JAPAN Law and Practice Contributed by: Satoru Hasumoto, Takahiro Sato and Fuyuki Uchitsu, Mori Hamada & Matsumoto
6.3 Regulation of Rents or Lease Terms General Lease In a general lease for land or buildings, lease terms that are contrary to or reduce certain stat - utory protections or rights granted to the tenant under the Land Lease and Building Lease Law are void. Several of these statutory protections and rights are outlined below. • The lessor must have a justifiable reason to refuse a renewal of the lease. • The tenant may demand that the rent be decreased in response to market condi - tions and cannot be deprived of the right to demand a decrease in the rent even if they explicitly agree not to exercise that right. • In the case of a land lease, the leasehold interest in the land is perfected without reg - istration if the land tenant owns a registered building on the leased land. • In the case of a land lease, the land tenant has the right to request the landlord to pur - chase the building upon the termination of the land lease. • In the case of a building lease, the leasehold interest in the building is perfected without the need for registration if the leased building is delivered to the tenant. The rent and other terms of a general lease are otherwise freely negotiable and not regulated or subject to a voluntary code. Fixed Term Lease The tenant may be deprived of the protections and rights in the case of a land lease, where the land tenant has the right to request the landlord to purchase the building upon the termination of the land lease and the lessor must have a justifi - able reason to refuse a renewal of the lease.
The tenant may also be deprived of the right to demand that the rent be decreased in response to market conditions and the right not to be deprived of the right to demand a decrease in the rent even if they explicitly agree not to exer - cise that right and the right to require the lessor to have a justifiable reason to refuse a renewal of the lease. 6.4 Typical Terms of a Lease The initial term of a land lease for owning a build - ing is required by law to be at least 30 years and tends to range from 30 years to 50 years, except where the land lease is “Category 3 fixed term land lease” . Building leases are typically for a much shorter term. Office space leases are often for a short term (most commonly two to five years), while building leases for retail or commercial facilities tend to be longer, for ten to 20 years. The maintenance and repair of the premises actually occupied by the tenant are typically the responsibility of the tenant. However, if cer - tain renovation works are required by the ten - ant before it can start using the premises, the allocation of the responsibility and the cost for these works is negotiated before entering into the lease agreement. Monthly payment is the most typical payment term. 6.5 Rent Variation Lease agreements usually schedule a regular rent review, which is conducted every three to five years in many cases. During a rent review, the parties will negotiate an increase or decrease in the rent for the next three to five years.
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