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Content of typical lease agreement in Japan

Here I would like to inform you of the content of a typical lease contract paper.

When you start your business in Japan, you may rent office space.

For example, you plan to sell secondhand goods via the internet.

In that case, you need to obtain a secondhand goods dealer license.

In that case, you need to prepare physical office space. Unfortunately, you can not use a virtual office service. Even if you are renting a residential apartment, you can not use your residence to apply for secondhand goods dealer license.

If you only need an address in Japan, you can apply for a virtual office company or use your residential address.

If you pay about 2000 yen per month, you can rent only the address of the virtual office company.

Once you can rent an address in Japan, you can incorporate a company.

However, in order to obtain some kinds of license, including a Secondhand goods dealer license, you can not use a virtual office.

Physical office space should be prepared.

So you will contact a local real estate company and find suitable rental office and enter into a lease agreement.

On the lease contract paper, the address, rental fee, and room area of the office space will be indicated.

However, I would like to inform you of more important items.

The purpose of renting the office space is specified on the lease contract paper.

It may be “”Operation of secondhand goods dealer business”” or “”Operation of recruitment business””.

So it is not good to change your business after you have rented an office space.

On the lease contract paper, you will find information relating to lease period.

Basically, the lease period will be for 2 years.

When you rent an office of 20 square meters in Tokyo, amount of rental fee will be from 70000 yen to 150,000 yen per month.

So you will hesitate to rent an office space.

Even if you can not find customers for your business, you need to pay the monthly rental fee. So you will not be comfortable.

So you will need to advertise your business before you rent an office space.
Actually, finding customers, and advertising your business is much more important than acquisition of a license or incorporation of company.

If you hope to start your business in the future, you should start advertisement from today.

If you hope to start an IT consulting business 10 years later, you should start an activity that clarifies your IT skill now.

Let’s get back to the main topic.

If you can operate your business in a rural area, you will not rent an office space in Tokyo at first.

If you rent office space in neighboring prefectures, like Saitama prefecture or Chiba prefecture, you can save a lot of money.

As for Deposit

When you rent an office space, you need to pay a deposit to the landlord.

If you fail to pay the rental fee, the landlord will seize this money to compensate the rental fee.

The amount of deposit differs depending on office space and type of business.

It may be 4 months of the monthly rental fee.

Assumed that you rent an office space with a rental fee of 90000 yen per month.

Please note that this presumption applies to all of this article.

In this case, the amount of the deposit will be 360,000 yen. (90000 yen × 4 months rental fee).

When you rent a real estate to start a restaurant business, the amount of deposit may be 540,000 yen. (90000 yen × 6 months rental fee).

And when you terminate the lease agreement in the future, some of the deposit will not return to you. Even if you deposit 360000 yen to the landlord, you may receive only 270,000 yen.

The landlord amortizes, erases another 90,000 yen.

Moreover, after 2 years after signing the lease contract paper, you will renew the lease agreement. At that time, a renewal fee is necessary. It will be 90,000 yen.

So after 2 years from now, you need to pay a monthly rental fee + renewal fee at the same time.

You may think real estate renting out business is good business.

Yes, as far as you can find and sustain a renter, it may be good business.

As for fire insurance

When you rent an office space, you need to purchase fire insurance and the amount will be 22,000 yen for 2 years.

As for termination of the lease contract

If you hope to terminate the lease agreement, you need to inform the owner 3 months before the termination date.

So if you hope to terminate the lease contract by end of July 2022, you need to inform the landlord by end of April 2022.

Or if you gift 270,000 yen to the landlord, you can terminate the lease contract without 3 months’ advance notice.

Moreover, you need to leave the office space much earlier than end of July 2022.

Because the landlord will hope to clean or renovate the office space by end of July 2022.

So you will leave the office space on end of June. After that carpenter will renovate the room and landlord will charge you a lot of renovation expenses.

Status of renter is always in a vulnerable position.  

As for short period termination of the lease contract

Basically, lease period is for 2 years. Then depending on the owner, when you terminate the lease agreement within one year, you need to pay 90,000 yen to the landlord. It may be a kind of penalty.

When you entered into a lease agreement, the landlord expected that you will rent the office space for a long period.

So there will be this kind of clause on the lease contract paper.

Hopefully, you will not terminate the lease agreement within one year.

But after you start your business actually, you may find that the business is not going well.

In that case, withdrawal may be necessary.

Well, that’s all for today.

Thank you very much for reading my unskilled English sentences.