For Chinese and Taiwanese owners: leasing a Japanese income property on a fixed-term lease—how it differs from an ordinary lease, and re-contracting

The key point: When you lease out a Japanese income property, the contract comes in two types—an "ordinary building lease" and a "fixed-term building lease." The biggest difference is whether there is renewal. An ordinary lease is in principle renewed even after the term expires, and the landlord needs "just cause" to refuse renewal (Land and Building Lease Act arts. 26 and 28). A fixed-term lease ends definitively at expiry, with no renewal. However, a fixed-term lease is not formed unless two conditions are met: (1) the contract is in writing (or an electromagnetic record) and defines that there is "no renewal"; and (2) before contracting, the landlord delivers a written document stating that there is no renewal and the lease ends at the end of the term, and explains it (Land and Building Lease Act art. 38; the amendment effective 18 May 2022 also allowed electronic contracts and electromagnetic means). Neglecting this prior explanation voids the no-renewal clause, and the lease is treated as an ordinary one. For a non-resident owner, a fixed-term lease—which lets you control renewal—is an option, but it has the flip side of vacancy risk and the trouble of re-contracting. We (real estate) handle property management and information on the contract; rental management and the important-matters explanation go to a rental-housing manager/broker, eviction and litigation for rent arrears to a lawyer, and withholding and tax filing on a non-resident owner's rent to a tax accountant—each an independent business contracted with separately (no referral fees are exchanged).

For non-resident owners in China, Taiwan and other Chinese-speaking regions who hold Japanese income property, and for local professionals who handle Japanese real estate, this article organises the difference between a fixed-term and an ordinary lease and the practice of re-contracting, in the order of the law and the MLIT standard contract. This is general information; the final judgment on an individual contract design or dispute response belongs to the respective licensed professionals.

Yotsuba Real Estate Co., Ltd. (四葉不動産株式会社), based in Bunkyo, Tokyo, provides real-estate surveys/brokerage and information on leasing. Even if you do not live in Japan, you can consult us from the stage of which contract type to choose.

What is the difference between a fixed-term and an ordinary lease?

The decisive difference is "whether it is renewed." An ordinary lease is deemed renewed on the same terms as before even after the term expires (art. 26), and for the landlord to refuse renewal or give notice of termination, "just cause" is required (art. 28). Just cause is judged by weighing the parties' need for the building, the past course of dealings, the state of use, an offer of eviction money, etc., and is not easily recognised.

A fixed-term lease (fixed-term building lease) ends definitively at expiry, with no renewal. In exchange, the formalities for its formation are strict.

Item	Ordinary lease	Fixed-term lease
Renewal	In principle renewed (art. 26)	No renewal (ends at expiry)
Refusing renewal	Landlord needs just cause (art. 28)	Just cause unneeded (no renewal from the start)
Contract form	May be formed orally	A written or electromagnetic-record contract is required (art. 38(1), (2))
Prior explanation	Not needed	Deliver a written explanation that there is no renewal and it ends at expiry (art. 38(3))
Minimum term	Under 1 year is deemed no fixed term	Valid as a fixed-term lease even under 1 year
Early termination	By special agreement	For residential use under 200 m², the tenant may terminate on unavoidable grounds (art. 38(7))

A fixed-term "building lease" and a fixed-term "land lease" are different things. It is easy to confuse the fixed-term land lease that leases land (art. 22 et seq.), so the land side is covered in selling a building when inherited land turned out to be on a fixed-term land lease. This article narrows to the "fixed-term building lease" that leases a building.

Where are the merits and risks for a non-resident owner who chooses a fixed-term lease?

For an owner living abroad, the appeal of a fixed-term lease is that you "can control renewal yourself." Under an ordinary lease, without just cause you cannot get the tenant to leave, but a fixed-term lease ends definitively at expiry, making it easier to plan a future sale, own use or rebuilding. On the other hand, because there is no renewal, tenants settle less readily, and each term brings the trouble of re-contracting or re-advertising.

Perspective	Merit of a fixed-term lease	Risk / trouble of a fixed-term lease
Certainty of recovery	Ends definitively at expiry; just cause / eviction money in principle unneeded	To keep leasing, a re-contracting procedure is needed
Rent setting	Easier to set a term matched to the market without assuming renewal	Tenants may be harder to attract than at market
Future plans	Easier to match the timing of sale, own use or rebuilding	Vacancy risk may arise at each expiry
Managing from abroad	Easier to plan management with a bounded term	Managing termination notice / re-contracting deadlines is a burden remotely

Which is better depends on the property's location, rent market and the owner's exit strategy. For points on management and contracts for Chinese-speaking owners, see also entrusting management when a Chinese-speaking owner turns a held property into a minpaku and the management-rules and repair-plan checks a Chinese-speaking buyer looks at.

What happens if you neglect the prior delivery and explanation of the document?

This is where accidents happen most with a fixed-term lease. Land and Building Lease Act art. 38(3) requires the landlord, before contracting, to deliver a written document and explain that "there is no renewal, and the lease ends at the end of the term." With the amendment effective 18 May 2022, provision by electromagnetic means became possible with the tenant's consent (art. 38(4)), but the structure of "in advance, by a separate document (or electromagnetic record), with explanation" is unchanged.

What happens if you neglect it? Under art. 38(5), the no-renewal clause becomes void. In other words, what was meant to be a fixed-term lease becomes an ordinary lease; what should have ended at expiry is renewed, and without just cause you cannot have it vacated. Even if the contract states "this is a fixed-term building lease," this conclusion does not change without the prior delivery of the explanatory document.

Common pitfall	Article	What happens if neglected
Not contracting in writing (electromagnetic record)	art. 38(1), (2)	Not formed as a fixed-term lease
Not delivering the prior explanatory document	art. 38(3), (5)	The no-renewal clause is void = ordinary lease
Combining contract and explanation in one sheet	Case law requires a separate document	The fixed-term lease may be denied

For an owner abroad, this prior explanation is in practice often designed to be done by the rental-housing manager or broker to whom management is entrusted. Settling, before contracting, who delivers the explanatory document and when is the key to avoiding the void risk.

How should early termination and re-contracting be designed?

Early termination is treated differently in ordinary and fixed-term leases. In a fixed-term lease, for a residential building under 200 m², if the tenant can no longer continue living there on unavoidable grounds such as a job transfer, medical treatment or caring for a relative, the tenant may give notice of termination, and the contract ends one month after the notice (art. 38(7)). This is a tenant-protection provision, and any special agreement disadvantageous to the tenant contrary to it is void. Termination by the landlord in principle cannot be done without a special agreement.

Termination notice is also easily forgotten. In a fixed-term lease of 1 year or more, the landlord cannot assert the termination against the tenant unless it notifies, between one year and six months before expiry, that the lease ends at expiry (art. 38(6)). If notified after that period, it can be asserted six months after the date of notice. Managing this notice deadline is especially important for management from abroad.

Re-contracting is not "renewal." Because a fixed-term lease is not renewed, to keep leasing to the same tenant you must conclude a new fixed-term lease after expiry (re-contract). In principle, the written contract and prior explanation under art. 38 are redone each time. MLIT publishes a "Standard Fixed-Term Residential Lease Contract," which can be referred to as a template for termination-notice and re-contracting clauses.

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Scene	Deadline / requirement	Basis
Termination notice (term ≥ 1 year)	Notify between 1 year and 6 months before expiry	art. 38(6)
Tenant's early termination (residential under 200 m²)	Unavoidable grounds + 1 month from notice	art. 38(7)
Re-contracting	New contract, not renewal; redo the written contract + prior explanation	art. 38(1)–(5)

Who do I ask for management entrustment, eviction litigation and withholding?

Leasing for an overseas owner lines up professionals beyond real estate. The roles:

Scene	Who	Content
Property management / contract information	Real estate (us)	Explaining the contract type, property survey, support for re-contracting/advertising
Rental management / important-matters explanation	Rental-housing manager / broker	Tenant handling, rent collection, restoration; the art. 35 explanation
Eviction / litigation for rent arrears	Lawyer	Termination, eviction claims, litigation and other legal response
Withholding / tax filing	Tax accountant	Withholding and tax filing on a non-resident's real-estate income

When a non-resident leases domestic real estate in Japan and receives rent, the payer (tenant) in principle bears the duty to withhold 20.42% and pay it by the 10th of the following month (Income Tax Act arts. 212, 213). However, withholding is not required where an individual rents it for the residence of themselves or a relative (Income Tax Act Enforcement Order art. 328). The owner too in principle needs to file a tax return in Japan, and adjustment under a tax treaty is also possible. These are a tax accountant's field. Where rental-housing management is undertaken as a business, the registration and sublease rules of the Act on Optimisation of Rental Housing Management Business (Act No. 60 of 2020) also apply.

These cannot be bundled into one contract; each is an independent business contracted with separately. Rather than our taking on everything, the property and contract type are ours, management the manager's, disputes the lawyer's and tax the tax accountant's—with the windows separated, connected from one and the same window. No referral fees are exchanged.

Consult Yotsuba Real Estate on how to lease a Japanese income property and the contract type (initial consultation free)

In your message, write the property's area and type (condominium unit / whole building / detached house), the country/region where you currently live, whether you are considering a fixed-term or an ordinary lease, and your current contract status. We talk through everything from organising the contract type to referring management, tax and disputes.

Can I contract and renew while overseas?

Yes. The 2022 amendment made it possible to carry out both the fixed-term-lease contract and the prior explanation by electromagnetic record / means (art. 38(2), (4)). An electronic contract system, or provision of the explanatory document by email with the tenant's consent, is possible, making it easier to proceed even when the owner is not in Japan.

Two cautions, however. First, electromagnetic prior explanation needs the tenant's consent, premised on the recipient being able to output the record to paper. Second, because a fixed-term lease has no "renewal," to keep leasing you need to re-contract at each expiry, redoing the written contract and prior explanation in principle. The more remote the owner, the more important it is to pin down—dividing roles with the manager—the termination notice (between 1 year and 6 months before expiry) and the re-contracting deadlines. This article provides general information; the judgment on an individual contract's validity or tax belongs to the respective licensed professionals such as the rental-housing manager, lawyer and tax accountant.

Frequently asked questions

Q. What is the single biggest difference between a fixed-term and an ordinary lease?
A. Whether there is renewal. An ordinary lease is in principle renewed even after the term expires, and the landlord needs just cause to refuse renewal (Land and Building Lease Act arts. 26, 28). A fixed-term lease ends definitively at expiry, with no renewal. In exchange, the conditions for its formation are that the contract (in writing or an electromagnetic record) defines "no renewal," and that before contracting the landlord delivers a written document to that effect and explains it (art. 38). For a non-resident owner, the ability to control renewal is the fixed-term lease's hallmark.

Q. What happens to a fixed-term lease if I don't hand over the prior explanatory document?
A. The no-renewal clause becomes void (Land and Building Lease Act art. 38(5)). Even if the contract says "fixed-term building lease," if you did not, before contracting, deliver and explain a separate document stating that there is no renewal and it ends at expiry, it is treated as an ordinary lease; it is not ended at expiry but renewed, and you cannot seek eviction without just cause. The 2022 amendment allows electromagnetic means too, but the tenant's consent is required.

Q. Can I contract or re-contract a fixed-term lease even while living abroad?
A. Yes. With the amendment effective 18 May 2022, both the contract and the prior explanation can be done by electromagnetic record / means (art. 38(2), (4)). An electronic contract, or provision of the explanatory document by email with the tenant's consent, is possible. But because a fixed-term lease has no renewal, to keep leasing you need to re-contract at each expiry, in principle redoing the written contract and prior explanation. Don't forget to manage the termination-notice deadline (between 1 year and 6 months before expiry).

Q. How is tax handled when a non-resident receives rent?
A. When a non-resident leases domestic real estate in Japan and receives rent, the tenant who pays in principle bears the duty to withhold 20.42% and pay it by the 10th of the following month (Income Tax Act arts. 212, 213). However, where an individual rents it for the residence of themselves or a relative, withholding is not required (Income Tax Act Enforcement Order art. 328). The owner too in principle needs to file a tax return in Japan, and adjustment under a tax treaty is possible. For the specific calculation and filing, consult a tax accountant (an independent business under a separate contract).

Sources

The following public materials are starting points. Laws are amended, so check the current article, paragraph, item, enforcement date and latest amendment on e-Gov Law Search. MLIT's standard contract and the National Tax Agency's guidance are updated from time to time, so check the latest version. The final judgment on an individual contract design or tax belongs to the respective licensed professionals. Public materials were all consulted on 4 November 2026. The sources below are in Japanese.

• e-Gov Law Search: Land and Building Lease Act (Act No. 90 of 1991; art. 26 = renewal, art. 28 = just cause, art. 38 = fixed-term building lease. Art. 38 added electromagnetic record/means by the amendment (Act for Developing Laws Relating to the Formation of a Digital Society) effective 18 May 2022; check the paragraph numbers on e-Gov Law Search)
• MLIT, "Standard Fixed-Term Residential Lease Contract" and "Standard Residential Lease Contract" (termination-notice and re-contracting clauses; consulted 4 November 2026; the latest is on the MLIT page)
• e-Gov Law Search: Act on Optimisation of Rental Housing Management Business (Act No. 60 of 2020; registration of rental-housing management business; rules on specified sublease operators)
• National Tax Agency, "No.2884 Withholding on non-residents etc. / withholding rates" (20.42% withholding on real-estate rent; not required where an individual rents for the residence of themselves or a relative; Income Tax Act arts. 212, 213 and Enforcement Order art. 328; consulted 4 November 2026)
• e-Gov Law Search: Income Tax Act (Act No. 33 of 1965; art. 212 = withholding duty, art. 213 = rate)

This article provides general information and does not guarantee that an individual contract is validly formed as a fixed-term building lease, or the tax treatment. Property management and information on the contract are real estate's (ours); rental management and the important-matters explanation a rental-housing manager/broker's; eviction and litigation for rent arrears a lawyer's; withholding and tax filing a tax accountant's—each judged and handled by them.

Joji Uramatsu (浦松 丈二), Representative Director and licensed real estate transaction specialist, Yotsuba Real Estate Co., Ltd. (四葉不動産株式会社). As a licensed real estate transaction specialist in Bunkyo, Tokyo, we provide real-estate surveys/brokerage and information on leasing. Author profile

Updated: 4 November 2026