Short-term rentals, globally recognized as Airbnb and specifically referred to as Minpaku in Japan, have revolutionized the hospitality industry worldwide.

However, with this rise in popularity comes the need for clear regulations, especially in a country like Japan known for its attention to detail and safety standards. If you’re considering investing in a property for short-term rental purposes in the country, it’s crucial to understand the legal framework and requirements set forth by the Ministry of Land, Infrastructure, Transport and Tourism.

Even with its success, the industry in Japan has faced its share of challenges, particularly in navigating the initial regulations and procedures required to obtain licenses for vacation rentals. These were further compounded by the impact of the COVID-19 pandemic, which led to a significant drop of approximately 13% in the number of Minpaku accommodations during the pandemic period.
Despite these challenges, the industry remained resilient, with about 20,000 private lodgings available in 2023, showcasing the continued interest and potential in the Minpaku market in Japan.

In this article, we will be providing and reviewing the requirements in an easy-to-understand manner and keeping the focus on the core points.

Understanding the Private Lodging Business Act (New Minpaku Law)

The Private Lodging Business Act, enacted in June 2017, is the cornerstone of regulations governing short-term rentals in Japan. This law was designed to address safety, sanitation, and social concerns arising from private lodging services while ensuring a positive experience for tourists.

Three Types of Operators under the New Minpaku Law

The New Minpaku Law categorizes operators into three main types:

Private Lodging Operators:

• Have the necessity to notify authorities of the intent to operate.
• Are limited to 180 days of operation annually.
• Are responsible for maintaining standards like sanitation, noise control, and guest registration with official operational guidelines and standards that have to be followed.
• Are subject to supervision by local authorities

Private Lodging Management Operators:

• Are registered with the Ministry of Land, Infrastructure, Transport and Tourism.
• Manage operational aspects, contract management and necessary documentation.
• Are subject to dual supervision by the Ministry and local authorities.

Private Lodging Intermediaries:

• Facilitate transactions and ensure contract clarity.
• Registration with the Japan Tourism Agency is mandatory.
• Are supervised by the Agency for compliance.
• Have to provide full transparency in contract and business operations is required

Compliance with Housing Standards

For a property to qualify under the New Minpaku Law, it must meet specific equipment and occupancy criteria, as per below:

• Equipment Requirements: Kitchen, bathroom, toilet, and washroom.
• Occupancy Requirements: Used as a primary living space, available for new tenants, and occasionally used by the owner or lessee.

As mentioned above, the law allows for up to 180 days of operation per year, with strict calculations and guidelines outlined by government ordinances.

Obtaining your Private Lodging License

Finally, here is a simplified list of the required steps for obtaining the private lodging license:

• Arrange a consultation at your local public health center to understand the registration procedures and Japanese regulations.
• Receive a rule book and checklist during the consultation. Tasks may include informing neighbors, ensuring safety measures, confirming rental rules, and complying with fire safety regulations. Consider outsourcing operations if you won’t be present.
• Use the Minpaku Portal Site to submit necessary documents like a notification form, financial stability certificate, eligibility oath, and floor plan. The required paperwork depends on your property type and presence during guest stays.
• Upon approval, get your private lodging business certificate from the city ward – see the image example below. Display it visibly at your property’s entrance to officially start your vacation rental business in Japan.

Ensuring Compliance and Best Practices

Adhering to the regulations outlined in the New Minpaku Law contributes to a safe and sustainable lodging market in Japan. Understanding these legal requirements is essential for investors and operators alike to provide reliable and enjoyable experiences for guests while operating within the bounds of the law, so always ensure you keep up to date with any developments in the market! 

For further insights into how to run a Minpaku business, as well as the nuances between Minpaku and hotel licenses, Tracey Northcott’s informative presentation (below) during April 2024’s Real Estate Summit provides valuable clarity on this topic.