If you’re renting an apartment in Japan, you’ll likely encounter a fee called key money, or reikin (礼金).
Key money is a non-refundable payment to the landlord, typically equivalent to one month’s rent, that you pay when you sign your lease. Unlike a security deposit, you don’t get it back when you move out.
For a lot of foreigners, this is confusing and frustrating. You’re already paying a security deposit, agency fees, and first month’s rent, and now there’s an additional payment that’s essentially a gift to the landlord for letting you rent the place. It feels like an outdated practice because it is one, but it’s still common enough that you need to plan for it.
How much is key money and when do you pay it?
Key money is typically one month’s rent, though some landlords charge two months in competitive areas. If your rent is 150,000 yen per month, expect to pay 150,000 yen in key money on top of your other move-in costs.
You pay key money when you sign the lease, along with your security deposit, agency fee, and first month’s rent. This is why moving into a Japanese apartment can require four to six months’ worth of rent upfront, which catches a lot of people off guard.
It’s important to understand that key money is separate from the security deposit (敷金, shikikin). The security deposit is refundable when you move out, minus any deductions for cleaning or repairs. Key money is not refundable under any circumstances.
Why does key money exist?
Key money originated in the aftermath of World War II, when Japan faced severe housing shortages. With cities destroyed and millions of people displaced, demand for housing far exceeded supply. Tenants began offering landlords extra money as a gesture of gratitude for being given a place to live, and this practice became known as reikin.
Over time, what started as a voluntary thank-you became an expected part of the rental process. Even though the housing shortage ended decades ago, the custom stuck around because landlords had no reason to stop asking for it.
Why Does Reikin Still Exist?
There are various reasons as to why key money has not been phased out, but here are a couple. The first reason is market competition. In highly competitive markets like central Tokyo, key money serves as a demonstration of commitment, helping landlords to gauge the seriousness of potential tenants. This upfront payment also deters any applicants who may not be fully committed to a given property.
Another reason key money has not been phased out is because of risk assessment. For landlords, reikin is a way to make an immediate profit—rather than charging higher rents—while managing potential financial or tenancy risks.
It is unlikely that key money will completely stop as a practice in the near future. In fact, the percentage of properties requiring key money has gone up across all price ranges in the greater Tokyo area in recent years.
Currently, roughly 54% of properties renting for 100,000 yen or less require key money, and this percentage rises as the rental price increases. In other words, reikin is still a customary standard in Japan.
How to avoid paying key money?
Key money is common, but there are several ways to reduce or eliminate this cost if you know where to look.
Search for no-key-money listings
Many rental platforms let you filter for properties for rent that don’t require key money. Look for listings marked “礼金なし” (no key money) or “reikin zero.” This is becoming more common as landlords compete for tenants, especially in areas with higher vacancy rates or for properties that have been sitting empty for a while.
That said, be careful with no-key-money listings. Some landlords eliminate key money but make up for it with higher monthly rent, additional fees, or stricter lease terms. Always look at the total cost of move-in and the full monthly expense, not just whether key money is listed.
Consider furnished or short-term apartments
Furnished apartments and short-term rentals aimed at foreigners often don’t charge key money. Companies like Sakura House, Oakhouse, and similar providers have simplified their fee structures and typically only require the first month’s rent plus a small deposit.
If you’re staying for a year or less, this can be a much cheaper option than a traditional lease.
Live in a share house
Share houses are another way to avoid key money entirely. Most share house operators don’t charge it, and they also tend to have lower deposits and no agency fees.
You get your own private room but share common areas like the kitchen and bathroom. It’s not for everyone, but if you’re flexible on living arrangements, it’s one of the cheapest ways to get settled in Japan.
Negotiate or ask for a discount
Key money isn’t always fixed. If a property has been vacant for a while or the landlord is having trouble finding tenants, there’s room to negotiate.
Your real estate agent can ask on your behalf whether the landlord would accept reduced key money or waive it entirely in exchange for a longer lease commitment or a quicker move-in date.
This works best for properties that are clearly struggling to attract tenants. If it’s a popular apartment in a prime location, the landlord has no incentive to negotiate. But for older buildings, units that have been listed for months, or apartments in less desirable areas, it’s worth asking.
Ask about free rent periods
Some landlords offer a free rent period of one or two months instead of reducing key money. This doesn’t eliminate the upfront cost, but it reduces your overall expense over the course of the lease.
If you can’t get the landlord to budge on key money, asking about free rent is another angle to try.
Work with a foreigner-friendly agency
Agencies that specialize in helping foreigners find housing often have relationships with landlords who are more flexible on fees.
At Tokyo Portfolio, we work with property owners who understand the challenges foreigners face and are often willing to negotiate on key money, especially for qualified tenants who can demonstrate stable income and a commitment to the lease.
Conclusion
Key money is one of those costs that feels arbitrary because it is. It’s a holdover from a time when housing was scarce and tenants had no leverage. That’s no longer the case, but the practice persists because landlords have little incentive to abandon it.
The good news is that you have options. You can search for properties that don’t require key money, consider furnished apartments or share houses, negotiate with landlords, or work with an agency that knows how to navigate the system. You don’t have to accept key money as an unavoidable cost.
If you’re looking for an apartment in Tokyo and want help finding options that fit your budget, get in touch with us at Tokyo Portfolio. We can walk you through your options and help you avoid unnecessary fees.
