In Japan, the business of providing lodging has long been governed by the “Hotel Business Act.” Enacted in 1948, this law has undergone numerous revisions over more than 70 years to keep pace with changing times. However, in recent years, the surge in foreign tourists, the growing problem of vacant homes, and the rise of new internet-based lodging businesses have created situations that the existing Hotel Business Act simply cannot accommodate.

This is where the “Private Lodging Business Act,” commonly known as the “New Minpaku Law,” comes in. Enforced on June 15, 2018, this new law was created to address a form of lodging provision—namely the “private lodging business”—that doesn’t fall under the traditional Hotel Business Act. Below, we’ll explain the Private Lodging Business Act in detail.

What Is the Private Lodging Business Act (New Minpaku Law)?

The Private Lodging Business Act (New Minpaku Law) establishes a new category of business called “private lodging business,” which doesn’t fall under any of the three business categories defined by the traditional Hotel Business Act (hotel/ryokan operations, simple lodging operations, and boarding house operations) or the “Special Zone Minpaku” designation under National Strategic Special Zones. This law was enacted to properly regulate the practice of using existing residential properties to provide paid lodging.

Key characteristics of the private lodging business:

• Annual lodging days are limited to 180 days or fewer
• Only houses currently used as residences are eligible
• Lodging is provided for payment on a repeated, ongoing basis

In this way, the private lodging business is positioned as a new business category that leverages existing residential properties to provide short-term accommodations.

[Blog] What Is Special Zone Minpaku? Differences from the New Minpaku Law and Hotel Business Act, Tips for Success, and Pros and Cons Explained!

Important Considerations Under the Private Lodging Business Act (New Minpaku Law)

When starting a private lodging business, the most important step is verifying that your property meets the requirements set out in the “Private Lodging Business Act.” This law establishes strict criteria for what qualifies as a “residence.” Article 2, Paragraph 1, Item 2 of the Private Lodging Business Act defines this as “a house recognized as being used for residential purposes,” with more specific requirements detailed in Article 2 of the Enforcement Regulations.

Operating a business at a property that doesn’t meet these conditions constitutes a legal violation and may result in penalties, so careful verification is essential. Below, we’ll explain the most important points in detail.

Conditions for a Property to Qualify Under the Private Lodging Business Act

Under the Private Lodging Business Act, a property is recognized as a “residence” if it meets any one of the following three conditions.

1. A house currently used as someone’s primary residence
2. A house currently being advertised for tenants
3. A house periodically used for residential purposes by its owner, lessee, or sub-lessee

Let’s take a closer look at each of these conditions.

1. A House Currently Used as Someone’s Primary Residence

To meet this condition, a specific individual must be living in the property on an ongoing basis. Specific examples include the following cases:

• A house where the resident’s registration (juminhyo) is filed
• A house used as the center of someone’s daily life

On the other hand, short-term or temporary stays alone don’t qualify as a “primary residence.” As a result, newly built properties intended exclusively for minpaku use, or properties where residency registration hasn’t been transferred, may not meet this requirement.

2. A House Currently Being Advertised for Tenants

Properties currently being advertised for tenants are also recognized as “residences.” However, there are several important caveats to this condition.

• Genuine advertising activity is essential: Superficial listings (for example, listing a property under deliberately unattractive terms with no real intent to find a tenant) don’t qualify.
• Use credible channels: The property must be advertised through reliable methods, such as real estate agencies or established listing platforms.

Additionally, if you operate a private lodging business while the property is being advertised for tenants, it’s important to keep the property clean and appealing. Poor maintenance can undermine the credibility of the tenant search.

3. A House Periodically Used for Residential Purposes by Its Owner, Lessee, or Sub-Lessee

This condition applies to properties that, while not serving as a “primary residence,” are regularly used by their owner or lessee. Specific examples that may qualify include the following:

• Vacation homes or weekend properties: Seasonal vacation homes or second homes used only on holidays.
• Vacant homes during a work relocation: Properties temporarily unoccupied due to a job transfer, with plans to move back in the future.
• Inherited vacant homes: Properties currently unoccupied but owned with future use in mind.

On the other hand, newly built properties with no residential history at all, or investment condominiums specifically designed for minpaku use, do not meet this requirement.

How to Start a Private Lodging Business (New Minpaku Law)

The enforcement of the Private Lodging Business Act (New Minpaku Law) has opened up new possibilities for minpaku businesses. Operating a minpaku under this new law requires completing specific procedures and meeting certain requirements. In this article, we’ll explain in detail how to start a private lodging business and the related operations involved.

Under the new law, someone who runs a minpaku business is called a “private lodging business operator.” To start a business, you must file a notification as a private lodging business operator. This notification is a crucial procedure that certifies your property meets legal requirements and registers it with the relevant government authorities.

Examples of Required Documents

• Private lodging business operator application form (using the designated format)
• Detailed floor plans of the property
• Fire code compliance certificate
• Report on notification to neighboring residents

Once the notification is completed, you’ll be officially certified as a “private lodging business operator” and can begin operations. However, to maintain proper operations, you must continue conducting business in full compliance with the law.

What Is a “Private Lodging Business Operator”?

A “private lodging business operator” refers to a person who has filed a notification with the government authorities and operates a private lodging business. This operator plays the following roles:

• Providing the property: Offering guests a residence that meets all legal requirements.
• Managing the registered property: Ensuring proper sanitation and safety.
• Being considerate of neighboring residents: Maintaining good relationships with neighbors to prevent problems before they arise.

If you manage the property yourself, you can also serve as a “private lodging management business operator,” a role explained in more detail below. However, if you’re ever unavailable, you’ll need to outsource management duties to an external management company.

What Is a “Private Lodging Management Business Operator”?

A private lodging management business operator is a specialized company entrusted by a private lodging business operator to manage and operate a property. Specifically, their responsibilities include the following:

• Guest support: Assisting with check-in and check-out, and handling inquiries.
• Property management: Cleaning, equipment inspections, and handling issues as they arise.
• Legal compliance: Ensuring operations remain proper and fully compliant with the Private Lodging Business Act.

Becoming a private lodging management business operator requires registration with the Minister of Land, Infrastructure, Transport and Tourism. This registration involves a strict screening process, and applications that don’t meet the required standards may be rejected. Additionally, violations of the law can result in registration revocation or a suspension of business operations.

What Is a “Private Lodging Intermediary Business Operator”?

The “private lodging intermediary business operator,” a new category created under the Private Lodging Business Act, acts as a bridge connecting guests with private lodging business operators. Specifically, their responsibilities include the following:

• Brokering lodging contracts: Connecting prospective guests with hosts.
• Operating booking platforms: Driving bookings through online reservation platforms such as Airbnb and Booking.com.
• Managing payments: Supporting payment processing and distribution of lodging fees.

Intermediary business operators are required to register with the government authorities in order to provide trustworthy services.

In Closing

The enforcement of the “Private Lodging Business Act (New Minpaku Law)” made it possible to operate minpaku businesses even in exclusively residential zones that were previously subject to strict regulations, giving rise to an entirely new industry: the “minpaku business.” This new law also paved the way for a new business model called “private lodging management,” and the industry as a whole is expected to grow and diversify in exciting new ways.

At the same time, new business opportunities come with new responsibilities. Because minpaku involves three parties—the operator, the guest, and the neighboring residents—coexisting in the same space, it’s essential to establish an operational system that doesn’t cause any inconvenience to the surrounding community. If this balance is disrupted, it can lead to disputes and, in the worst case, force an operation to shut down. To help you avoid this kind of outcome, we at Stay Buddy offer complete, end-to-end support for minpaku businesses—from launch through ongoing operations. If you’re interested, please feel free to reach out.