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Japan: Short-Term Home Rentals Restricted by Many Local Governments

(Aug. 31, 2018) In June 2017 the Diet (Japan’s Parliament) enacted the House Sharing Business Act, which regulates short-term home renting (minpaku). (Sayuri Umeda, Japan: Law on Renting Rooms in Private Homes to Tourists, GLOBAL LEGAL MONITOR (June 16, 2017).) The new law became effective on June 15, 2018. (Press Release, Japan Tourism Agency, Cabinet Decisions on Order to Set Enforcement Date of House Sharing Business Act and Enforcement Order of House Sharing Business Act (Oct. 24, 2017) (in Japanese).) Under the Act, when there is a need to prevent the deterioration of the living environment in neighborhoods that results from the noise of renters or other issues related to the renting business, the prefectures or certain large cities with jurisdiction over the properties can set an ordinance in order to limit the renting period in a specified area. (House Sharing Business Act, Act No. 65 of 2017, art. 18, e-Gov website (in Japanese).)

As of June 15, 2018, 52 local governments had enacted such ordinances. Under the House Sharing Businesses Act, a business that rents out all or part of a home for a short-term period must report the business for each home to the local government. 3,728 businesses have made such reports so far, and local governments have completed reviews of 2,210 of them.  (Expectations and Complaints Regarding Enforcement of New House Sharing Law, KANKO KEIZAI SHINBUN [TOURISM ECONOMY NEWSPAPER] (July 5, 2018) (in Japanese).)  As of August 17, 2018, 100 local governments had adopted such ordinances and completed reviews of 6,297 out of 7,594 business reports. (Japan Tourism Agency, A Chart of Numbers of Reports and Registrations Under the House Sharing Business Act (Aug. 17, 2018), Ministry of Land, Infrastructure, Transport and Tourism website.) The number of reported businesses is significantly lower than the 62,000 units that were listed on Airbnb in spring 2018. Calls for easier procedures for the reporting of such businesses have been made in news media. (Reviews of Minpaku Business Delayed, NIKKEI (July 15, 2018).)

Meanwhile, the number of applications for permission to operate basic lodging facilities (kan-i shukusho), such as pension hotels and hostels, has increased. (Minpaku Reports Hitting the Wall, Kan-i shukusho Increasing, SANKEIBIZ (June 16, 2018).) A basic lodging facility operator must obtain permission from the local government under the Hotel Business Act. (Hotel Business Act, Act No. 138 of 1948, amended by Act No. 84 of 2017, art. 3, e-Gov website (in Japanese).)  A basic lodging business cannot operate in an exclusively residential area, and there are other operating requirements as well. (Id.) However, there is no restriction for lodging businesses regarding the maximum number of business days, unlike in the house-sharing business. (House Sharing Business Act art. 2, ¶ 3.) News articles have reported that some of the people who considered engaging in house sharing chose the basic-lodging business instead because the return on the investment is quicker. (Minpaku Reports Hitting the Wall, Kan-i shukusho Increasing, supra.)