TT-527 -- Clawing back tenant rights, ebiz news from Japan

* * * * * * * * * T E R R I E 'S T A K E * * * * * * *
A weekly roundup of news & information from Terrie Lloyd.

General Edition Sunday, July 26, 2009 Issue No. 527


- What's new
- News
- Candidate roundup/Vacancies
- Upcoming events
- Corrections/Feedback
- News credits

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The Japan Times has been doing a good job recently of
documenting consumer rights law cases and also foreigner-
related issues that might be of use to its readers. Last
week they reported on a landmark court ruling, whereby the
Kyoto District Court said that a landlord's insistence on
contract renewal fees ("koshinryo") may violate the rights
of the tenant. This is the first time such a case has been
ruled in favor of the tenant.

In the case, the tenant was apparently told that there
would be a contract renewal fee, but not why. Presumably
the agent thought that because the renewal fee is a
traditional payment, dating back to post-war times when the
government didn't want returnee soldiers relocating en
masse to the cities, they didn't go into it in any detail.
In any case, as a result of that oversight, when the
plaintiff moved out several months after he'd paid the
renewal and the landlord refused to refund the payment, the
tenant took offense and took the landlord to court.

The basis for the lawsuit was the 2001 revised consumer
protection law, which the court agreed had precedence over
the tenancy law. In the ruling the judge apparently
commented that, "The reasons for charging contract renewal
fees must be clearly explained to tenants and agreed upon
between the two sides."

Now before everyone starts hooting from the roof tops that
it's time for landlords to get some of their own medicine,
it's worth remembering that this is the exact same Kyoto
District Court that in January of last year dismissed a
very similar lawsuit. In that earlier case, the tenant
also based his claim on the 2001 consumer contract law,
where he said that renewal fees in the way they are
currently notified and imposed, constitute a contract that
"Unilaterally causes damage to the interests of consumers."
We daresay that a lot of readers would agree with that

[Continued below...]

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[...Article continues]

It seems that the point of legal consideration by the two
different Kyoto law court judges wasn't whether the renewal
fees are allowed under consumer law or not -- they are, so
long as the landlord or the agent explains clearly that the
fees are part of the contract and that the tenant knowingly
and willingly signs the contract. Rather, the consideration
was all about whether the fee's purpose was clearly
explained -- thus allowing the tenant to claim that he
wasn't fully informed and therefore permitting him to
invoke the consumer protection law.

So, the requirement to pay rent renewal fees, as onerous as
they are, has not gone away. It's just now that it's
possible to claim ignorance to the rules, and use that to
get your money back. This is not a strong step forward for
tenant's rights, but at least it's a start...

As most readers would be aware, the renewal fees are not
the only sticking point when it comes to renting Japanese
apartments. There is also the non-refundable deposit and
the "cleaning fees" to be deducted from that deposit when
you move out. Most people who have moved apartments more
than once have learned that very little of their 2-3 months
refundable deposit will actually come back -- a good
reason, of course, why people don't move so often.

We've heard a variety of opinions about whether tenants can
fight the imposition of cleaning fees -- especially if
you've cleaned the apartment thoroughly enough that it
doesn't need much more polishing. Certainly you CANNOT not
pay them, since the fees are generally taken out of the
deposit paid when you first moved in. The general
guideline, apparently is for a cleaning fee of
JPY1,000~JPY1,500 per sq. m. of apartment floor area --
which for a JPY100K apartment might leave you with the
grand total of just JPY50,000 from your original
JPY200,000~JPY300,000 of refundable deposit being returned.

Talking to a certain large rental agent for foreigners, we
have heard that the situation is quite different in the
non-Japanese sector. Largely because expat apartments tend
to be bigger and more expensive to keep vacant, and because
there is also a dearth of tenants, landlords are being much
more flexible and cooperative. They are cutting deals that
strictly Japanese-facing landlords would never dream of. The
deals include no-deposit contracts, 3-6 months free rent on a
two-year lease (just like B- and C-grade offices), and large price
cuts of up to 50% discount.

But as we've noted, one man's cloud is another's silver
lining. Word is that there are plenty of local foreigners
and Japanese moving into the more fashionable districts
in Tokyo right now -- because they're trading up into the
gaijin apartments, but not having to pay much difference
for all the extra space, appliances, and convenience.


One last reminder that on this coming Wednesday, Japan
Inc. will be running a Cost-cutting Seminar in cooperation
with Nomura Real Estate. The seminar is by managers for
managers and will concentrate of how to cut costs
innovatively and effectively. The seminar is free, but you
do need to register beforehand at

There will be 2-3 speakers, one of whom will be Terrie
Lloyd, discussing some new ideas for cutting costs and
restoring profits. This is sure to be an entertaining and
thought-provoking seminar.

See the EVENTS section below for more contact details.


Terrie's Take is proud to be a supporter of The Japan
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+++ NEWS

- 110,000 credit card customers' data stolen
- DPJ to lower age of majority?
- ‘Cool Biz’ hurts economy
- Slew of R&D subsidy requests
- Shiseido to remove glass ceiling for foreigners?

-> 110,000 credit card customers' data stolen

It's a corporate nightmare come true. Insurer Alico
admitted on Friday that the credit card data for 110,000
customers, and possibly more, has been stolen and was being
misused. The company was alerted by credit card companies
that they had received 1,000 purchase dispute claims from
card customers. Alico doesn't yet know how big the problem
is nor what the cause of the leak may have been. ***Ed: If
not handled properly, an incident like this can be the kiss
of death in the Japanese market. Alico needs to move
quickly to reassure the public that the leak is plugged and
what caused it.** (Source: TT commentary from,
Jul 23, 2009)

-> DPJ to lower age of majority?

The resurgent Democratic Party of Japan (DPJ) has said that
it will likely lower the age of majority (and thus the
voting age) from 20 to 18, if it comes to power. Although
the party says that the suggested move is simply a
recognition of the fact that its citizens are maturing
earlier, cynics reckon the DPJ is hoping to expand its
voter base by an extra 2m potential voters in time for the
next election. ***Ed: The irony is that a poll conducted by
Kyodo News earlier this month found that young people in
their 20's prefer the LDP to the DPJ by a factor of 3:1.**
(Source: TT commentary from, Jul 23, 2009)

-> ‘Cool Biz’ hurts economy

A former economist for the Dai-ichi Life Research Institute
in Tokyo, fed up with having to work in an office whose air
conditioning was set to a sweltering 28 degrees per the
Cool Biz guidelines, has found that the high temperature
in offices rather than helping the economy, is actually
hurting it. The researcher found that high office
temperatures are reducing office worker productivity
nationally by about JPY653bn (US$6.9bn) a year, or 0.13%
of the nation's GDP. According to the researcher, the ideal
temperature to save energy and yet suit the wearing of cool
biz-type clothing, and which is used by the United Nations,
is around 25 degrees. The researcher discovered that for
each degree the air conditioning is set above 25, worker
productivity drops by 1.9%. ***Ed: Cool biz ain't so cool
after all.** (Source: TT commentary from, Jul
23, 2009)

-> Slew of R&D subsidy requests

The government program of R&D and new product development
subsidies, aimed at SME companies struggling to break the
current cycle of dependence on upstream firms, has met with
an overwhelming response. The program allows for companies
creating new products to request up to 2/3 of the
development costs to be covered by government grants. The
SME Agency says that it has had about 7,000 subsidy
applications, more than 350% greater than budgeted. The
Agency will reportedly keep taking requests until the
JPY54.2bn budget for the program runs out. ***Ed: We're
kicking ourselves for not creating a JPY100m software
program that helps companies apply for government
subsidies...!** (Source: TT commentary from,
Jul 24, 2009)

-> Shiseido to remove glass ceiling for foreigners?

We'll believe it when we see it, but according to a
Shiseido press release, it is going to open up senior
management positions to foreigners hired locally in Japan,
as well as in subsidiaries abroad. The company says that
the new policy will target 330 managers at 26 subsidiaries
in 17 countries and regions. It says that it is aiming to
have at least 50% of its sales in 8 years time to be export
related -- and thus needs the management skills to conduct
business in each locale. ***Ed: The glass ceiling against
foreign managers is one of the more infamous aspects of
Japanese HR policy. Maybe Shiseido will start a trend
here.** (Source: TT commentary from, Jul 23,

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.

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In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to

=> No corrections or feedback this week.

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