This is basically a gift to the owner of the property and can be one or two months rent equivalent. You never get this money back when you move out of the apartment. This is needed because, unlike Canada, property prices in Japan go down over time. This is also in addition to the houses losing value, not to be confused with the land, due to the wear and tear of this extreme climate. For example, when a person sells their old property, he can sometimes get more for the property if he knocks the house down and sells just the land because the property can be worth less with the house on it.
Like back in Canada, you have to pay one or two months full monthly deposit. Of course, don’t expect to get this back either as no doubt the owners will spend the deposit cleaning and renovating the place when you move out.
Some places require that you pay first and last months rent.
You usually have to pay one months rent as a fee the rental agency.
When you move in to your new pad it will have nothing. Sometimes it won’t even have light fixtures so you have to buy everything for it.
Stove: 25,000 yen
Fridge: 60,000 yen
Washing Machine: 50,000 yen
Total: 140,000 yen
Let’s do an example on a 100,000 yen monthly rental. (In downtown Tokyo this would be a 15 – 20 square meter 1 Br apartment / studio flat.)
Key Money: 200,000 yen
Deposit: 200,000 yen
Rent: 200,000 yen
Extras: 140,000 yen
Total: 840,000 yen
At today’s exchange rate you need about $10,500.00 just to get the key and be able to live in your apartment.
This example is a bit misleading because this would be a very nice apartment for Tokyo standards. You can move out of town a bit and find places that only ask for one months deposit with no key money and just the first months rent. But these places are generally in bad areas of town and are a bit run down.