Should you avoid rental properties that do not require a security deposit or key money? Explaining the advantages, disadvantages, and points to note

What exactly is a property with no security deposit or key money?

A no-deposit/no-key-money property is one that does not require the "deposit" and "key-money" that are often incurred when signing a rental contract, or where both are set to 0 yen. The appeal is that it significantly reduces initial costs, but signing a contract without understanding the background of "why it is free" can lead to unexpected costs and trouble later on. First of all, it is important to correctly understand the role of each deposit and key-money.

What is a security deposit? What is its role and how is it handled when you move out?

A security deposit is money that you deposit with your landlord when you move in, and it acts as a kind of "security" to cover any overdue rent or restoration costs when you move out. The standard amount is one to two months' rent, and if you move out without any problems, the remaining amount minus the cost of restoring the property to its original condition will generally be refunded.

However, depending on the terms of the contract, there are cases where the tenant is deemed responsible for stains on the wallpaper, scratches on the floor, etc., so the full amount may not be returned. In properties that do not require a security deposit, there is a possibility that cleaning and repair costs will be charged all at once when you move out, so it is important to be sure to check the terms of the costs when you move out before signing the contract.

What is key money? Reasons for paying it and the average price

Key money is a fee paid to the landlord as a "thank you" for renting the property. Unlike a security deposit, it is not refunded when you move out. The average amount is about one month's rent, but in some areas it may be set at two months' rent. This custom originally emerged during a time of housing shortage, and in recent years there has been an increase in properties that do not require key money.

However, there are cases where the rent is set higher in exchange for eliminating the key money, or other costs are added under other pretexts. It is important not to immediately assume that no key money means a good deal, but to judge based on the total amount including the rent and contract terms.

Is it true that "no deposit or key money = property with issues"?

The reason why properties with no security deposit or key money are said to be "problematic" or "better off" is not necessarily because there is a problem with the property itself. There are many cases where properties with a long vacancy period and a need to find tenants quickly, or properties that are old and less competitive, are recruited by lowering the initial costs.

On the other hand, it is also true that there are other hidden risks, such as rents being higher than the market rate or penalties for short-term cancellations. The important thing is to check "why there is no security deposit or key money" and calmly compare all the contract terms.

Why is it said that you should avoid properties with no security deposit or key money?

While properties with no security deposit or key money can reduce initial costs, it is also true that many people complain that they ended up losing money or regretting their decision. This is because in some cases, instead of eliminating the security deposit or key money, costs and risks are compensated for in other areas. If you judge a property based solely on its apparent low price, you may find yourself at a disadvantage in terms of monthly rent, moving-out costs, and contract terms.

Here, we will explain in detail the typical reasons why people say you should avoid properties with no security deposit or key money.

Rents are sometimes set higher than market rates

In properties with no security deposit or key money, the monthly rent may be set higher than the market rate in exchange for lower initial costs.

For example, imagine that the hundreds of thousands of yen that would have been paid in security deposits and key money are spread out over the monthly rent. Therefore, the longer you stay, the higher the total payment, and it is not uncommon for the property to end up costing more than a property with security deposits and key money. In particular, if you sign a contract without researching the surrounding market prices, you run the risk of continuing to live in the property without realizing that the rent is too high.

It is important to always compare the rent with properties in the same area and with the same conditions, and make your decision based on the total cost.

Cases where expenses are added under other pretexts

Even if there is no deposit or key money required, it does not necessarily mean that you can sign the contract with peace of mind.

In properties that do not require a security deposit or key money, there may be additional costs added at the time of signing the contract, such as "cleaning fees," "disinfection fees," and "support fees." These are often non-refundable, and can essentially amount to the same burden as a security deposit or key money. Furthermore, the guarantor company's initial guarantee fee and renewal fee may be set high, so the initial costs may not be as cheap as you would expect.

It is important to check the contract and estimate in detail to see how much everything will cost.

There may be short-term cancellation penalties

In properties that do not require a security deposit or key money, a "short-term cancellation penalty" may be set, as it would be a heavy burden on the owner if the tenant moves out within a short period of time.

For example, if you cancel within a year, you will have to pay one to two months' rent as a penalty. If you overlook this point and sign a contract, you may end up having to move out early due to a job transfer or a change in lifestyle, which could lead to unexpected expenses. This is especially important for people who are likely to move, such as students living alone or new members of the workforce.

Be sure to check the cancellation terms before signing the contract.

Possibility of properties with poor conditions or vacancies that are difficult to fill

Among the properties with no security deposit or key money, there are some that have weak conditions such as location, age of the building, and facilities, making it difficult to secure tenants under normal recruitment conditions. For this reason, there are cases where properties are advertised without security deposit or key money in order to secure tenants even if it means lowering the initial costs. Of course, not all properties are bad, but it cannot be denied that there may be problems with noise, sunlight, management, etc.

When viewing a property, it is important to check not only the rent and initial costs, but also the living environment and management status.

Disadvantages of properties with no security deposit or key money

While properties with no security deposit or key money can help keep initial costs down, a major disadvantage is that they can easily result in unexpected costs after signing the contract or when moving out. In particular, people tend to overlook moving-out costs, total monthly payments, and strict contract terms. If you judge a property based solely on its superficial low price, you may end up regretting your decision.

Here, we will explain in detail the typical disadvantages that are often pointed out about properties that do not require a deposit or key money.

You may be charged high cleaning fees when you move out

In properties that do not require a security deposit or key money, since no security deposit is paid, you will often be charged cleaning and repair costs directly when you move out.

In some cases, the contract clearly states that the cleaning fee upon moving out is XXX million yen, and you may be charged a fixed amount regardless of how much you actually use the room. For this reason, even if you use the room carefully, the cost will still be incurred, and many people feel that it would have been cheaper if they had a security deposit.

To prevent any problems, it is important to check the scope of restoration to the original condition and the conditions for cost burden before signing the contract.

Initial costs are low, but total costs tend to be high

While properties with no security deposit or key money may seem like a lighter burden at the time of moving in, they tend to have higher total costs in the long run. This is because the rent may be set higher than the market rate, and renewal fees and various other charges may be expensive. Furthermore, when you add in moving-out costs and short-term cancellation penalties, the total payment amount may end up being higher than for a property with a security deposit or key money.

When choosing a property, it is essential to compare not only the initial costs but also the total amount based on the estimated period of time you plan to live there.

It may be necessary to join a guarantor company, which can increase your burden

For many properties that do not require a security deposit or key money, joining a rent guarantee company is a mandatory requirement.

If you use a guarantor company, you will need to pay an initial guarantee fee of around 30-100% of the rent, and you may also be required to pay annual renewal fees and monthly guarantee fees. These fees are non-refundable, so the actual burden is not small.

Especially if you plan to live in the property for a long period of time, the cumulative amount of guarantee fees can become large, which may result in expenses greater than expected. It is important to check the guarantee conditions and fee structure in detail in advance.

In some cases, concerns remain about the tenant demographics and management system.

Because properties with no security deposit or key money have a low barrier to entry, they tend to have a high turnover of tenants. As a result, some people feel that there is a high risk of inconsistent living etiquette and noise problems. Furthermore, in properties with a high rate of rent arrears and short-term departures, it cannot be denied that the management system is not adequately maintained.

This does not apply to all properties, but when viewing a property it is important to check the cleanliness of the common areas, the notices posted, the response of the management company, etc. to determine whether the environment is safe and comfortable to live in.

The benefits of no deposit or key money properties

While the disadvantages of no deposit or key money properties tend to be highlighted, there are cases where they can have significant benefits depending on your conditions and purpose. In particular, they are often a viable option for people who are short on funds when moving or who have a set period of time they will live in.

Here, we will explain in detail the typical benefits that are unique to properties with no security deposit or key money.

Significantly reduce initial costs when moving

The biggest benefit of a property with no security deposit or key money is that it significantly reduces the initial costs incurred when moving. With a regular rental property, it's not uncommon for the security deposit and key money alone to be more than two months' rent, but by eliminating this, you can reduce your burden by hundreds of thousands of yen. This frees up more money for moving expenses and purchasing furniture and appliances.

In particular, if you need to decide on a place to live quickly due to a sudden transfer, going to school, or starting work, the fact that you can keep initial costs down is a major attraction.

Easy to move in even if you don't have much savings

A feature of properties with no security deposit or key money is that they are easy to sign a contract for even if you don't have a large amount of savings. Students, new employees, and people who have just changed jobs often don't have enough money to move, but by keeping initial costs down, the hurdle to moving in is lowered.

It's also reassuring to know that you can secure a place to live without relying on help from your parents or temporary loans. However, the key to long-term stable housing is to create a reasonable payment plan that includes monthly rent and other expenses.

If you are staying for a short period of time, it may be acceptable.

Properties with no deposit or key money may be suitable if you plan to live there for a short period of time.

For example, you might be using it as temporary housing for a few months to a year, or as a stopgap until you are transferred or relocating. For short-term stays, even if the rent is a little more expensive, you may be able to keep the total payment down by not having to pay a security deposit or key money.

Also, if you have a set period of stay, it will be easier to understand the short-term cancellation penalty and moving-out costs in advance, making it easier to make a pragmatic decision. This is a reasonable option for people with a clear purpose and period of stay.

Who are properties with no deposit or key money recommended for?

Properties with no security deposit or key money are not suitable for everyone, but depending on your requirements and perspective, they can be a reasonable choice. The important thing is not to choose a property because it's cheap, but to determine whether it suits your lifestyle, financial situation, and length of stay.

Here we will introduce the specific characteristics of people who are particularly suited to properties with no deposit or key money.

People who want to keep initial costs down

Properties with no security deposit or key money are suitable for people who want to keep the initial costs of moving as low as possible. By not requiring a security deposit or key money, you can avoid expenses of hundreds of thousands of yen, which can be used for moving expenses, living expenses, and purchasing furniture and appliances.

The benefits of keeping initial costs down are particularly great at a time when expenses tend to pile up due to things like continuing education, getting a job, or changing jobs. However, the key to avoiding regrets is to make a payment plan that includes monthly rent and moving-out costs.

Short-term stays and those intending to move

Properties with no security deposit or key money are also suitable for people who plan to move in for a short period of time or who intend to move. If you are using the property as temporary housing until you are transferred or until you find your next home, not having to pay a security deposit or key money can potentially reduce the total amount you pay. In some cases, even if the rent is a little higher for short-term stays, it can still be cheaper overall.

However, it is important to check in advance whether there are any early termination penalties and how much moving-out costs will be incurred.

Someone who can check the details of the contract

The key to choosing a property with no security deposit or key money is to be able to check the details of the contract. If you can understand the cleaning costs when you move out, the extent of restoration to the original condition, the costs of the guarantor company, the cancellation conditions, etc., you can minimize the risks of a property with no security deposit or key money.

On the other hand, if you sign a contract without carefully checking the details, you may end up facing unexpected expenses later. For those who can compare terms and conditions and sign a contract only after they are satisfied, this is a valid option.

Points to check before signing a contract

To avoid regretting your decision to rent a property with no security deposit or key money, it is important to check before signing the contract. If you decide on a property just because the initial costs are low, you may incur unexpected expenses when you move out or cancel the contract. In particular, the costs and conditions stated in the contract are points that are often overlooked.

Here we will summarize the important items that you should be sure to check before signing a contract for a property with no security deposit or key money.

Check the moving-out costs and restoration conditions

In properties with no security deposit or key money, trouble can easily arise over who will be responsible for the costs when you move out, so it's essential to check the conditions for restoring the property to its original condition in advance. Contracts sometimes state things like "cleaning fee upon moving out: XXX million yen" or "restoration costs to original condition are the tenant's responsibility," and in some cases these costs are incurred regardless of usage.

It is also important to draw the line between wear and tear that occurs over time due to normal living and wear and tear that the tenant is responsible for. By understanding the extent of your responsibility based on the guidelines of the Ministry of Land, Infrastructure, Transport and Tourism and signing the contract, you can reduce anxiety when you move out.

Check whether there is a short-term cancellation penalty

Many properties with no security deposit or key money have a penalty for early termination. In many cases, there is a condition that states, "If you terminate the contract within one year, you must pay one to two months' rent." If you sign a contract without checking this point, and end up having to move out early due to a job transfer or a change in lifestyle, it can be a huge burden.

In particular, people who may be moving or who have not yet decided how long they will stay in the property should be careful. The cancellation conditions will always be explained in the important matters explanation document, so be sure to check it and do not leave it vague.

Compare the total amount of rent, common area fees, and other expenses

When considering a property with no security deposit or key money, it is important not to judge based on the rent alone, but to compare the total amount including common area fees, management fees, guarantee fees, various support fees, etc. Even if the initial costs seem low, if the monthly payments are set high, it may end up being more expensive in the long run.

Also, don't overlook the recurring costs, such as renewal fees and guarantor company renewal fees. By comparing the same conditions with other properties that require a deposit and key money, you can calmly determine whether it is really a good deal.

Take photos and videos of the room condition at the time of moving in

For properties with no security deposit or key money, it is very important to record the condition of the room when you move in to avoid any issues with restoring it to its original state when you move out. Take photos and videos of scratches, stains on the walls and floors, and any malfunctions in the facilities before moving in.

If possible, it's a good idea to keep the documents in a format that shows the date. This will reduce the risk of being charged for damage that was already there when you move out. It's a little bit of work, but it's an effective measure that will help avoid future problems.

If you want to keep your initial costs down, consider other options.

Properties with no security deposit or key money are one way to keep initial costs down, but they are not necessarily the best solution. Depending on the conditions, a property with a security deposit or key money, or choosing a different way of living, may be more advantageous in terms of total costs and peace of mind. Comparing multiple options without being limited to initial costs will help you choose a home you won't regret.

Find a property with low initial costs even if there is a deposit or key money required

Even if a property requires a deposit and key money, there are cases where the initial costs can be reduced depending on the conditions.

For example, there are properties with no key money and one month's security deposit, and properties that come with free rent (free rent for a certain period of time). These tend to have fewer problems when you move out compared to properties with no security money and key money, and tend to be more comfortable to live in in the long term.

Also, in some cases, it may be possible to negotiate the rent or get a discount on the brokerage fee, so the total amount may not be that different. It is important to check the breakdown of the initial costs and compare them flexibly.

UR rental and public housing options

For those who want to keep initial costs down, public housing such as UR rental housing is a strong option. UR rental housing is characterized by a simple fee structure that does not require key money, agency fees, or renewal fees, and only requires a security deposit. Furthermore, in some cases, you can sign a contract without a guarantor, and the terms are clearer than private rentals, giving you peace of mind.

Although some of the properties are older, many are in good locations and are suitable for people who prioritize a balance between initial costs and livability.

Shared house/furnished property

If you want to significantly reduce your initial costs, it's worth considering a shared house or a property with furniture and appliances. These properties often require no security deposit or key money, or they are set at a very low amount, minimizing the burden of moving.

Also, since there is no need to purchase new furniture or appliances, it is suitable for people who want to keep their initial investment low or who are considering short-term stays. However, it is important to check in advance whether the living style and privacy required are suitable for you.

Conclusion: It's not necessarily a good idea to avoid properties with no security deposit or key money.

Although it is often said that you should avoid properties with no security deposit or key money, that doesn't mean they are an unsuitable option for everyone.

The important thing is not to judge based on the superficially low initial costs alone, but to correctly understand the reasons why the property is being offered without a deposit or key money, as well as the contract terms. If the conditions match your situation, it may be a rational and satisfying choice.

The important thing is to find out "why there is no deposit or key money"

The most important thing when considering a property with no security deposit or key money is to understand why the property does not require a security deposit or key money. The degree of risk varies greatly depending on whether the property has been vacant for a long time and you are aiming for early occupancy, whether it is to cover the age of the building or location, or whether the cost is covered by rent or other expenses.

If the reason is clear and you are satisfied with the terms of the contract, there is no need to be overly cautious. Understanding the background before making a decision is the first step to avoiding regrets.

If you decide based on price alone, you're likely to regret it.

If you are attracted to a property just because it has no security deposit or key money, you are likely to end up regretting it. While the initial costs may seem cheap, there are many cases where the rent is higher than the market rate, and there are also move-out fees and short-term cancellation penalties. As a result, the total cost can end up being rather high.

The important thing is not "how much you will pay now" but "how much it will cost while you live there." It is essential to calmly compare the total amount.

Depending on your circumstances and lifestyle, it can be a rational choice.

Depending on your requirements and lifestyle, properties with no security deposit or key money may be a reasonable choice. For example, for those who plan to stay for a short period of time or who do not have enough money to move, the benefit of being able to reduce initial costs can be significant.

Also, if you are able to carefully check the contract details and understand the risks before making a choice, you can make use of it without difficulty. Deciding based on whether it suits your purpose and lifestyle will lead to a home selection that will leave you satisfied.

FAQ

Many people have similar questions and concerns when considering a property with no security deposit or key money. In particular, it is important to confirm before signing a contract whether it is really okay to not require a security deposit or key money, and how much it will cost when you move out.

Here we will explain some frequently asked questions about properties with no security deposit or key money, and the thinking behind them in an easy-to-understand manner.

Is it more reassuring to have a security deposit or key money?

In conclusion, if you plan to stay for a long time or want to avoid trouble, it is often more reassuring to have a security deposit and key money. If you have a security deposit, cleaning and repair costs when you move out will be settled from it, making it easier to reduce the risk of additional charges.

On the other hand, properties without a security deposit or key money will have lower initial costs, but you may be billed a large amount when you move out. You should decide whether you value peace of mind or the initial costs.

How much are the moving-out costs for a property with no security deposit or key money?

The moving-out costs for properties with no security deposit or key money vary greatly depending on the property and the terms of the contract, but generally, cleaning fees are expected to be around 30,000 to 60,000 yen.

However, if the contract specifies a fixed cleaning fee or if repairs are deemed necessary, the amount may be higher. Since there is no security deposit, all costs are charged at actual cost. It is important to check the breakdown and maximum amount of moving-out costs before signing the contract.

Are zero-zero properties really dangerous?

Zero-zero properties (properties with no security deposit or key money) are not necessarily risky. However, there are cases where there are other types of risks, such as higher-than-market rent, short-term cancellation penalties, or expensive moving-out costs.

The important thing is not to assume that "zero-zero" means "dangerous," but to check why those conditions exist and whether there are any disadvantages to the contract. If you understand the conditions before making your choice, you will often be able to live there without any problems.

summary

While it's often said that properties with no security deposit or key money are "better to avoid," that doesn't mean they're an unsuitable option for everyone. While initial costs can be significantly reduced, there are cases where the rent is higher than the market rate, and other burdens arise, such as move-out fees and short-term cancellation penalties. For this reason, it's important to check "why there's no security deposit or key money" and "how much it will cost in total," rather than judging based solely on the superficial cheapness.

It may be a rational choice for short-term stays or when you are short on funds, but if you plan to stay long-term, it is a good idea to compare properties that require a deposit and key money, as well as other living options. Choosing a property that suits your lifestyle, length of stay, and understanding of the contract terms will lead to a property you won't regret.