RetireJapan

Hi everyone. I have been reading and learning a lot from this forum and I can't thank you enough for all information that has been shared by everyone here. I am in a situation and I would appreciate it if I can have your advice.

The situation
・ Me and my family currently renting a newly built detached house and I signed the typical 2 years house renting contract with the real estate agency（不動産） that is in charge of this house on December 2021.
・ From signing the contract to moving in, the process was rather smooth, similar to our previous renting experience.
・ But, there was one thing that the 不動産 mentioned during the signing of the contract, which I now take as the first red flag: "the homeowner's personal information is currently registered to this house and it will take some time for him to do update his details, and I will be receiving his letters for a while until he does so". I didn't think much and thought this is fine, the 不動産 said they just need my help to forward whatever letters belong to the homeowner to them until the homeowner changed/update his details, which I agreed to do so.

The problem

1. Letters
・ To date, I am still receiving the homeowner letters. His tax letters, his pension statements, letters from the banks, almost everything, as if he is currently living in this house. (I forwarded everything to the 不動産 in a stamped envelope which they have prepared)

2. Electricity bill
・ Since the day that I moved in, I have not been able to register the electricity of this house to my name. (Water and gas are fine though)
・ The 不動産 said I should have not faced any issue registering the electricity, but after some back-and-forth communication with TEPCO, I found out that the homeowner has a 10 years contract (something to do with the solar panel, I guess) with one electricity company, which he needs to terminate the contract first before I could register my name.
・ I reported back my findings to the 不動産, which then they told me that they will get in touch with the homeowner and give me an update.
・ To date, I have not heard anything, I followed up with the 不動産 from time to time, and to my surprise: they told me the homeowner is unreachable. It seems they have lost contact with the homeowner and could not do anything to help for now.
・ Though we are using the electricity from the day we moved in, I won't pay anything until I receive the official billing statements, is what I have said to the 不動産.

3. The bank
・ With the uncertainty of the homeowner and electricity bill situation, I noticed more and more letters from the banks arrive every month.
・ Sometime around May/June last year, an unknown guy dingdong our house, I attend and find out that he is the person in charge of the loan department from the bank which the homeowner gets his mortgage from.
・ He asks if I am the homeowner, which then I denied and said I am just renting the house. He seems surprised and said that the homeowner is unreachable, even to the bank, for quite some time now.
・ He said the homeowner might have a problem but since it is out of my business/problem, he said he will investigate further from his side. He asked about the 不動産 details, and gave me his contact, in case I heard anything about the homeowner.

What to do?
・ From dealing with the 不動産 and the anxiety on what's coming next, I'll be honest that this somehow is quite a stressful situation to be in. What we wanted is to just settle down in a place since we are going to have a baby.
・We are currently thinking of just finishing out the 2 years contract since we had paid a lot of money to move in and we have started to find a new place. Gutted to think that we have spent quite a lot to move in and thought to live here for long considering the conveniences of the locations etc., but, oh well.. sometimes things are just beyond our control.

I apologize for the lengthy post, but the insecurities/uneasiness of the situation scares us, and we are clueless if there is anything we should do, since we have not been in this situation before. Any advice is appreciated.

Wow, that seems very irregular and worrying.

I don't have any information for you, but renter's rights are quite strong in Japan and you will probably be able to continue living in the house or get the owner (or the bank, if they repossess the property) to pay your moving expenses/compensation if you need to move out.

I might talk to a lawyer in the meantime (you can often get a cheap or free initial consultation through city office).

Anyone else?

Sounds like your landlord might be scamming the system. Japanese banks make a distinction between home loans for primary residence vs a home loan for an investment property. The interest rate on investment properties is significantly higher than for a primary residence, according to this article:

Home vs Investment Loans
There is a huge difference between a primary resident home loan and a 2nd home vs an investment loan. In Japan, the home loan (jyuutaku 自宅) is for your primary residence only and you must live there. If you move at some point in Japan or overseas, the bank expects you to sell the house since you no longer live there, or refinance as an investment or 2nd home.

These primary home loans have the famed < 1% interest rates. Investment and 2nd home loans can range from 1.5% to 3.5% — hence there is an obvious desire to get a jyuutaku loan (or two if possible).

So it seems like there is an incentive to game the system. I think by doing this he could also get the lower tax rate on capital gains if he sells it after living there for five years as his primary residence. Maybe mention to your real estate agent that you are afraid your landlord is engaged in some sort of illegal scam. IANAL, but that might invalidate the contract and maybe you could get reimbursed for your incidental expenses? It would seem the real estate agency would be legally liable for not doing due diligence.

.

A few thoughts:

• This may be an attempt by your landlord to keep an address in Japan while being posted by his company to work overseas, i.e. to pretend he's a resident to avoid all the hassles of cancelling everything when stationed abroad. (banks send physical email periodically as part of their compliance checking process, and if it gets returned it raises a red flag)
• Although an interest-rate arbitrage play, like other posters suggested, can't be ruled out, this is all so amateurish/slipshod. If he wanted to keep up pretenses, all he had to do was keep up the payments, and no one is the wiser. But the banker he got his mortgage from physically coming to investigate?! That indicates that, in addition to being unreachable, he likely missed some payments. Slipshod.
• The mail and the electric contract strongly hint that he did actually live there at some point, further evidence pointing against this being a pure investment play. Because if he had bought a new house, why not use his new address? The only mail he would have needed forwarded to keep up pretenses would've been the mortgage lenders.
• Although rental contracts are two years, you are permitted to sever the contract and move out simply by giving notice. So don't worry too much about the need to fulfill two full years. However, given the overall dodginess of this whole thing, I'm wondering if you have some clause in there that says either a) you are committed to two full years, or b) he can kick you out whenever he wants (if he was going abroad and intended to return, he might have wanted that).
• Is your real estate agent a big company or a mom/pop shop? If the former, I would highly recommend you ask to speak to someone higher up, express your discomfort with these irregularities, and your disappointment that they facilitated (and continue to facilitate) such a dodgy arrangement. Mention the bank came and questioned you. State that you would like to move because of this, but the costs incurred are prohibitive and you are seeking some sort of financial remedy from them (pay your moving costs, waive any fees, etc. for the next deal).

A random thought and probably unlikely. Could the landlord be in prison? We had a situation once where somebody was 'unreachable', 'not able to deal with admin at this time' etc for ages and I joked that maybe he was in prison. He was! More likely he is out of country, but not sure what you can do in a situation like that - seems quite odd and annoying.

goodandbadjapan wrote: ↑Fri Feb 10, 2023 5:19 am A random thought and probably unlikely. Could the landlord be in prison? We had a situation once where somebody was 'unreachable', 'not able to deal with admin at this time' etc for ages and I joked that maybe he was in prison. He was! More likely he is out of country, but not sure what you can do in a situation like that - seems quite odd and annoying.

Held indefinitely by this police without being put on trial is certainly possible, and is you don't have family or a lawyer to take care of stuff it would pile up...

Thank you for the responses everyone.

mighty58 wrote: ↑Fri Feb 10, 2023 5:12 am A few thoughts:

• This may be an attempt by your landlord to keep an address in Japan while being posted by his company to work overseas, i.e. to pretend he's a resident to avoid all the hassles of cancelling everything when stationed abroad. (banks send physical email periodically as part of their compliance checking process, and if it gets returned it raises a red flag)
• Although an interest-rate arbitrage play, like other posters suggested, can't be ruled out, this is all so amateurish/slipshod. If he wanted to keep up pretenses, all he had to do was keep up the payments, and no one is the wiser. But the banker he got his mortgage from physically coming to investigate?! That indicates that, in addition to being unreachable, he likely missed some payments. Slipshod.
• The mail and the electric contract strongly hint that he did actually live there at some point, further evidence pointing against this being a pure investment play. Because if he had bought a new house, why not use his new address? The only mail he would have needed forwarded to keep up pretenses would've been the mortgage lenders.
• Although rental contracts are two years, you are permitted to sever the contract and move out simply by giving notice. So don't worry too much about the need to fulfill two full years. However, given the overall dodginess of this whole thing, I'm wondering if you have some clause in there that says either a) you are committed to two full years, or b) he can kick you out whenever he wants (if he was going abroad and intended to return, he might have wanted that).
• Is your real estate agent a big company or a mom/pop shop? If the former, I would highly recommend you ask to speak to someone higher up, express your discomfort with these irregularities, and your disappointment that they facilitated (and continue to facilitate) such a dodgy arrangement. Mention the bank came and questioned you. State that you would like to move because of this, but the costs incurred are prohibitive and you are seeking some sort of financial remedy from them (pay your moving costs, waive any fees, etc. for the next deal).

I also have a feeling that the landlord might be living outside Japan at the moment, or might also be in jail as @goodandbadjapan suggests.
We planned to rent here for a long time, when we first signed the contract we make sure that we can renew it after two years without the possibility that the landlord will come back and kick us out. They assured us that, so we were at ease initially. (The contract says that there will be a penalty if we terminate it within 1 year after moving in, so we are in a position to leave without penalty now.)

The real estate agency, however, is not a big company. Although it was already too late when we realized it, we find it suspicious when:

1. They don't seem to be troubled that I could not register the electricity to my name. Not being able to reach the landlord might be the reason but to date, they could not come out with any solution.
2. When I informed them that a guy from the bank came to visit us, their reaction was like "damn, bank people have found out that the landlord is renting the place" and they seem displeased knowing that I have informed the bank people that they are the agency managing the house. My gut feeling tells that they realize the landlord is throwing shit at them but at the same time, they could not do anything because the landlord is unreachable and the due diligence was not properly done from their side from the start.

At the moment, the plan is to start looking for a new place to rent, it might take some time since we don't really have much budget to again pay for a big deposit but that is another problem that I will need to think about.

One concern is regarding the electricity bill. Since I have not been paying it for over a year, I believe it is somehow being deducted directly from the landlord's account every month from the rental money, else, the electricity might have been cut long before if it is not paid. Since we are going to trigger the contract termination soon or at the end of the contract terms, do you think the real estate agency or the landlord has the right to ask me to pay for the past year's usage? I told them I am only willing to pay if they show me the valid billing statement, but since nobody heard anything from the landlord, I am unsure of what to expect on this one.

RetireJapan wrote: ↑Fri Feb 10, 2023 3:14 am Wow, that seems very irregular and worrying.

I don't have any information for you, but renter's rights are quite strong in Japan and you will probably be able to continue living in the house or get the owner (or the bank, if they repossess the property) to pay your moving expenses/compensation if you need to move out.

I might talk to a lawyer in the meantime (you can often get a cheap or free initial consultation through city office).

Anyone else?

Thank you for suggesting this. I will try to consult with the city hall if we can receive any consultation support.

reicloud wrote: ↑Fri Feb 10, 2023 9:14 am At the moment, the plan is to start looking for a new place to rent

I wouldn't rush into this. Talk to a lawyer and negotiate with the estate agent. This situation is not your fault and you shouldn't suffer financially because of it.