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'Minpaku' lodging law goes into effect, but complicated process thwarts property owners

Koichi Okano, who started his "minpaku" private lodging business in Konosu, Saitama Prefecture, on June 15, 2018, is seen in this photo taken on June 12, 2018. (Mainichi)

A new law regulating short-term stays at privately owned homes for a fee -- called "minpaku" in Japan -- went into effect June 15, but due to the complicated process of becoming an authorized minpaku operator, owners of property that could be used as accommodations for travelers have been slow to get in on the action.

Property owners who were banned from renting out unused apartments or homes to travelers and other short-term renters without permission under the Inns and Hotels Act, can now rent out spaces by submitting paperwork for minpaku operation to prefectural government offices.

But because of the onerous process of registering properties as minpaku under the new law, as of June 8, the registration process had only been completed for 2,707 of the 60,000 minpaku properties that were believed to exist nationwide.

The purpose of the new minpaku law is to eliminate illegal minpaku businesses and offer more lodging options for inbound visitors, but private would-be minpaku operators are dragging their feet. Meanwhile, a slew of companies, with their sights on the future potential of the lodging business, have been entering the minpaku arena.

"Just three days ago, I received a sign with my registration number, which I need to operate my minpaku business," said 58-year-old Koichi Okano, who started up his private lodging business, Hidamari no ie (A sunny home), in the Saitama prefectural city of Konosu. "I'd already booked reservations for tourists from Hong Kong to stay at my accommodations, so luckily the sign came just in time for my business start date of June 15."

Okano said that both the prefectural government and the local fire department seemed unfamiliar with how to help would-be minpaku operators set up their businesses, since it was their first time going through the process, too. When Okano visited the Saitama Prefectural Government office in March -- when the authorities started accepting notifications on the establishment of such lodgings in accordance with the new minpaku law -- officials at the prefectural office told him they didn't have any of the answers to his questions, and that they would have to ask the central government. When he posed questions to the local fire station, the response he got was, "It's the end of the fiscal year and we're busy." They asked that he wait until late April or early May, when they would have more time to tend to his needs.

Because Okano would be using a guest house on the grounds of the property where he lives for minpaku purposes, he outfitted the guest house with emergency lights and smoke detectors as instructed by the fire department. Perhaps due to a rise in demand for smoke detectors because of the new minpaku law, smoke detector orders are backed up, and Okano did not receive his sign until shortly before the new law went into force.

The equipment that he installed at the instruction of the fire department cost about 300,000 yen to 400,000 yen, according to Okano. In addition, when guests are foreign nationals, the new law requires minpaku operators to take copies of their guests' passports, and to report the number of guests they have had and the number of days their guests have stayed to their municipal government every two months.

"Being a minpaku operator costs money and requires going through burdensome procedures," Okano said. "That's probably why a lot of people who want to be minpaku operators are waiting around to see what it's like before they go ahead with it."

The hassle required in becoming and staying a minpaku operator is not the only reason for the low rate of minpaku notifications. The new law caps the days that a minpaku lodging can be rented out per year at 180, out of consideration for neighbors, but to prevent disputes over noise and trash, 48 local governments across the country have passed ordinances that further limit the areas in which minpaku lodgings can be operated and the number of days that they can be rented out.

For example, the city of Kyoto has limited the number of days that a single minpaku can be rented out per year to 60 as a general rule, and to prevent problems that could arise with minpaku where the owner is absent, it has an additional rule requiring that a manager for the minpaku must always be within 10 minutes of the accommodations when they are being rented out.

"The new law could not avoid incorporating various regulations to address concerns from various standpoints, so it's definitely not an easy law to follow," said attorney Yohei Ishihara, who is well-versed in issues surrounding minpaku. "But we should welcome the fact that a new set of rules has been established, and if need be, we can make revisions."

While private individuals who could potentially become minpaku operators have not filed minpaku operation notifications in large numbers under the new law, many companies have entered the field and are offering a range of services. These companies see the potential of minpaku, which are generally a cheaper alternative to hotels, expanding in the future.

Morten Amberg, a 28-year-old engineer from Sweden who was sightseeing in the city of Kyoto, said that for travelers, having more options for accommodations -- with the introduction of the new minpaku law -- was good news. He himself had used the lodging brokering service giant Airbnb to reserve a condo, and seemed satisfied with the usability of the U.S. company's website, which allows users to choose lodgings based on location, price, and other criteria.

Recently, Airbnb Inc. created mass confusion with a slew of cancellations for bookings of unauthorized minpaku -- under Japanese law -- that had been made through their website ahead of the June 15 enforcement of the new minpaku law. At a press conference in Tokyo, Airbnb co-founder Nathan Blecharczyk expressed his company's intention of promoting minpaku legally, saying that his company would support private property owners through the minpaku registration process by holding seminars held by legal experts, among other means.

Airbnb has joined hands with 36 Japanese companies, including All Nippon Airways Co.: when one uses Airbnb through a special ANA site, the user can gain ANA mileage points based on how much money they spend on Airbnb lodging. FamilyMart Co. has also partnered up with Airbnb, allowing Airbnb guests to pick up the keys to their lodgings at certain FamilyMart convenience stores starting June 15.

Companies that had heretofore not partaken in the business of providing short-term minpaku accommodations are now taking the leap. E-commerce giant Rakuten Inc. and Lifull Co., an online provider of real estate information, founded a new company that is now working with HomeAway Inc., which, like Airbnb, is a major U.S. brokering service, and the Japan Kominka (old homes) Association to rent out old Japanese-style homes as lodging facilities.

The undergarment manufacturer Wacoal Corp., which is headquartered in the ancient capital of Kyoto, has also entered the minpaku business. It renovates old homes, including Kyoto-style townhouses, for use as lodging facilities. It also rents homes that are not in use, renovates them, and then rents them out for short-term stays. Minpaku is not limited to traditional Japanese-style homes; condos and buildings that are not in use are renovated and rented out -- and are attracting attention as a new way of addressing the problem of unused property.

The amount of money involved in minpaku-related transactions in 2016 stood at 678.3 billion yen, according to InfoCom Research Inc. The research institute has predicted that by the early 2020s, the figure will have doubled to around 1.31 trillion yen. "If a sharing culture in which one chooses to share a room simply because there's one open becomes firmly rooted in Japan, and the renter has no qualms about renting such a space, this kind of arrangement will grow as a business," a representative of InfoCom said.

Until the new minpaku law went into effect June 15, minpaku operators, as a general rule, were required to obtain permission under the Inns and Hotels Act, if they were allowing people to stay at accommodations for money. The conditions that had to be cleared to obtain permission for operating minpaku were strict, including not renting in residential areas and installing equipment for fire prevention. Many minpaku, therefore, were run illegally.

Minpaku were permitted in municipalities that were recognized as National Strategic Special Zones, but there were restrictions, such as the length of stay set at a minimum of two nights.

The new minpaku law categorizes the owners of minpaku properties as residential accommodation operators, people who introduce minpaku properties on websites and through other means as residential accommodations brokers, and if residential accommodation operators do not live close to the accommodations that are rented out, or the owner is absent, a residential accommodation manager must be designated.

(Japanese original by Masahiro Kawaguchi, Tokyo Business News Department, Yusuke Kaite, Kyoto Bureau and Natsuki Oka, Osaka Business News Department)

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