Deposit and key money: the Japanese rental tradition.

Key money (礼金, reikin) is the line that makes least sense to renters from outside Japan, and even Japanese renters under 40 increasingly question why it still exists. It is a one-time, non-refundable payment to the landlord at the start of the lease, traditionally framed as a 'thank-you' for being chosen as the tenant. There is no service rendered in exchange, no escrow, no settlement at move-out. The money is simply transferred to the landlord and remains there.

The custom comes out of the immediate postwar period, when central Tokyo was rebuilt under severe housing shortage. Landlords held all the leverage: applicants competed for a scarce supply of habitable units, and a one-time gift to the landlord was a way to outbid competing applicants and secure the lease. As the housing supply recovered through the 1960s and 1970s, the leverage shifted, but the custom stuck because key money was already baked into landlord income expectations and into agent commission calculations.

There is also a quiet tax reason it persists. Key money is treated as taxable income to the landlord in the year it is received, while the security deposit is not (because the deposit remains the renter's property until move-out). For a landlord weighing how to price a unit, shifting one month's worth of compensation from rent to key money has tax implications that not all landlords want to abandon.

In central Tokyo in 2026, key money typically runs from zero to two months' rent. Zero is increasingly common, especially on units that have been on the market more than a few weeks and on newer buildings whose management companies have moved past the custom. Two months is now unusual outside of premium addresses with strong demand. One month is the most common landing point.

Of all the move-in cost lines, this one is the most negotiable. A polite request through your agent succeeds often enough to be worth asking on any unit where reikin is one or two months. We covered the negotiation tactics in the move-in costs guide; the key point for this article is that the line itself is cultural and contractual, not regulatory, so it can move.

Security deposit (敷金, shikikin) predates key money by centuries. The custom traces back to the Edo period (1603 to 1868), when landlords held a refundable sum against any damage the tenant might cause to the property. The structure has not really changed: the landlord holds the deposit during the lease, deducts repair and cleaning costs at move-out, and returns the balance.

What has changed, significantly and recently, is what the landlord can deduct. The April 2020 revision of the Civil Code (民法改正) added Article 622-2, which codified into statute what courts had been saying for years: the renter is not liable for 通常損耗 (ordinary wear and tear) or 経年変化 (aging). In plain language, scuffs and scratches that come from normal living use, sun-faded curtains, gradual stains on tatami, small pin holes from hanging artwork are not deductible from the deposit. The renter is liable only for damage caused by their own negligence or intentional act, beyond what ordinary use produces.

What the landlord can still deduct: cigarette smoke residue on walls and ceilings (treated as negligence even if smoking was permitted), pet damage in pet-allowed units beyond what the pet clause covers, holes from heavy fixtures the renter installed without permission, custom modifications, broken fixtures from misuse, and unrecovered cleaning costs that exceed what the deposit's amortised portion (see shikibiki below) covers.

In practice for a clean tenancy on a normal lease length (two to four years), most central Tokyo deposits return between sixty and one hundred percent of the deposited amount. The most common deduction is the move-out cleaning fee, even though the move-in cleaning was already paid for at the start. Some landlords also deduct light wall-paper repair on long tenancies, which the 2020 Civil Code change has made harder to enforce but which still appears on settlement statements out of habit.

If the deduction looks unreasonable, the renter can dispute it. The Tokyo Metropolitan Consumer Affairs Center (東京都消費生活総合センター) runs a free advisory line for tenant-landlord disputes, and the small claims court (少額訴訟) handles deposit cases up to ¥600,000 on a single-day docket without requiring a lawyer. Most disputes settle once the renter cites the 2020 Civil Code revision specifically; landlords and management companies are aware of the change and rarely want to litigate a clearly weak deduction.

Shikibiki (敷引), also written as 敷金償却, is the line that has confused renters most over the last decade because it sits between key money and security deposit and behaves like both. The structure: the lease declares in advance that a fixed portion of the deposit, often half a month or a full month of rent, is non-refundable regardless of unit condition at move-out. The remainder of the deposit behaves like a normal shikikin, refundable net of damages.

The custom originated in Kansai (Osaka, Kobe, Kyoto) where it has been standard for decades, and over the last ten to fifteen years it has spread eastward into Tokyo, particularly in newer buildings managed by larger property management companies. The landlord's motivation is administrative: instead of itemising cleaning and minor repairs at move-out and arguing line-by-line with the departing tenant, the landlord pre-declares a flat amount that covers it, and the rest is genuinely refundable.

The renter's question is whether the shikibiki amount is reasonable. A 2011 Supreme Court ruling on a Kansai case held that shikibiki clauses are valid in principle, as long as the amount is clearly disclosed in the lease, the renter signs with knowledge of the clause, and the amount is not disproportionate to the underlying repair and cleaning costs the clause is meant to cover. Excessive shikibiki amounts (the Court did not set a hard line, but several lower-court rulings have struck down shikibiki of two months or more on a one-month-deposit lease) can be voided as 公序良俗 violations.

For a renter reading a Tokyo lease today, the practical question is just: 'what is the largest amount I cannot get back, even with a clean tenancy?' That number is the sum of any reikin plus the shikibiki amount. The shikikin balance above the shikibiki is potentially refundable. Knowing this number going in is more useful than negotiating it after signing.

On any standard central Tokyo lease, the three lines appear separately and are usually labelled in 漢字 with the amount expressed as a multiple of monthly rent. Here is the cheat sheet for what to look for.

Before April 2020, deposit return was governed mostly by case law and a 1998 set of guidelines from the Ministry of Land, Infrastructure, Transport and Tourism. Most landlords followed the guidelines voluntarily. Some did not, and disputes were common because nothing in statute settled the question of what counts as 'ordinary wear and tear'.

The 2020 revision codified the answer. Civil Code Article 622-2 now explicitly states that the renter is not liable for the cost of restoring the property to address ordinary wear and tear or aging that arose through ordinary use. This is a baseline that cannot be overridden by lease language: a clause in the lease saying 'the tenant agrees to pay all repair costs at move-out' is unenforceable to the extent it reaches ordinary wear.

Practical effect for a renter today: even on an older lease drafted before April 2020, the statute applies once the lease is renewed or once the renter raises it during a deposit dispute. Citing 民法第622条の2 in writing, in a polite settlement email to the management company, often resolves disputed deductions within a few days.

Both reikin and shikibiki are increasingly optional on central Tokyo listings, but they appear on different unit profiles and require slightly different search instincts.

Zero reikin is the more common of the two and easier to filter for. Buildings older than three years, units that have been on the market more than two weeks, and units where the landlord owns the building outright (rather than going through a large management company) are all more likely to be zero-reikin. Most major listing portals expose a 礼金ゼロ filter, and any agent worth hiring can pre-filter their search by it. The trade-off is rarely real on quality: you can find zero-reikin units in any of the eight central wards at most price points.

Zero shikibiki is rarer because the landlords who use shikibiki at all use it as a default policy across their portfolio, and the landlords who do not use it do not advertise the absence. The honest signal is contract language. When the lease has only a 敷金 line with no 敷引 or 敷金償却 sub-clause, the deposit is fully potentially-refundable. Newer buildings (less than five years old) and units in smaller management portfolios are statistically more likely to have no shikibiki clause. Asking the agent to confirm at the inquiry stage is the most reliable approach.

The combination to look for, if minimising upfront non-refundable cost is your priority: zero reikin, one month of shikikin, no shikibiki clause. This is a real combination on central Tokyo listings, especially in the ¥250,000 to ¥350,000 a month band, and it can save a renter nearly two months of rent compared to a comparable unit with one month reikin and half a month shikibiki.