Growing need for institutional guarantees as more households struggle to secure guarantors

「By its nature, the housing market is unlikely to expand or contract sharply and is readily affected primarily by demand-side factors, such as demographic and social structural changes. In recent years, social awareness and understanding of rent debt guarantees have steadily advanced against a backdrop of the increasing prevalence of nuclear families, the rising unmarried rate, and the declining birth rate and aging population. Institutional guarantees, meaning services provided by rent guarantee companies, are now used for approximately 90% or more of new rental contracts. In addition, the amended Civil Code, including amendments to the law of obligations, which took effect in April 2020, introduced requirements including the explicit specification of maximum amounts in personal guarantee contracts and codification of the obligation to restore property to its original condition, resulting in a major review of risk management in rental contracts. As a result, demand for institutional guarantees that do not depend on personal guarantors has increased further. In recent years, an increasing number of local governments have also considered or implemented institutional guarantee systems for public housing as a measure for applicants who have difficulty securing joint guarantors.」

「As of 2018, the total number of privately rented housing units was 15.295 million (Note 1), and the Company had a 1.7% share of the market. Given the nature of housing, the market itself is not subject to sudden expansion or contraction and is primarily driven by demand. As nuclear families became more common, the unmarried rate rose, and the population continued to age and decline, awareness of rent debt guarantees increased year after year, and institutional guarantees were mandatory for approximately 80% or more of new rental contracts (Note 2). Demand in the rental housing market has increased further following the amended Civil Code, which took effect in April 2020, and some local governments are considering or have begun using institutional guarantees for public housing.」

「As of 2018, the total number of privately rented housing units was 15.295 million, and the Company had a 1.7% share of the market. As nuclear families became more common, the unmarried rate rose, and the population continued to age and decline, awareness of rent debt guarantees increased year after year, and institutional guarantees were mandatory for more than 80% of new rental contracts.」

「The system includes requirements, such as explaining the maximum guarantee amount, that make it more difficult to rely on joint guarantors, and is expected to increase social demand for rent guarantee companies.」

「The social role and responsibility of the Company, which provides institutional guarantees as an alternative to joint guarantors, are expected to grow further against a backdrop of weakening family ties, an increase in elderly people, foreign nationals and others who have difficulty securing joint guarantors, and developments in amendments to the Civil Code concerning joint guarantors, including the mandatory setting of maximum amounts for personal guarantees.」

「Against a backdrop of weakening family ties as nuclear families become more common, an increasing number of single-person households, and a growing number of elderly people, foreign nationals and others who have difficulty securing guarantors, demand for rent guarantees provided by institutional guarantors is continuing to increase.」