What is Act on Rental Housing Management Business (Act on Optimization of Rental Housing Management Business)?

Poste date: Friday, October 27, 2023

Act on Rental Housing Management Business (Act on Optimization of Rental Housing Management Business, etc.) came into effect on June 15, 2021. With the enforcement of this act to optimize the management of rental housing, the former registration system required by the Ministry of Land, Infrastructure, Transport and Tourism was abolished. We will explain here which companies are subject to the act and what their obligation of explanation, etc. to the lessor is all about.

Purpose of enactment of the Act

It was established to eliminate dishonest housing management companies that do not meet the standards, by establishing certain standards for rental housing management operations, and to make it possible to announce the list of high-grade management companies as the registered companies.

You can search for the registered companies on the website of Ministry of Land, Infrastructure, Transport and Tourism (available only in Japanese).

https://etsuran2.mlit.go.jp/TAKKEN/takkenKensaku.do

Companies subject to the Act

Rental housing management companies or specified subleasing business companies (subleasing brokers) that manage more than 200 rental housing units, are subject to the act.

When you manage one building, such as an apartment building, which has 10 units, it shall be calculated as 10 units.

* The Ministry of Land, Infrastructure, Transport and Tourism recommends registration of small-sized management companies which manage 200 or fewer units.

Posting of notices

 

Each branch office or business office must post a “notice” with the following contents at a readily visible location.

  1. Registration number
  2. Registration date
  3. Validity period of Registration
  4. Trade Name, Company Name, or Name of Representative
  5. Location of the principal business office or other office (including Phone Number)

 *Registration is valid for 5 years and must be renewed every 5 years.

Obligation to explain important matters in advance to the lessor

Before concluding a management contract, a document on the details and the method of the management works must be issued for “explanation of important matters” to the lessor.

* With the consent of the lessor, the "document on explanation of important matters" and the "contract" may be handled in electronic document.

Furthermore, “explanation of important matters” is not necessary when the other party of the contract is someone who has expertise, such as a real estate broker or a rental housing management company.

Obligation to assign business managers

Each office (branch office) must assign at least one business manager. If there are multiple offices, each of them must assign a separate manager.

* A business manager is a person who has at least two years of work experience in management business works, has taken designated training, passed the examination for being registered as Certified Property Manager, and has the qualification of a Real Estate Transaction Agent.

Obligation to segregate and manage assets 

Management company must segregate the accounts for the company’s own assets from the accounts for the management business such as for the rent money or security deposits received in the business. In addition, the company must manage the received money, in the state that you can immediately determine which money comes from which management business, on the accounting book or software.

Obligation to report periodically

The manager has the obligation to report the following matters to the lessor at least once a year.

  1. Reporting period
  2. The implementation status of management operations
  3. Status of the occurrence and handling of complaints from the tenants of the rental housing under the management operation.

The report shall not be made orally, but in written form. With the consent of the lessor, reporting on website or by email shall be allowed. Written reporting shall be also obligated upon termination of the management contract.

Obligation to keep books

Each office (branch office) must have a management ledger and must record the date of the management contract, etc.

Summary

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) enforced the act to ensure “clarity of the details of management contract, appropriateness of the method of maintaining and managing rental housing as a management business, stable residence for the tenants, smooth execution of business related to leasing of rental housing, etc.”

Our company is a rental housing management company registered by Ministry of Land, Infrastructure, Transport and Tourism, and has an experienced business manager who is a Certified Property Manager.

>> Our Property Management Services

We are providing smooth services by an appropriate method of maintaining and managing rental housing under the management contract in a clear manner. We are happy to be your best choice for taking care of your property’s overall management.

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