The Importance of Lease Agreements in Special Zone Minpaku Business

In property rentals, the lease agreement plays a crucial role in clearly defining the rights and obligations of both landlord and tenant. This holds true for Special Zone Minpaku businesses as well, where entering into a contract based on a lease agreement is an essential requirement for business operations.

Under relevant government ordinances and local regulations, applicants seeking Special Zone Minpaku certification (Specific Certification) are required to submit their lease agreement and any accompanying terms and conditions, ensuring a system that guarantees proper contract execution.

This article is intended for those considering entering the Special Zone Minpaku business. Based on Osaka City’s Guidelines for the National Strategic Special Zone Foreign Guest Accommodation Business, we’ll explain what should be included in a lease agreement and key points to keep in mind.

What Is a Lease Agreement in Special Zone Minpaku?

The Special Zone Minpaku business allows facilities within National Strategic Special Zones to be used based on a lease agreement and any related contracts. For this reason, applicants for Special Zone Minpaku certification are required to attach copies of the lease agreement and related terms and conditions when submitting their application.

Generally speaking, lease agreements are freely entered into by mutual consent between landlord and tenant, based on the principle of freedom of contract. However, the Special Zone Minpaku business is a unique type of operation subject to legal and regulatory restrictions—for example, the stay period must fall between 3 days (2 nights) and 10 days (9 nights).

Additionally, only the tenant named on the lease agreement and their cohabitants are permitted to stay at the Special Zone Minpaku facility—no one else may stay there. It’s also recommended to install a video camera with recording capability near the entrance of the facility to monitor and confirm that only registered guests are coming and going.

*Note: While the Foreign Guest Accommodation Business is designed to provide suitable facilities for foreign travelers for a set period, this does not mean Japanese guests are prohibited from using these facilities.

Types of Lease Agreements

Because Special Zone Minpaku facilities have restricted stay periods, the lease agreement typically falls under either a “fixed-term building lease agreement” or a “temporary-use lease agreement,” as defined under the Land and Building Lease Act.

In particular, if adopting a fixed-term building lease agreement, the tenant must be informed in writing—and in advance—that the contract will not be renewed and will terminate upon expiration of the agreed period.

Contents of the Lease Agreement

Lease agreements for Special Zone Minpaku businesses must clearly state the following items. Additionally, it is not permitted to enter into multiple contracts for the same room during the same period.

1. Purpose of Facility Use
   The agreement should limit use of the room to staying purposes only, and must include a clause prohibiting business activities within the facility.
2. Length of Stay and Guest Information
   The agreement must state that the room will be used for 3 days or more, and must list the names of all individuals staying at the property.
3. Right of Entry
   The agreement must specify the right to enter the room when necessary for hygiene or facility management purposes, with the guest’s consent obtained beforehand.
4. Language Support
   The lease agreement and any related terms and conditions must be prepared in a form the guest can understand in their native language.

For corporate contracts, the following requirements must be met:

• The specific employee(s) belonging to the corporate tenant must be identified.
• Whether the contract is signed jointly by the corporation and employee, or under the corporation’s name alone, it must clearly state that the employee is the guest staying at the property, and must include a guest list and copy of the employee’s passport.
  No other contract format is acceptable.

Preventing Disputes

Preventing conflicts with neighboring residents is also essential. Incorporating the following measures into the lease agreement can help prevent issues before they arise.

1. Parking and Bicycle Storage
   The agreement should clearly state the rules for using parking and bicycle storage areas, the need to maintain order, and whether pets are permitted.
2. Clarifying Prohibited Behavior
   To protect the living environment of other guests and local residents, the following actions should be listed as prohibited in the agreement, along with a statement that violations may result in contract termination:
   • Noise
   • Inviting an excessive number of visitors
   • Any other behavior that causes nuisance to local residents
3. Checks During the Stay
   For stays of 7 days or longer, the property must be checked at least once during the stay to confirm it is being used appropriately, with the results recorded. Specifically:
   • Visually check how garbage is being stored.
   • Ask local residents whether there have been any issues with noise or other problems.

Early Termination of Contracts

Special Zone Minpaku businesses are subject to minimum stay periods set by government ordinances and local regulations. Therefore, if an early termination clause is included in the lease agreement or related terms and conditions, the following must be observed.

• If a guest terminates the contract early for personal reasons, the agreement must clearly state that no refund will be issued for the portion of the stay that falls short of the minimum stay period set by local ordinance.

Including such a clause ensures the contract complies with applicable laws and regulations.

Operating in Condominium Units

When operating a business in a condominium or other unit within a jointly-owned building, compliance with the building’s management regulations is required. Even if the standard management regulations state that “the exclusively owned section shall be used as a residence,” this does not necessarily prevent Specific Certification, given that the Special Zone Minpaku system is premised on residential use.

However, certification will not be granted if the management association has passed a resolution interpreting the regulations as prohibiting Special Zone Minpaku use, or if the management regulations otherwise conflict with Special Zone Minpaku operations. Applicants must therefore demonstrate that there is no obstacle to conducting the business—for example, by attaching a copy of the management regulations or submitting a document confirming the management association’s approval.

Authority to Use the Property

To operate a Foreign Guest Accommodation Business, the certified operator must have the authority to lease the property. If the applicant for Specific Certification is a tenant or sub-tenant of the property, the following conditions must be met.

1. The property owner and all lessors must have given their consent for the property to be used for business purposes.
2. The lease agreement must not contain any clause prohibiting business use.

To demonstrate this, copies of all lease agreements and letters of consent must be attached at the time of application. Even in the case of a sublease, both the user and the sub-tenant must comply with the minimum stay period and all other applicable laws and regulations.

Explaining Important Notices to Guests

Certified operators must explain important notices regarding facility use to guests in their native language. This explanation must include the following:

• How to use the facility’s equipment
• How to dispose of waste
• Prohibition of noise disturbances
• Emergency contact information and initial response procedures (including how to use fire prevention and disaster equipment)

Operators are also required to take their own measures for waste disposal and fire-related response procedures.

Which Foreign Language to Use

There are no specific restrictions on which foreign language to use, and English is not mandatory. However, staff who can respond in the selected language must be available as an emergency contact. It’s also recommended to clearly state which foreign language is used on the facility’s website—displaying this on the homepage makes it easy for guests to understand at a glance.

Requirements for the Facility Website

The facility’s website should offer thorough guidance in foreign languages, presented in a way that’s easy for guests to understand. In addition to floor plans, photos, and pricing information, it’s recommended to include the following:

• Building age and structure
• Fire prevention and earthquake resistance information (including whether a seismic assessment has been conducted, and its findings)
• A foreign-language version of the lease agreement alongside the original Japanese text

Note that it is prohibited to include content that could be misinterpreted as suggesting stays of less than 2 nights are available.

From Certification Application to Ongoing Operational Support

At Stay Buddy, we provide comprehensive support for Special Zone Minpaku operations in Osaka Prefecture—from certification application through to day-to-day management. Beyond confirming facility requirements, preparing documentation, and handling the application process on your behalf, we also share the know-how and guidance needed to keep your Special Zone Minpaku business running smoothly.

We also offer wide-ranging support—including foreign language assistance, website creation for your facility, and social media marketing strategies—to help lighten the load for operators. If you’re considering starting a Special Zone Minpaku business, please feel free to reach out to us anytime.