Understanding Genjo Kaifuku Rules as a Landlord in Japan

Eight years ago a tenant moved out of one of my two-bedroom units after a nine-year stay, and my property management company called me the same afternoon asking one question: who pays for the yellowed wallpaper and the faded flooring near the window? My answer was simple — nobody, because that fading is exactly what genjo kaifuku (restoring a rental to its original condition) is designed to sort out fairly. If you own or plan to own rental property in Japan, understanding this concept will save you thousands of dollars in disputes and keep your tenants from leaving one-star reviews on every listing site that mentions your building.

I have self-managed 9 rental units for more than 15 years, and move-out settlements are one of the areas where I see foreign landlords get burned the most, usually because they assume Japan works like their home country. It does not. Below is what I have learned the hard way, plus the checklist I run through on every single move-out.

What Genjo Kaifuku Actually Means

Genjo kaifuku literally translates to restoring the current state, and in the rental context it means returning the unit to a condition comparable to when the tenant moved in — not brand new, but not damaged beyond ordinary use either. This is not just landlord custom; it is shaped directly by the Civil Code and by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) guidelines on restoration costs, first published in 1998 and revised several times since. Those guidelines exist precisely because disputes over the security deposit (shikikin) used to be so common that the government stepped in to standardize expectations.

Normal Wear and Tear vs Tenant Damage

The entire system hinges on one distinction: normal wear and tear (keinen henka and ordinary usage deterioration) is the landlord’s cost, while damage caused by the tenant’s negligence or misuse is the tenant’s cost. In practice this means:

• Sun-fading of wallpaper or flooring near windows — landlord pays, this is considered inevitable over time
• Small nail holes from hanging a calendar or picture — landlord pays, treated as normal living
• A cigarette burn in the tatami or a wine stain soaked into the carpet — tenant pays, this is negligence
• Mold caused by the tenant never ventilating the room — tenant pays, considered a failure to maintain
• Mold caused by a structural condensation problem in the building — landlord pays, this is not the tenant’s fault

On one of my properties a tenant left after four years with a large grease stain on the kitchen wall from years of frying without using the range hood. That crossed the line from wear and tear into negligence, and roughly 18,000 yen of the repainting cost was billed to the tenant rather than absorbed by me.

What Landlords Can and Cannot Charge For

Depreciation matters enormously here. Japanese tax law assigns useful-life values to interior finishes — wallpaper is typically depreciated over 6 years, for example — so even if a tenant caused damage, you cannot bill them for the full replacement cost of decade-old wallpaper. You can only bill a percentage reflecting its remaining value at the time they moved out. I learned this the expensive way early in my landlord career, when I tried to charge a departing tenant the full 82,000 yen quote for repapering an entire room. My management company politely explained that the wallpaper was already 7 years old, meaning its book value was close to zero, and I ended up covering nearly all of it myself. Now I always ask my contractor for the installation date of any finish before I even think about billing a tenant.

How the Move-Out Inspection Actually Works

The standard process runs on a fairly tight clock. Within about 1 to 2 weeks of the tenant vacating, the landlord or management company walks the unit with a checklist, photographs every room, and compares the condition against move-in photos (which is why I now photograph every corner of every unit before a new tenant ever gets the keys). Any charges against the security deposit must be itemized in writing, and under the 2020 Civil Code revision the deposit itself is now explicitly defined as fully refundable minus legitimate deductions — a shift that codified what the MLIT guidelines had already been recommending for over 20 years.

My Pre-Move-Out Checklist

To keep every settlement smooth and avoid the kind of argument that eats an entire Saturday afternoon, I run through the same steps on every unit before finalizing the deposit return:

• Pull the original move-in photos and place them side by side with fresh move-out photos
• Check the installation or last-repaint date for wallpaper, flooring, and fixtures to calculate remaining depreciated value
• Separate every issue into two piles — ordinary wear versus tenant-caused damage — before calling a contractor
• Get at least 2 repair quotes for anything over 30,000 yen so the tenant sees the number is market-rate, not padded
• Send the itemized deduction breakdown within 10 business days so nobody is left waiting and guessing

Common Disputes and How I Avoid Them

Most of the arguments I have seen between landlords and tenants come down to one thing: the landlord tried to bill for something that should have been normal wear. Air conditioner filters clogging up after 3 years of standard use, carpet flattening under furniture, or a slightly sticky door hinge are not chargeable events, no matter how tempting it is to fund a full refresh out of somebody else’s deposit. Being transparent, sharing photos proactively, and explaining the depreciation math up front has meant I have had zero formal disputes escalate to a rental dispute committee across all 9 of my properties in over a decade of doing this myself.

That is the approach I use across all 9 of my properties, and it is the same standard I would want applied if I were the one moving out.

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