When signing a lease in Japan, tenants and landlords must navigate three key deposits: shikikin, reikin, and hoshokin. Each has a different legal nature, refund policy, and local custom, making them a common source of conflict. This article clarifies their differences and offers practical steps to avoid refund disputes.

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1. Definitions and Key Characteristics

・Shikikin  Typically 1–2 months’ rent held as a refundable security deposit. Unpaid rent and restoration costs are deducted and the balance returned at move-out.

・Reikin  Usually 1–2 months’ rent paid as non-refundable key money to the landlord.

・Hoshokin  A large refundable deposit used mainly in commercial leases. In a part of Kansai area, up to 30 % may be withheld on exit as a regional custom.

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2. Dispute-Prevention Measures

・Specify restoration rules and deduction criteria in the lease.

・Use photo-based inspection checklists at move-in and move-out.

・Follow the Ministry of Land guidelines to allocate repair costs fairly.

・Issue a detailed settlement statement and keep proof of payment.

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3. Example Case

A Tokyo studio lease held ¥200 000 as shikikin. At move-out, the landlord tried to deduct the full amount for wallpaper replacement. Photos taken at move-in showed prior damage, leading to a negotiated refund with ¥100 000 returned. Documentation and photos were crucial to the resolution.

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Takeaway

Remember: Shikikin is generally refundable, reikin is not, and hoshokin follows contract-specific deduction rules. Thorough inspections, clear lease clauses, and guideline-based settlements greatly reduce refund disputes.