhood character, rising rental costs, and a lack of available housing for locals. The law was partly introduced to address these concerns and strike a balance between tourism and local living conditions.
4. Preparation for 2020 Olympics: With Japan set to host the 2020 Summer Olympics in Tokyo, there was a heightened concern about the country’s image and the need to provide safe, regulated accommodations for the influx of tourists. The stricter laws were seen as necessary to ensure that properties were adequately prepared for the event, without compromising safety or quality.
5. Tax Revenue and Regulation: Japan wanted to ensure that hosts paid the appropriate taxes on their rental income, as many did not report earnings or followed proper tax procedures. The new laws required hosts to register their properties with the government, enabling authorities to track and tax them more effectively.

Overview of Minpaku Law

Minpaku (hereafter used interchangeably with “AirBnB”), is categorized in many ways the same way as a regular residential property and therefore it is zoned in the same way. This comes as a result of the fact that minpaku is considered unique and is characterized by letting people into one’s home and the guest interacting with the local community. Minpaku has a limitation that hotels (and as we’ll see latter, rental properties more generally) don’t have, and that’s a 180 day cap. That is to say a property can only be used as an AirBnB for approximately half the year, the idea being that the other half would be as a residence for the owner.

Registration Requirements

Under the Minpaku law, anyone who wants to offer short-term rentals must register their property with the local government and obtain a Minpaku registration number. This is sometimes informally referred to as a “Minpaku license,” but it’s essentially a notification/permit system. The registration number must be displayed in any listing or advertisement (e.g., on Airbnb or other platforms). Operating without registering is illegal, and platforms like Airbnb are obligated to de-list properties that don’t show a valid registration ID.

The requirements to register are quite extensive. A host must prepare numerous documents and meet specific criteria: for example, proof of identity and residence, a certificate of good conduct (no bankruptcy or criminal gang affiliation) building floor plans, a letter of approval from the building management (if it’s a condominium/apartment, since many building HOAs ban short-term rentals) notification to neighbors, and a plan for how the property will be managed. The host must file these with the local ward/city office (often the local health department or tourism section handling Minpaku). Only after passing inspections (including fire safety checks) and submitting all paperwork will the host receive the official notification license number.

Operational Limits

The law distinguishes between hosts who live on-site and those who do not. If the owner or primary host doesn’t reside at the property, they must appoint a registered “Minpaku administrator” to manage the rental on their behalf. In practice, this means an off-site host needs to hire or contract with a property management company that is licensed to oversee Minpaku properties. This company or individual must be able to respond to guest issues or neighborhood complaints promptly. It’s a legal requirement to have a contact person physically available if the host isn’t nearby. Many hosts hire professional management firms for this role, which adds to operating costs. Owning and operating an Airbnb from abroad isn’t allowed unless you have such an agent in Japan.

It is exceedingly difficult to start an AirBnB in an apartment or condo (マンション) as although you own the property and it is appropriately located, you are at the mercy of the building’s management. In many instances (read: most – if not all), buildings and their operators flat-out refuse to allow occupants to operate AirBnB in one of their units. As minpaku is defined by the founding idea that you are staying in someone’s house, the baseline permissions extend to those same areas as any ordinary residence. The table below shows how the zoning laws look in Tokyo. Different businesses have different restrictions regarding in which areas they’re allowed to operate.

General Zoning Laws
	Hotels	AirBnB	Residential
First-class low-rise residential area	❌	☑️	☑️
Class 2 low-rise residential area	❌	☑️	☑️
Class 1 medium and high-rise residential area	❌	☑️	☑️
Area dedicated to second-class middle and high-rise dwellings	❌	☑️	☑️
Class 1 residential area	☑️	☑️	☑️
Class 2 residential area	☑️	☑️	☑️
Semi-residential area	☑️	☑️	☑️
Neighborhood commercial area	☑️	☑️	☑️
Commercial area	☑️	☑️	☑️
Quasi-industrial zone	☑️	☑️	☑️
Industrial area	❌	☑️	☑️
Special Industrial area	❌	❌	❌

Safety and Reporting Obligations

Under Japan’s Minpaku Law:

• Hosts must obtain and display a registration number for their property listing.
• If the owner does not reside on the property, they must designate an administrator to manage it.
• Short-term rentals can only operate for a maximum of 180 days per year.
• Hosts are required to submit guestbook details to the government every two months.
• A minimum of 3.3 square meters of space dedicated for each guest.
• Installed and regularly checked emergency lighting equipment along with displayed evacuation routes.
• Information on how to use any equipment or amenities in a foreign language, along with foreign language information on means of transport and emergency phone numbers.
• Fire department approval and emergency fire safety equipment that is regularly checked.
• Waste must be collected from an industrial waste collection company rather than the residential waste collection services.
• Signs notifying the building’s purpose must be posted in a clearly visible and public place on the property.
• Prepare and maintain a guestbook that records guest information (name, nationality, and passport number must be listed) and days of business.
• This information must be kept for up to three years.

Every two months operators must report:

• The number of days hosting lodgers in the notified building.
• The current number of lodgers.
• The total number of lodgers.
• A breakdown of the number of lodgers per nationality.

Many of these have fines or penalties if not followed (e.g., failing to report your usage can eventually lead to loss of your license).

Tax Implications

Income Tax: Any income earned from short-term rentals is subject to income tax (national and local resident taxes, if applicable) in Japan. If the host is an individual, they must declare rental income on their tax return. If the host is a company, corporate tax rules apply. There’s nothing unique about Minpaku income versus other income – it’s taxed at the normal rates.

• Consumption Tax (JCT/VAT): Japan’s Consumption Tax is 10%. Not every host will need to collect this – it depends on their status. If a host’s annual rental revenue exceeds 10 million JPY, they become a taxable enterprise for consumption tax, meaning they should collect 10% from guests or factor it into pricing. Below that threshold, a host might be a “tax-exempt business” for JCT, but with the new invoice system in 2023, some hosts may opt into consumption tax to allow corporate guests to claim tax deductions. 
• Lodging Tax (Accommodation Tax): Tokyo has a local accommodation tax (also known as a hotel or lodging tax) which was the first in Japan. Tokyo Metropolis, the rate is: ¥0 for stays under ¥10,000 per person per night, ¥100 for ¥10,000–¥14,999, and ¥200 for ¥15,000 and above. This tax is per person, per night.
  • Important update: Initially, Tokyo’s lodging tax law only applied to licensed hotels/inns and excluded unlicensed properties. Now that Minpaku properties are licensed (registered), they are generally subject to this tax as well. Hosts in Tokyo are responsible for collecting it from guests and remitting it to the Tokyo Metropolitan Government. (Airbnb does not automatically collect Tokyo’s lodging tax as of the last update – hosts either include it in the price or request it on arrival. Airbnb only has agreements to collect lodging tax in certain areas like Osaka and Kyoto, not Tokyo.
• Property Tax: Owning a property in Japan incurs annual fixed asset (property) tax and city planning tax.

Special Zone Minpaku

Another legal route mentioned is “TokkuMinpaku” (National Strategic Special Zone private lodging). Before the 2018 national law, certain areas in Japan (designated special zones) had their own rules allowing short-term rentals. These still exist as an alternative framework. For example, parts of Tokyo’s Ota Ward, and Osaka were special zones. Special Zone Minpaku requires a separate certification and has different rules: no 180-day limit, but a minimum stay of 2 nights (guests can’t book just a single night) and a maximum stay of 9 nights. It also has a much larger space requirement (at least 25 m² per guest), far above the regular Minpaku standard. Because of the space requirement, this path is mainly used by owners of larger vacation homes. However, it’s true that special zone licenses remain an option in specific tourist-heavy districts, offering year-round operation for those who qualify. This is far rarer to find and/or achieve in Tokyo as there are few properties with the space necessary to fulfil the requirements for this designation.

Hotels, Inns, and Ryokan (旅館）

Hotels come in a variety of different forms in Japan but they largely follow as similar pattern. There are different categories of hotel but broadly speaking they follow a similar pattern. There are four main categories according to law, hotels (ホテル), inns (旅館), “simple lodgings” (簡易宿所), and boarding houses (下宿). Each of these has their own requirements and definitions but broadly speaking follow similar fundamental rules and laws. Floor plans and maps need to be provided for approval in advance, before – much like minpaku properties – neighbors need to be informed of the proposed project. The hotel license and qualification is held to higher and more rigorous standards due to the nature of them generally being larger enterprises. There are more business oriented documents that are required for submission, for example, logos, tax returns, checks with the fire department, business and floor plans, among other similar documents. For those operating an AirBnB, should they wish, their business and property can be qualified as a hotel. Of course, the hoops are numerous but for those willing to jump them they can operate their AirBnB 365 days a year (as opposed to the minpaku limit of 180). 

Normal Rentals (賃貸）

We’d like to take a moment to discuss a final category, which is to say an ordinary rental property. The biggest and most obvious distinction between this designation and those above is the duration of stay. In Japan the minimum stay for a rental is one month – anything less would legally have to be qualified differently (see above). Stays of a couple of days or weeks – i.e. falling short of a month – would have to be treated and processed as minpaku or a hotel stay. And, if one doesn’t have the correct license this could spell trouble. That being said, normal rentals can come in many forms, furnished or unfurnished, stand-alone houses or condos, fixed-term or renewable leases. The main distinction is the application of tenancy laws, which will be explored in greater detail in part three a few weeks from now.

Conclusions

In summary, Tokyo’s regulatory landscape for short-term rentals is multifaceted, offering a range of possibilities for different types of property owners. Whether you’re looking to offer a traditional ryokan experience or simply rent out a room in your home through a platform like AirBnB, it’s crucial to understand the legal framework surrounding minpaku, hotels, inns, and regular rentals.

If you’re interested in the short-term rental market, minpaku is a popular option, though it comes with specific limitations (such as the 180-day cap) and legal requirements. On the other hand, hotels and inns, while subject to more rigorous regulations, offer the potential for year-round business operations. Regular rentals, while simpler to manage, cannot be used for short-term stays unless you have the appropriate licenses.

In our next article, we’ll dive into the specific zoning regulations across Tokyo’s wards, helping you navigate the legal intricacies of operating a short-term rental or owning property in the city. Stay tuned to get more detailed insights and actionable information as you plan your next move in the world of short-term rentals!