The government has proposed legislation setting rules on the practice of renting out private lodging (minpaku) to tourists. The measure is designed to respond to a sharp increase in the number of inbound tourists by accommodating them in private residences, while preventing potential troubles involving lodgers, owners and neighbors. Local governments, which will oversee minpaku businesses in their areas, need to make adequate preparations to ensure the industry will expand in a healthy manner.

The number of inbound visitors continues to rise — from 13.4 million in 2014 to 19.7 million in 2015 and to 24 million last year. The government has set new goals of welcoming 40 million tourists in 2020 — when Tokyo hosts the Summer Olympic and Paralympic Games — and 60 million in 2030. However, a shortage of accommodation capacity poses an acute problem, particularly in popular destinations such as Tokyo, Kyoto and Osaka, where room occupancy rates at city hotels exceeds 80 percent. The use of private residences to provide lodging for tourists is seen as a solution, but problems have surfaced in the rapidly expanding practice.

People are now allowed to offer their residences as fee-charging accommodation facilities for visitors if they pass screening and get permission to engage in budget hotel business under the Hotel Business Law. But a Health, Labor and Welfare Ministry survey of some 15,000 residences covered by websites that provide minpaku information found that only 17 percent of the owners of such residences obtained permission under the law and 31 percent were found to be running the accommodation business without permission (the survey was unable to identify the remaining residences). Hurdles for obtaining the permission are rather high. For example, the houses and apartments to provide lodgings for tourists must in principle must be located outside residential areas. The tight conditions have led many people to engage in minpaku business illegally. Troubles have also been reported over the minpaku business, including complaints over noise and garbage disposal.

The proposed bill will ease conditions for starting a minpaku business while imposing some restrictions. Owners in residential areas will be able to engage in the minpaku business if they submit the necessary paperwork, including one related to the Fire Service Law, to prefectural governments or designated major cities. However, they can operate for only up to 180 days annually — and prefectures and major cities may introduce by-laws to shorten the period for individual residences when it’s deemed necessary to resolve troubles with neighbors. Since smaller municipalities will be more familiar with the local situation, cooperation between them and prefectural governments, which enact the by-laws, will be important.

People offering their residences for lodgings for visitors will be required to put up relevant signs on the properties, to keep registers of guests and to maintain adequate hygienic conditions. They will be obliged to properly deal with problems involving their guests and neighbors. Operators of websites offering information on residences available for lodgings will be required to register with the Tourism Agency.

Even if the national legislation passes, local governments will set their own policies. The city of Kyoto expects that its “traditional “machiya” houses as tourist lodging will help preserve the properties, but it will seek to tighten control against minpaku that operate without permission under the Hotel Business Law. In contrast, the town of Karuizawa, Nagano Prefecture, which has a large number of resort villas, opposes the minpaku business, citing environmental and behavior concerns. When developing their minpaku policies, prefectures and municipalities should take into consideration tourist numbers, hotel and inn room capacity and occupancy rates, and other local factors, and also solicit opinions from a wide range of parties including businesses, residents and assembly members.

The Tourism Agency plans to create an online system to grasp the accommodation situation at all minpaku businesses. Owners of such properties and operators of websites providing information on those residences should work together with the agency to provide accurate data. Since municipalities likely do not have enough resources and manpower to inspect private residences used for tourist lodging, the agency should build a reliable and easy-to-use system to help them accurately grasp the situation at individual residences and to take appropriate action as necessary.

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