Trends in Rent Levels

Rising land prices and higher construction costs driven by a weak yen have pushed up the prices of newly built condominiums. As a result, demand has shifted away from expensive new properties toward existing homes and rental housing, leading to upward pressure on both property prices and rents.
 

According to the nationwide Published Land Prices announced by Japan’s Ministry of Land, Infrastructure, Transport and Tourism on September 16, 2025 (as of July 1, 2025), the average land price across all uses—including residential and commercial land—has risen for the fourth consecutive year, with the rate of increase expanding compared to the previous year. The overall average increased by 1.5%. As land prices rise, property owners face higher assessed values for fixed assets and increased tax burdens. Both strong demand and rising property taxes are contributing to higher rents.
 

In response to these conditions, more owners are implementing rent increases at the time of lease renewal or when accepting new tenants. However, rent increase negotiations can raise the risk of tenant turnover. For example, if an owner attempts to raise rent by 5% but negotiations fail and the tenant moves out, resulting in a one-month vacancy, even if a new tenant is found after one month, it would take at least 20 months of occupancy to recover the loss incurred during that vacancy period.
 

When raising rents, it is essential to understand nearby market rates and to introduce amenities that tenants value, creating an environment that justifies the rent and attracts prospective tenants.
 

In recent years, some owners have opted for fixed-term lease contracts instead of standard leases to facilitate smoother rent increases at renewal. While fixed-term leases can be renewed, they allow owners to reset rent at the time of re-contracting, making it easier to respond to market changes. This can be a viable option going forward.
 

That said, fixed-term leases may be avoided by tenants who wish to live long-term in one place. Therefore, owners should consider locations where turnover is naturally higher—such as areas near universities—and carefully assess how much risk can be mitigated.
 

Reference: Standard Land Price