Home sharing service represented by Airbnb launched in the US gradually dominated in Japan. Hereby, people have an additional choice of staying at a stranger’s house instead of hotel.

A host can obtain income by providing a vacant room that nobody uses or providing rooms when he is out for traveling. Guests can stay there at relatively lower price than they stay in a hotel or “Ryokan”.

You will have good advantage by using this service that you can experience and learn local people’s lifestyle by interacting with the host.

Obstables of legal restrains that block you from doing Airbnb business in Japan

According new report, number of registration of Airbnb in Japan has grown threefold in a year.Home sharing services are accepted among Japanese and it spreads around Japan.

However, those who use Airbnb in Japan are under the circumstance having the risks of legal violation due to the Hotel Business Act or breach of lease agreement of apartment.

On the other hand, looking ahead to Tokyo Olympic Games, there is also a movement of easing current regulations to compensate for the shortage of hotels and accommodations by introducing home sharing services flexibly

What’s the problem of the current home sharing services in Japan?

What kind of problems do we have on home sharing services in Japan in detail? I am going to explain the issue of lease contract and regulations of hotel business for the first part and explain the movement of deregulation of Airbnb business.

If you want to manage hotel business, you need to get permission from the Japanese government. This regulation is based on the Hotel Business and the permission is granted by the prefectural governor.

The definition of “Hotel Business is…”

  • Receive accommodation charges
  • Let people stay
  • Hotel management

Receiving accommodation charges

Basically, charges that are looked as usage fee of bedding and the room are all categorized as “accommodation charges.

Let people stay

This part is defined, “let people use the facility with bedding”. In addition, “letting people stay” is subject to the Hotel Business Act but leasing room is not subject to the Hotel Business Act. Then, how should you distinguish “letting people stay “ and “leasing room”?

  • The stayer is not based in the room for living
  • The stayer’s length of stay is less than 1 month

When it comes to distinction between “hotel business” and “leasing agreement”, the rental service of luxury villas a Japanese travel agency launched in 2014 was problematized by administration in terms of whether this business was categorized as hotel business or leasing business.

The Japanese travel agency alleged that this business could be regarded as hotel business and there was no need to get permission. However, administration judged this business could be categorized as hotel business and issued business stop order against this service for about 1 month.

Hotel management

The definition of “Hotel Management” is not clearly given on the law. According to a judicial precedent, in case that the Airbnb business is run with an intention of accepting stayers continuously, it can be regarded as “hotel management”.

Generally, the behavior of renting room for a fee is judged

  • if it can be looked as profitable business execution
  • if it can be run with an intention of accepting unspecified majority of people continuously

Does Airbnb business need a permission because it is regarded as “Hotel Business” in Japan?

If home sharing services on behalf of Airbnb are categorized as “Hotel Business” in Japan, do I need to get a permission from administration? Let’s see what it is like in detail.

Firstly, let’s inspect if Airbnb business has the above three conditions, “Receive accommodation charges”, “Let people stay”, “Hotel management”.

Case 1: if you are a Airbnb host

In home sharing business, hosts generally provide a room with bedding (let people stay) for a fee (receive accommodation charges). However, guests cannot be considered they are based in the rented room for their living and duration of stay will be generally less than one month. According to this, Airbnb business is not normally regarded as room leasing business. Therefore, it satisfies the conditions of “let people stay” and “receive accommodation charges”.

How about Hotel management? For example, if you want to give it try to rent your house through Airbnb while you are away from your home and traveling during long summer holidays, you are not considered that you have an intention of accepting guests continuously so this case is not regarded as “hotel management”.

In contrast, if you possess or rent a room or a house for only Airbnb and rent a room or a house to unspecified majority of guests repeatedly, you are likely to be considered that you have an intention of accepting guests continuously.

If you in the case that you can’t say which from the above examples like you’re often away from your house because of business trip or something, it is not unmistakably clear that this case is regarded as “Hotel management”. So, this case is said to be judged if it is categorized as “Hotel management”depending on the individual cases.

Case 2: Airbnb (as a company)

On terms of the service Airbnb side is only the platform provider and it gives its opinion that Airbnb as a company doesn’t rent rooms and facilities.

From this fact, it is considered that Airbnb doesn’t manage hotel business itself. However, if the Airbnb host commits a violation of the Hotel Business Act, Airbnb is likely to be problematized and seen as giving silent approval and contributing to violating act.

What types of regulation is subject to “Hotel Business”?

As I said the above, the host runs this home sharing service “with an intention of accepting guests continuously” and the providing service is considered to be “Hotel management”, you need to get permission from administration.

Acquiring permission from administration, the renting house or room is required to be in accordance with legally designated building structure and facility standard. In addition, prior to running hotel business, the host need to follow the standard of ventilation, lightning, hygiene and so on regulated by the prefectural ordinance, and also the host is obliged to make a hotel register and install a hotel reception inside.

If you manage hotel business without permission, the host shall be punished by imprisonment with work not exceeding 6 months or fine not exceeding 30,000 yen.

The issues between homeowner management bylaws and lease agreement, and Airbnb business

In addition to the problem of the Hotel Business Act, if you rent your room under the lease contract or your apartment which you possess, you are also likely to have problems with homeowner management bylaws and lease agreement.

If you rent your apartment under the lease contract

Subleasing your room to someone without permission from the apartment owner is prohibited in almost all the lease agreement in Japan.

If you let someone stay in your apartment , no matter how many times and how long you let a person stay in your apartment, you are considered to be subleasing. And if you sublease your apartment to someone without permission, the apartment owner can generally cancel the lease contract with you.

Renting your apartment through home sharing services representing Airbnb is considered to be subleasing. If you let someone stay in your apartment through Airbnb without permission, you have the risk of being kicked out of your leasing apartment.

If you rent your owned apartment

If you rent your owned apartment, you need to pay carefully attention to what homeowner management bylaws say.

Generally, even if it is your owned apartment, it shall be only used as a residence. Whether or not, the apartment is used only as a residence will be judged if the guests are based in your apartment for living

If you possess apartment just for Airbnb and the apartment is not considered to be guest living base, you are likely to commit a violation of homeowner management bylaws.

Moreover, High-rise condominiums located in the Metropolitan area is considered to set regulation that stops residents from renting rooms to others through home sharing services.

If the host commit a violation, apartment management association can start a lawsuit against the host to make a request for use prohibition of the apartment.

The government tries to pursue the policy of easing regulations of home sharing services but…

According to the above, there is the risk of committing a violation of the lease contract or the homeowner management bylaws if renting an apartment through home sharing services under the Japanese legal system. This kind of risk may make people seem resistant to using Airbnb.

However, the government is positively backing home sharing service by easing the policy of the Hotel Business Act and so on in order to response to the needs of foreign tourists in preparation for Tokyo Olympic Games.

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