Wealthy Chinese Find Loophole in Short-Term Rental Market

Applications for hotel business licenses are on the rise in Osaka as property owners explore alternative methods for running short-term rentals following the suspension of new special-zone minpaku applications in May. Wealthy Chinese and other overseas investors are increasingly drawn to this option. The special-zone minpaku program was halted due to complaints about garbage, noise, and an influx of visa applications.

Although a rush of last-minute applications occurred before the cutoff, problems in the short-term rental sector may persist as operators and investors turn to hotel business licenses. These licenses allow condominium units and other properties to be used for accommodation, similar to minpaku. One condominium near Nipponbashi Station, owned by a Singaporean resident, is being prepared for accommodation use with the owner planning to launch the service by the end of the year.

Short-term rental operators typically rely on either the nationwide private lodging system or Osaka's special-zone minpaku program. However, the Nipponbashi property is seeking permission under the Hotel Business Act, which offers advantages like the ability to accept one-night stays. The management office for the Nipponbashi property is located 500 meters away from the accommodation, and staff are not required to reside permanently at the property.

The number of hotel business license applications in Osaka City reached 108 in July, with around 20% of applicants being foreign nationals. One Chinese woman has purchased four condominium units in Osaka and is considering starting four accommodation businesses using hotel business licenses. While demand is strong, residents in areas with growing accommodation businesses have expressed concerns about the noise, waste, and impact on property prices and neighborhood character.

Osaka Mayor Hideyuki Yokoyama announced plans to strengthen Hotel Business Act regulations as applications for accommodation businesses increase.