The Types of Legal Vacation Rental Operations allowed in Japan

Many people have heard about how using a residential unit in Japan as a vacation rental can bring in very favourable returns compared to the usual market rental yield.

Operating a vacation rental is still possible, but the yields and returns very much depend on the type of vacation rental approval and area you choose.

We will be seeing 3 types of legal vacation rentals allowed in Japan

1. Hotel License Type (旅館業法 Ryokan Gyoho)

Points

  • Requires a special license known as simple lodging (簡易宿所 Kanyishukusho)
  • No limitation on operation days (365 days)
  • Standard size of 3.3 sqm / guest
  • High-return yield (occupancy rate depends on peak / low season)

2. Special Area Type (特区民泊 Tokku Minpaku)

Points

  • Requires a special license known as 特定認定Tokuteinintei 
  • No limitation on operation days (365days)
  • Size of unit must be bigger than 25sqm
  • High return yield (occupancy rate depends on peak / low season)

3. New Vacation Stay Regulation Type (民泊新法 Minpaku Shinpo)

Points

  • Requires a special application known as the todokede (this application can be submitted online)
  • Limitation on operation days (180days/year)
  • Standard size of 3.3 sqm / geust
  • Low return yield (as operation days are reduced to half, so is the yield)

Although some forms of vacation rentals in less popular destinations have lost some of their appeal, cities and regions that see large numbers of tourists (such as Kyoto) are still benefitting after the new regulations.

However, before investing in a property for use as a vacation rental, it is absolutely necessary to fully understand the current regulations in place in Japan.

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For more detailed information, the Japanese government has provided a site with information about vacation rentals in both Japanese and English here:

Minpaku - Portal Website for Private Lodging