Lease Guarantor Companies in Japan

Poste date: Friday, May 20, 2022

In many lease agreements, it is necessary to come up with a joint guarantor or a guarantor company at the time of conclusion of these agreements. A joint guarantor or a guarantor company has the obligation to pay on behalf of the lessee in the unlikely event that the lessee is unable to pay the rent. We will explain here about a joint guarantor service for a lease agreement by an average guarantor company in Japan or introduction of English (foreign language) speaking guarantor companies when the lessee is a foreigner, and he/she makes a personal lease agreement.

◆ Joint Guarantor

Lessees often ask their relatives with stable income.
A joint guarantor is obligated to pay up to the maximum amount of the lessee’s liabilities to the lessor (the guaranteed amount limit to be determined in advance).
The lessee’s liabilities to the lessor include not only the rent but also the repair costs when the room equipment is intentionally damaged, costs of restoring the leased property to its original condition, and costs for resolving various disputes with the lessee’s neighbors such as noises.

◆ Guarantor Company

The lessee enters into a guarantor agreement with a guarantor company and pays the guarantor fee.
A guarantor company principally guarantees the lessee’s payment of the rent.

Recently there are many cases where lease agreements are made with use of a guarantor company. Some of the cases are due to the lessee’s reasons such that the lessee can hardly ask relatives because of a risk of inconvenience, or the relatives are difficult to be a guarantor because the relatives are elderly, or their incomes are unstable even if the lessee wants to ask them, while other cases are due to the lessor’s reasons such that it is comfortable to lease his/her property with a guarantor company which promptly pays the rent on behalf of the lessee when the lessee’s rent is late. So, we will explain about a guarantor company as below.

1. The Role of a Guarantor Company

To examine the tenants　

A guarantor company examines if the applicant is able to pay the rent based on various information for making a decision.

To guarantee the tenant’s rent payment

In the unlikely event that the lessee’s rent is late, a guarantor company promptly pays the rent to the lessor on behalf of the lessee. The warranty of some guarantor company may cover the payment of the costs of restoring the leased property to its original condition or the repair cost of the room equipment.

2. How to decide which guarantee company to use

A lessor or a management company often designates a guarantor company, but with the lessor’s permission a lessee can also use a guarantor company of his/her choice.

*Some lessors may want to make a lease agreement with a joint guarantor instead of a guarantor company.

3. Documents required for examination

Application form for guarantor companies
Identification documents (driver's license, health insurance card, My Number card, etc.)
Income certificates (tax withholding slips, salary statements, etc.)

*Required documents vary depending on the guarantor company.

4. Average guarantor fee

The guarantor fee varies depending on the guarantor company, but on average, the amount of 50% to 100% of the monthly rent is paid to a guarantor company at the time of conclusion of a guarantor agreement.

In addition, upon renewal of the lease agreement, the amount of 10,000 JPY per year or 10% to 30% per annum of the rent will be paid as a guarantor fee at the time of renewal of the lease agreement.