Commercial Lease Agreements in Japan: Teiki Shakuya and Critical Clauses
Learn about commercial lease agreements in Japan: the difference between teiki shakuya and futsū, the hoshōkin security deposit, shikibiki deductions, and important points about restoring the property to its original condition.
Aug 7, 2026·✍️ olablog·⏱ 12 min read
Learn about commercial lease agreements in Japan: the difference between teiki shakuya and futsū, the hoshōkin security deposit, shikibiki deductions, and important points about restoring the property to its original condition.
Opening a Vietnamese restaurant, nail salon, grocery store, or company office in Japan is a dream for many Vietnamese people living and working there. However, quite a few have ended up covering losses of hundreds of thousands of yen or even going bankrupt simply because they signed a commercial lease while applying the same assumptions they would use for a standard residential lease. Commercial real estate in Japan is a completely different "playing field": you are not protected as an individual consumer but are treated as a professional business operator. This article breaks down the critical clauses in commercial lease agreements in Japan.
1. How is leasing commercial space different from renting a home in Japan?
When renting an apartment for residential use (居住用 - kyojūyō), Japanese law (the Land and Lease Law - 借地借家法 - shakuchi shakkyahō) prioritizes tenant protection. Any natural wear and tear caused by the passage of time (経年劣化 - keinen rekka) is generally the landlord's responsibility.
However, when leasing commercial space (事業用 - jigyōyō), you are acting as a business owner (事業主 - jigyōnushi). The law treats this as a transaction between two equal business parties, so the clauses in the lease agreement (賃貸借契約書 - chintaishaku keiyakusho) take precedence, no matter how harsh they may be.
The three biggest differences between residential and commercial leases are:
- Extremely high initial costs: A residential security deposit is usually only around 1–2 months' rent, whereas a commercial deposit is typically 6–12 months' rent (and can be 12–24 months for major shopping centers).
- Strict restoration requirements: You must return the premises completely cleared out, often restoring it to a bare-concrete shell (スケルトン - sukeruton).
- Long notice periods for termination: Residential tenants generally need to give only 1 month's notice, while commercial leases commonly require 3–6 months' advance notice.
2. Teiki Shakuya vs. Futsū Shakuya: A choice that can determine your survival
When you receive the explanation of important matters (重要事項説明書 - jūyō jikō setsumeisho), the first thing you must check is the type of lease. Commercial premises in Japan generally fall under two main types of agreements:
Ordinary building lease — 普通建物賃貸借 (futsū tatemono chintaishaku)
This is a type of lease that offers strong tenant protection.
- Features: The term is usually 2–3 years. When it expires, the agreement is automatically renewed (更新 - kōshin) if the tenant wishes to continue.
- Benefits: The landlord cannot unilaterally evict you or refuse renewal unless there is a "justifiable reason" (正当事由 - seitō jiyū) recognized by law, such as a building at risk of collapse or major redevelopment.
- Renewal fee: Upon renewal, tenants commonly pay a renewal fee (更新料 - kōshinryō) equivalent to 1 month's rent.
Fixed-term building lease — 定期建物賃貸借 (teiki tatemono chintaishaku / commonly shortened to: teiki shakuya)
This type of lease is increasingly common for high-end commercial premises and shopping complexes.
- Features: The lease ends exactly on the date stated in the documents. There is no automatic renewal.
- Risk: When the term ends (for example, after 3 years or 5 years), the landlord has the right to repossess the premises without giving any reason. Even if your restaurant brand is thriving, you may still have to close or relocate.
- Renewing the agreement (再契約 - saikeiyaku): You can continue operating only if both parties agree to sign an entirely new contract. At that point, the landlord has the right to raise the rent to any level they choose.
- Important note on early termination: Under a teiki shakuya agreement, tenants are generally not allowed to terminate the lease unilaterally before its expiration unless the contract expressly includes an early-termination clause (中途解約特約 - chūto kaiyaku tokuyaku). If you cancel on your own, you may be required to compensate the landlord for the full rent due for the remaining months.
3. The 保証金 (hoshōkin) security deposit and 償却 (shōkyaku) deduction clause
When planning your opening budget, the security deposit is often the biggest financial burden.
Security deposit / Guarantee deposit — 保証金 (hoshōkin) / 敷金 (shikikin)
- Typical amount: As of August 2026, in the middle of 2026, security deposits for commercial premises in major cities such as Tokyo, Osaka, and Nagoya are commonly 6 to 12 months' rent.
- Example: If the monthly rent is 300.000 JPY (approximately 49,5 million VND at an exchange rate of 1 JPY ≈ 165 VND), a 6-month deposit would be 1.800.000 JPY (approximately 297 million VND). At 12 months, the amount would reach 3.600.000 JPY (approximately 594 million VND).
- Purpose: The deposit covers rent if you fall behind on payments and pays for repairs or remediation if problems occur.
Deposit deduction / Amortization — 償却 (shōkyaku) or 敷引き (shikibiki)
Many Vietnamese tenants mistakenly assume that the hoshōkin security deposit will be refunded 100% when they vacate the premises, after outstanding rent has been deducted. In reality, Japanese commercial leases often include a 償却 (shōkyaku - amortization) or 敷引き (shikibiki - deposit deduction) clause.
- How it works: When the lease ends, the landlord will automatically retain a predetermined amount, regardless of how new or well-maintained your premises are.
- Calculation methods:
- Percentage-based: For example, "20% of the security deposit is deducted" (保証金の20%償却). If the deposit is 2.000.000 JPY, you will lose 400.000 JPY (approximately 66 million VND) as soon as you move out.
- Based on months of rent: For example, "an amount equivalent to 2 months' rent is deducted" (賃料の2ヶ月分償却).
| Cost item | Residential lease (Kyojūyō) | Commercial lease (Jigyōyō) |
|---|---|---|
| Security deposit (敷金/保証金) | 1–2 months' rent | 6–12 months' rent (can be as much as 24 months) |
| Deduction (償却/敷引き) | Rare; most of the deposit is usually returned | Common (10–30% of the deposit or 1–2 months' rent deducted) |
| Termination notice period (解約予告) | 1 month in advance | 3–6 months in advance |
| Natural wear and tear (経年劣化) | Landlord's responsibility | Tenant's responsibility if stipulated in the lease |
| Restoration to original condition (原状回復) | Cleaning and repairing damage caused by the tenant | Restore to a bare-concrete shell (Skeleton) or to the condition at move-in |
4. The expensive "nightmare" of restoring the premises 原状回復 (genjō kaifuku)
Unlike a residential rental, where you may only need to clean the property and pay a few tens of thousands of yen for cleaning, restoration to the original condition — 原状回復 (genjō kaifuku) — under a commercial lease can come as a shock.
Restoring the premises to a bare-concrete shell (スケルトン戻し - sukeruton modoshi)
If you took over a raw, empty space and installed the interior, flooring, ventilation system, plumbing, and other features yourself, you are generally required to remove everything when you leave, demolish partition walls and suspended ceilings, and return the premises to its original concrete framework.
- Cost: As of August 2026, demolition, removal, and industrial-waste disposal costs in Japan are very high, ranging from 30.000 JPY to 80.000 JPY/tsubo (1 tsubo ≈ 3,3 m²). A 20-tsubo restaurant (~66 m²) may cost between 600.000 JPY and 1.600.000 JPY (approximately 100 to 264 million VND) for demolition and removal alone.
Transferring a fully fitted restaurant (居抜き - inuki)
To avoid costly demolition, many restaurant owners choose to transfer the business in 居抜き (inuki) condition to the next tenant, leaving the existing fixtures and fittings in place. However, this must be approved in writing by the landlord. If the landlord refuses, you will be required to restore the premises to its original condition.
A/B/C construction categories (A・B・C工事区分 - A/B/C kōji kubun)
In office buildings and shopping centers, construction work is divided into 3 categories:
- A工事 (A kōji): The landlord appoints the contractor and pays for the work, such as the building structure and elevators.
- B工事 (B kōji): The landlord appoints the contractor, but YOU pay for the work, such as fire-prevention systems, central air conditioning, and main electrical and plumbing systems. This is the cost most likely to be inflated because you cannot choose a cheaper contractor.
- C工事 (C kōji): You choose the contractor and pay for the work yourself, such as interior decoration, tables and chairs, and signage.
5. Tips for negotiating a commercial lease in Japan before signing
To protect your finances when starting a business in Japan, you should take the following steps before signing:
- Negotiate the 償却 (shōkyaku) deduction: Ask to reduce the deposit deduction rate from 20% to 10%, or eliminate it altogether if you agree to return the premises in attractive 居抜き (inuki) condition.
- Request a 居抜き (inuki) transfer clause: Ask to add a clause allowing you to find a successor tenant who can take over the existing interior if you stop operating. This can help you avoid demolition costs of millions of yen.
- Add an early-termination clause (中途解約 - chūto kaiyaku): If you are signing a 定期借家 (teiki shakuya) lease, make sure it allows you to terminate the agreement with 3 to 6 months' notice without being charged the full remaining rent under the contract.
- Check the B工事 (B kōji) contractor carefully: Request a sample B工事 quotation or ask the landlord to allow competitive quotes (相見積もり - aimitsumori) from third parties to avoid inflated pricing.
- Take photos and prepare a handover record (引き渡し確認書 - hikitowashi kakuninsho): When you take possession of the premises, carefully photograph every crack and document the condition of the plumbing. Keep these records as evidence for comparison when you restore the premises.
Frequently asked questions
Q. Can a foreigner (including a Vietnamese national) sign a commercial lease in Japan in their own name? Yes. However, if you sign as an individual, Japanese real estate companies will often require you to hold a long-term visa, such as an Engineer visa, Permanent Resident status, Long-Term Resident status, or Business Manager visa, and to have a Japanese guarantor (保証人 - hoshōnin) or apply through a rent-guarantee company (保証会社 - hoshō kaisha). If you sign on behalf of a company (法人 - hōjin), you will need to provide the company's corporate registration certificate (履歴事項全部証明書 - rireki jigyō zenbu shōmeisho).
Q. Can I both live in and operate a shop or office from commercial premises? It depends on the permitted use (用途 - yōto) stated in the contract. Most commercial premises prohibit overnight stays or registering your residence (住民票 - jūminhyō) there because of fire-safety regulations and real estate taxation. If you want to combine living and working, you will need to find an apartment explicitly marked "Office/SOHO permitted" (事務所可 / SOHO可).
Q. If my restaurant performs poorly and I return to my home country, will I lose the security deposit? The landlord will almost certainly retain the deposit or apply it in full toward early-termination penalties, overdue rent, and the cost of restoring the premises. Moreover, if you signed a personal guarantee, the guarantee company or landlord may file a lawsuit to recover assets you own in Japan, seriously affecting your credit history and your ability to enter Japan in the future.
Q. My teiki shakuya lease is expiring, but I want to continue renting. What should I do? You should proactively contact the landlord or management company around 6 to 12 months before the expiration date to express your desire to sign a new agreement (再契約 - saikeiyaku). If the landlord agrees, both parties will renegotiate the new rent and lease conditions. If the landlord refuses, you must return the premises on the exact date specified in the contract.
Conclusion
Signing a commercial lease in Japan requires many times more care than renting an ordinary home. Do not rush to sign before you fully understand the nature of a 定期借家 (teiki shakuya) agreement, 償却 (shōkyaku) deductions, and your 原状回復 (genjō kaifuku) obligations. Thorough legal preparation and negotiation from the outset are the strongest safeguards for your capital and the future of your business in Japan.
Suggested further reading:
- Read more practical advice on starting a business, finding a rental home, and handling legal procedures at Blog OlaChill.
- If you are researching the market and learning about the culture of different areas in Tokyo, explore the flexible experiences offered through Day tours from Tokyo.
- Visit the OlaChill homepage for the latest useful information about living, studying, and working in Japan.
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