If I had a dollar for everybody who asks me how to set up a minpaku or Airbnb business in Japan – well… I would have a lot of dollars. But as I mostly live in Japan, I need to convert these dollars into yen to be of any value for me. However, this is what has lead me to write this post Navigating Minpaku Compliance in Japan: A Comprehensive Guide for Getting into Short-Term Rentals.
Basically, you too need to convert your thinking around Short Term Rentals and Airbnb from an “outside-of-Japan” model to an “inside-Japan” one. Specifically in terms of compliance, licencing and business practices. For some background, I wrote about minpaku as a new asset class previously and you can check this out here.
While the popular online platforms like Airbnb theoretically offer the same easy entry to market as in other countries, navigating Japanese government regulations can be a high hurdle before you even start. Stays under 30 days fall under the legal term “minpaku” or short term rentals (STRs).
You cannot host any minpaku in Japan without a licence.
Full Stop, Period, THE END.
Without this permit, you will not even be able to list on websites like Airbnb, VRBO or Booking.com. There is no way around this as each new listing is checked by a human against the public records.
As with laws and regulations in most countries and especially Japan, things can get fairly complex. But I will do my best to break down the New Private Lodging Law (民泊新法 = Minpaku Shinpō) and guide you through the process of registering your property.
Disclaimer here – this information is correct to the best of my knowledge at the time of writing. HOWEVER, please do not consider this as legal advice and you are advised to do your own due diligence before embarking on any new business.
Understanding the New Private Lodging Law for minpaku
In the past, the two primary ways to run an accommodation business in Japan were:
- obtaining a license under the Hotel Industry Law
- receiving a special permit for designated zones.
However, in June 2017, a significant change occurred with the introduction of the New Private Lodging Law. This law empowered homeowners to operate vacation rentals by following the guidelines published by the different local government offices.
Before this law, lodging businesses in Japan were restricted to hotels, inns, hostels, and boarding homes which were (and still are) fairly complex and mostly left to the hands of professional hotel operators.
The new private lodging law simplified policies, allowing homeowners to rent out their property with relative ease, provided they meet the requirements outlined in the Residential Accommodation Business Act (住宅宿泊事業法 = jūtaku shukuhaku jigyō hō).
Under this Business Act, there are three types of operators defined.
1. “Private Lodging Business Operator”
⇒ A person who has registered, in respect to Article 3, paragraph 1 of the Private Lodging Business Act, and is operating a private lodging business.
2. “Private Lodging Administrator”
⇒ A person who has registered, in respect to Article 22, paragraph 1 of the Private Lodging Business Act, and is operating a private lodging administration business.
3. “Private Lodging Agent”
⇒ A person who has registered, in respect to Article 46, paragraph 1 of the Private Lodging Business Act, and is operating a private lodging agent business.
Image Courtesy of: https://www.mlit.go.jp/kankocho/minpaku/overview/minpaku/law1_en.html
How to Rent Out a House in Japan
To rent your house as a minpaku in Japan, you must register your property at a local public health center (Hokenjo) and adhere to the conditions set by the New Private Lodging Law. Here are the main requirements:
- Property Categories: Vacation rentals/private lodgings must fall into specific categories, including houses where owners currently live, houses up for sale or rent, and houses used irregularly by owners and tenants.
- Business Duration: Business is limited to 180 days out of a year. If you plan to exceed this limit, you’ll need a hotel license.
- Note that some areas have additional restrictions on top of the 180 days such as limits for weekends only or only on school holidays. This is at the discretion of the individual city office administration.
- Facility Requirements: The house must have basic living facilities, including a kitchen, bathroom, toilet, and bathing area. Also a requirement of 3.3sq m of space per person, per room.
- Fire Prevention Measures: Owners must have appropriate fire prevention measures in place, which may vary by area.
Owner-On-Premise vs. Owner-Absent: How Are They Different?
Two ways exist to run a vacation rental in Japan, based on whether the owner stays on the property:
- Owner-On-Premise Type (家主居住型 = Yanushi Kyojū Gata): The owner is present during guests’ stays and is responsible for managing the property.
Duties include the following:
- Maintaining hygiene
- Securing the safety of guests
- Providing comfort and convenience to guests
- Keeping a guest list
- Providing explanations on how to prevent damage to the surrounding areas
- Handling complaints
- Owner-Absent Type (家主不在型 = Yanushi Fuzai Gata): If the owner is absent during guests’ stays or the property has more than five rooms, it falls into this type, requiring a management company (minpaku kanri) to handle duties.
And yes, you guessed it, to be a minpaku kanri you will also need to get an additional licence and have an LLC. But that is a whole different article.
How to Get a Minpaku License in Japan
Follow these steps to obtain a minpaku license:
1. Preliminary Consultation: Schedule a consultation at the local public health center to understand registration procedures.
2. Pre-Notification Instructions: Receive a rule book and a checklist of pre-notification instructions during your consultation. Prepare to:
- Notify neighbors of your intention to start a lodging business.
- Ensure safety measures are in place.
- Confirm whether there are rules for renting out your residence – eg the building kumiai (HOA) will need to sign off on the plan.
- Outsource the vacation rental operation to a management company (if the owner is absent).
- Coordinate with the fire department and other agencies per Japan’s Fire Safety Act.
3. Submission Through Minpaku Portal Site: Submit required documents through the portal, including a notification form, bankruptcy certificate, written oath, and floor plan.
If you have the language skills, the tenacity and patience to fill in a ton of paperwork, then you can do this yourself. But for my sanity and time, I always hire an outside consultant or a legal scrivener to get this done. It is a slight investment in money but a huge return on my time and mental health.
4. Receive Certification: Upon approval, receive a private lodging business certificate from the city ward, which must be displayed at the property. Here are some examples from the Portal Site. https://www.mlit.go.jp/kankocho/minpaku/business/host/responsibility02.html
Hotel License vs. Vacation Rental Registration in Japan
If you don’t meet minpaku requirements, such as operating for more than 180 days, you’ll need a hotel license. This license is necessary if you charge a lodging fee, operate continuously, and your facility is not a permanent place of residence.
If you are looking to make this a serious business rather than a side hustle then a hotel licence is essential. But there are different requirements for this licence. The same city office administers both of these licences and will provide you with a handy checklist to ensure you can meet the requirements. Some of them might seem a little strange like:
- No reheating bath functionality
- Lock on the linen cupboard or a separate room
- Gas cooker will need to be locked and unlocked on demand
- Reception counter required for check-in / if owner is not resident, tablet required to check ID at entrance.
- Required stairwell (a device to close the door in case of fire)
- In case of an emergency, you (the owner) need to come within 10 minutes
- No Nursery school within 100 m. Approval required
As with all things in Japan, don’t bother applying if you do not have every single requirement met. There are no grey zones and no wiggle room. But once you have satisfied each of these requirements, then the process is fairly smooth.
Frequently Asked Questions about minpaku
What is Minpaku?
Answer: Minpaku refers to private stay accommodations or private lodgings, similar to Airbnb lodging.
How Does the New Private Lodging Law Affect Me?
Answer: The New Private Lodging Law, enacted in June 2017, allows homeowners in Japan to operate vacation rentals by informing the relevant government offices, simplifying the process compared to previous regulations.
What Are the Requirements for Operating a Minpaku in Japan?
Answer: Requirements include registering your property at a local public health center, categorizing your property correctly, adhering to business duration limits (180 days per year), providing basic living facilities, and implementing appropriate fire prevention measures.
Can I Rent Out My Home When I’m Not Living There?
Answer: Yes, you can legally rent out your home in Japan under the Minpaku law. However, you must register your property at a local public health center and satisfy specific conditions.
What Are the Two Types of Minpaku: Owner-On-Premise vs. Owner-Absent?
Answer: There are two ways to run a vacation rental in Japan. Owner-on-premise means the owner is present during guests’ stays, while owner-absent requires a management company if the owner is not present or if the property has more than five rooms.
How Do I Obtain a Minpaku License in Japan?
Answer: The process involves scheduling a preliminary consultation at the local public health center, completing pre-notification instructions, submitting required documents through the Minpaku Portal Site, and receiving a private lodging business certificate from the city ward upon approval.
What’s the Difference Between a Hotel License and Vacation Rental Registration?
Answer: If you don’t meet vacation rental requirements (e.g., operating for more than 180 days), you’ll need a hotel license. Hotel licenses are required for continuous operations, charging lodging fees, non-permanent residences, and facilities exceeding socially regular acts in one’s life.
What Are the Advantages of Using Minpaku?
Answer: Advantages include lower costs compared to traditional hotels, the opportunity to experience local residential areas, and the potential for additional income.
What Are the Disadvantages of Using Minpaku?
Answer: Disadvantages may include variations in quality and services among different properties and potential language barriers with property owners.
How Has the New Minpaku Law Affected Airbnb in Japan?
Answer: The new Minpaku law led to some property owners having to stop offering their properties on Airbnb. However, it also established official standards, providing more assurance to guests about the quality of the accommodation.
I thought that Airbnb was illegal in Japan. What are the new laws and when did they start?
Answer: Airbnb and similar platforms became subject to the New Private Lodging Law in Japan, allowing homeowners to legally operate vacation rentals by informing the appropriate government offices. This law was enacted in June 2017, marking a significant shift in the regulatory landscape for short-term rentals.
Is running a minpaku in Japan profitable?
Answer: It DEPENDS! (Don’t you hate that answer?)
The profitability of running a minpaku in Japan can vary based on several factors. Location, property type, market demand, and effective management all play crucial roles. In popular tourist destinations or areas with high demand, the potential for profitability increases.
Minpaku hosts who provide unique and well-maintained accommodations, offer excellent guest experiences, and stay abreast of market trends tend to maximize their profitability. These are all the basics that I discuss over and over on my blog.
It’s advisable to conduct thorough market research, set competitive pricing, and provide amenities that cater to your target audience. Additionally, consider factors such as seasonality and local events that may impact demand.
While there is potential for profitability, success in the minpaku business often requires a strategic approach, commitment to guest satisfaction, and a thorough understanding of both the legal and market landscape.
What are the on-going requirements for Minpaku operators?
Answer: After obtaining a Minpaku license in Japan, operators must fulfill certain ongoing requirements to maintain compliance and ensure the smooth operation of their short-term rental business. So it doesn’t stop there.
Here are key considerations:
- Regular Inspections and Compliance Checks: Minpaku operators should be prepared for periodic inspections and compliance checks conducted by local authorities. These inspections ensure that the property continues to meet safety and regulatory standards.
- Record-Keeping and Reporting: Operators must maintain accurate records related to guest stays, rental periods, and any incidents that occur on the property. These records may be subject to review during inspections, and timely reporting to the authorities may be required in certain situations.
- Renewal of Licenses and Certifications: Minpaku licenses typically have an expiration date. Operators must stay informed about the renewal process and submit the necessary documentation on time to avoid disruptions in their business.
- Adherence to Local Zoning Regulations: Zoning regulations may change over time, and Minpaku operators should stay informed about any updates that may impact their business. Adhering to local zoning laws ensures that the property remains eligible for short-term rentals.
- Communication with Neighbors: Maintaining positive relationships with neighbors is crucial. Minpaku operators should communicate openly with neighbors, address any concerns promptly, and ensure that their guests adhere to house rules to avoid disturbances.
- Updates to Safety Measures: Stay informed about any updates to safety measures and fire prevention requirements in the local area. Making necessary adjustments to comply with evolving safety standards is essential for the well-being of guests and the longevity of the business.
- Knowledge of Industry Trends and Changes: Minpaku operators should stay informed about industry trends, changes in consumer preferences, and any amendments to regulations affecting short-term rentals. Being proactive in adapting to these changes can enhance the competitiveness of the property.
- Tax Compliance: Ensure compliance with local tax regulations related to short-term rentals. This may include collecting and remitting occupancy taxes and other applicable taxes. Stay updated on any changes to tax laws that may impact Minpaku operators.
Final Thoughts – if you made it this far
Listing your property as a vacation rental and obtaining a minpaku license in Japan is not for the faint of heart but the rewards are many. It has allowed me to create a very profitable family business that brings us financial freedom. But it is NOT passive.
Still curious? You can find detailed information on the government’s Portal Website for Private Lodging, available in English. For further insights, explore the Inns and Hotels Act and make an informed decision before embarking on your minpaku journey.
Of course, reach out to me personally as I may be able to assist you get up and running with a profitable and sustainable business. Or perhaps even allow you to fund your dream life in Japan or book in a Power Hour with me to discuss further
Welcome to the exclusive opportunity to chat with Tracey Northcott, a seven-figure Airbnb host. Spend an hour bouncing ideas, brainstorming, and picking each other’s brains to help elevate your short-term rental business.
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