Housing for Foreign Employees in Japan: Company Housing and Leases

Foreign employees are usually housed in one of two ways: company-leased housing (借上げ社宅), where the company leases a property and sublets it to the employee, or a personal lease signed by the employee. Employees who have just arrived in Japan have little local credit history or track record, so personal lease applications can be hard to get approved. With company-leased housing, the lease rests on the company’s credit, and if the employee pays part of the rent, payroll tax on the benefit can be kept down.

Company-leased housing versus personal leases

The choice changes who signs the lease, how screening works and how tax applies. The main differences are as follows.

Company-leased housing adds administrative work for the company. On the other hand, the time to move-in is more predictable, and employees can settle in sooner. Some companies use company housing for the first few years after arrival and switch to personal leases once employees are used to life in Japan.

Tax on company housing: the standard rental value and the 50% rule

If a company provides housing free of charge or at low rent, the difference from normal rent may be taxed as salary as an “economic benefit”. The benchmark is the standard rental value (賃貸料相当額) set by the National Tax Agency (NTA).

For employees other than officers, the monthly standard rental value is the sum of the following.

1. The building’s fixed asset tax assessed value for the year × 0.2%
2. JPY 12 × the building’s total floor area (m²) ÷ 3.3 m²
3. The land’s fixed asset tax assessed value for the year × 0.22%

The same formula applies to company-leased housing that the company rents from a third party and sublets to employees. If the employee pays at least 50% of the standard rental value, the difference is not taxed as salary.

There are three points to note. First, a housing allowance paid in cash is taxed as salary. Second, if the company pays the rent on housing the employee leased personally, this is not recognized as provision of company housing and is taxed. Third, a different calculation applies to housing provided to officers. Design officers’ housing together with How to set directors’ compensation.

Note also that residential rent is exempt from consumption tax. Rent on company-leased housing therefore does not qualify for the company’s input tax credit.

The leasing process and screening documents

The process is broadly the same whether the property is company-leased or personally leased. Working back from the arrival date, start searching one to two months ahead.

1. Set criteria such as budget, commuting time, size and whether family members will live there
2. Search for properties through a real estate agent and view them (online viewings may be available)
3. Submit a rental application and undergo screening by the landlord, management company and guarantee company
4. Receive the explanation of important matters and sign the lease
5. Pay initial costs such as the security deposit, key money, agent’s fee, advance rent, guarantee fee and fire insurance premium
6. Collect the keys and arrange electricity, gas, water and internet

Initial costs vary greatly by region and property. The security deposit (敷金, shikikin) is returned on move-out after deducting costs such as restoration, while key money (礼金, reikin) is not returned. These customs are unfamiliar outside Japan, so explain them to employees in advance.

Screening often requires documents such as the following.

• Residence card and passport (before arrival, a copy of the Certificate of Eligibility, etc.)
• Certificate of employment, employment contract or offer letter
• Proof of income
• For company-leased housing, the company’s certificate of registered matters and financial statements

How status of residence procedures relate to the start date is explained in Hiring foreign employees and work visas.

Rent guarantee companies and emergency contacts

Rental housing in Japan often requires the use of a rent guarantee company (家賃債務保証会社) instead of a joint guarantor. A guarantee company pays the rent on the tenant’s behalf if the tenant falls into arrears. The guarantee fee is usually borne by the occupant or the tenant under the lease.

Foreign tenants are often asked for an emergency contact in Japan. If the employee has just arrived and knows no one, naming a company representative as the emergency contact makes screening easier. Decide internally who will handle this.

If the guarantee company’s screening fails, options include looking for a property that accepts a different guarantee company or switching to company-leased housing in the company’s name. Reasons for screening results are often not given, so it is wise to have several candidate properties.

The Ministry of Land, Infrastructure, Transport and Tourism (MLIT) publishes guidelines for facilitating foreign nationals’ tenancy in private rental housing. This practical guide for landlords and management companies includes multilingual templates for rental applications and leases. It is also useful when explaining Japan-specific customs such as security deposits, key money and restoration to employees.

Amendments to the Housing Safety Net Act and related laws also took effect on 1 October 2025. A system of “residential support housing” offering services such as check-ins during tenancy was launched, and a certification scheme for rent guarantee providers was introduced.

Filings and house rules after moving in

Mid- to long-term residents must file their place of residence at the municipal office, presenting their residence card (在留カード), within 14 days of establishing it. When they move, they must also file with the new municipality within 14 days of moving. Filing a moving-in notification for the resident register is treated as filing the place of residence. For details, see Residence card notification duties.

To prevent problems after moving in, explain the following points at move-in.

• Waste sorting rules and collection days are set by each municipality
• Be careful about noise at night and how shared areas are used
• Leases often prohibit people other than the tenant from living there and subletting
• On move-out, costs are settled according to the lease and the restoration rules

What the company should prepare

As the number of foreign employees grows, deciding housing arrangements case by case becomes inefficient. Draw up company housing rules that cover the following.

• Eligibility (position, single or accompanied by family, length of service)
• Rent cap and the employee’s share (at least 50% of the standard rental value as a guide)
• Who bears initial costs, renewal fees and restoration costs on move-out
• Move-out deadlines on resignation, return home or transfer
• Emergency contacts and the internal point of contact for problems

If employees bring family members, size and distance to schools also become criteria. Setting out in the rules who bears the costs of moving from single to family housing keeps decisions consistent.

Procedures on resignation or return home

Leases specify a notice period for termination. Once a return home or resignation is decided, contact the landlord or management company immediately. Before and after moving out, the following steps are required.

• Cancel electricity, gas, water and internet and settle final bills
• Dispose of furniture, appliances and other items left behind
• Confirm restoration at a joint inspection and settle the security deposit
• If leaving Japan, file a moving-out notification with the municipality

With company-leased housing, the company handles much of this. Bills may arrive after the employee has returned home, so decide on a contact point until settlement is complete.

Summary: housing for foreign employees

Whether you use company-leased housing or personal leases changes how easily screening proceeds and how tax applies. With company housing, collecting at least 50% of the standard rental value from the employee avoids payroll tax. Even with personal leases, the company’s support is essential for guarantee companies and emergency contacts. After moving in, remember the 14-day filing of the place of residence.

Together with partner real estate firms, certified tax accountants and labor and social security attorneys, TIMOA supports company housing leases, the design of company housing rules and rent sharing, and scheduling around status of residence and onboarding procedures. For details, see Real Estate.