INA Wealth Vision | Japan Luxury Realty Group

Keys to Successfully Converting Your Rental Property to Pet-Friendly

Written by Daisuke Inazawa | Jul 2, 2025 7:26:44 AM

In recent years, demand for pet-friendly properties has grown rapidly as the number of pet-owning households has increased. According to a survey by the Pet Food Association of Japan, the number of households nationwide with dogs and cats exceeds 15 million, and this number is expected to continue to increase.

In response to these changes in the market environment, an increasing number of rental property owners are considering converting their existing properties to allow pets as a measure to address vacancies. However, simply allowing pets may cause unexpected problems and losses.

In this article, we will detail the important points for successfully changing to a pet-allowed property, based on our many years of experience in the rental management industry as INA & Associates, Inc. With proper preparation and measures, you can achieve both increased profitability and tenant satisfaction in your rental business.

Reasons to Consider Changing to a Pet-Friendly Property and Market Trends

Rapid increase in pet-owning households

In today's society, pets are not merely pets, but are considered to be members of the family. In particular, the number of households that have started keeping pets has increased dramatically as the time spent at home has increased due to the impact of the new type of coronavirus infection.

According to a survey conducted by Ierabu GROUP Inc., 75.9% of real estate companies responded that they expect the need for pet-friendly properties to increase in the future, indicating that the industry as a whole recognizes the growing demand for pet-friendly properties. In addition, the number of new pet insurance policies was 117,000 in the first half of 2024 (up 6% year-on-year), clearly indicating that pet-ownership has taken root in the industry.

Effectiveness as a Vacancy Countermeasure

As competition in the rental market intensifies, changing to a pet-allowed property is a very effective means of differentiation to improve occupancy rates. This will enable you to reach a segment of tenants that you could not reach with conventional properties that do not allow pets, thereby shortening vacancy periods and ensuring stable rental income.

In fact, the supply of pets-allowed properties is still insufficient to meet demand, and properly managed pets-allowed properties maintain high occupancy rates.

Advantages in Rent Setting

Pet-friendly properties have an advantage in terms of rent pricing compared to other types of rental properties. Pet owners have to choose from a limited number of options, so they tend to accept rents that are higher than the market rate as long as they are within a reasonable range.

In general, a pet-allowed property can add 5,000 yen to 10,000 yen to the monthly rent, which can increase annual income by 60,000 yen to 120,000 yen. However, the amount of the additional rent will vary depending on the location, the age of the property, and the condition of competing properties in the area, so careful market research is required.

Item General Property Pet-friendly property Difference
Monthly rent 80,000 yen 85,000yen~90,000yen +5,000 yen to 10,000 yen
Deposit 1 month's rent 2 to 3 months' rent +1 to 2 months' worth
Annual income increase -1.5 -1,000,000 -1,000,000 +60,000 yen to 120,000 yen

Specific points to consider when changing to a pet-friendly property

1. review and maintenance of contract conditions

Establish the pet-owning agreement

The most important factor when changing to a pet-allowed property is to establish a clear and detailed pet-ownership agreement. Ambiguous rules can cause problems later on, so the following items must be specifically stipulated.

It is important to clearly define the types of pets allowed and the number of pets allowed. Generally, most properties limit the number of pets to one dog and one cat each, but this should be adjusted according to the size and structure of the property. When restricting the keeping of large dogs, specific numerical standards for weight and height can be established to prevent discrepancies in perception with tenants.

Pet registration procedures should also be stipulated in detail. Requiring tenants to submit photographs of their pets, vaccination certificates, and spay/neuter certificates upon moving in will help ensure an appropriate pet-keeping environment and promote consideration for nearby residents.

Appropriate security deposits and key money

For pet-friendly properties, it is essential to set security deposits that take into account the risks associated with keeping pets. While the standard security deposit for a typical rental property is equivalent to one month's rent, it is standard to set the deposit at two to three months' rent for pet-friendly properties.

This additional security deposit is intended to cover the cost of restoring the property to its original condition when the tenants vacate, including the cost of removing scratches on the flooring, stains on the wallpaper, and odors caused by pets. However, it is important to keep the security deposit in balance with the surrounding market rate, as an excessively high security deposit may be a burden on tenants and may reduce the competitiveness of the property.

Security Deposit Setting Patterns General setting amount Applicable conditions
Basic pattern 2 months' rent Up to 1 small dog or cat
Multiple-occupancy pattern 2.5 to 3 months rent 1 dog and 1 cat each
Large dog pattern 3 months rent Keeping medium-sized dog or larger dog.

Strategic Considerations in Rent Setting

Rent setting for pet-friendly properties requires a strategic approach based on market analysis, rather than simply adding on to the rent. An appropriate price should be set based on a detailed survey of the rent market for pet-friendly properties in the surrounding area and a comprehensive evaluation of the property's location, age, and facility conditions.

The amount of the rent supplement is generally set in the range of 5,000 yen to 15,000 yen per month, but this varies greatly depending on the area where the property is located and the competitive situation. While a higher setting is possible for properties near train stations in urban areas, a more modest setting may be appropriate for properties in suburban areas. 2.

2) Property renovation and remodeling plan

Consideration of necessary capital investment

Appropriate capital investment is essential for changing to a pet-friendly property. Most important is to change the flooring material, taking into account the behavioral characteristics of pets. Conventional flooring is easily scratched by pets' nails and slippery, which can put a strain on pets' joints.

Pet-friendly flooring options include cushion flooring, pet-friendly flooring, and floor tiles. Cushion flooring is relatively inexpensive and easy to install, while floor tiles are durable and offer good long-term cost performance.

Wallpaper should also be considered for change to a material that can handle pet claws and stains. Pet-resistant cloth has a special coating on the surface that makes it easy to remove stains and resistant to a certain degree of scratching.

Implementation of Soundproofing and Odor Control Measures

Noise and odor problems associated with pet ownership can be a major source of trouble with neighbors. Appropriate soundproofing measures are essential, especially in housing complexes.

Effective soundproofing measures for floors include the installation of soundproof mats and the use of double-floor construction. In addition, reinforced ventilation facilities can prevent the accumulation of odors peculiar to pets. Installation of ventilation fans with deodorizing functions and air purifiers are also items to consider.

Remodeling Items Approximate cost Effect/Feature
Pet-friendly flooring 80,000-150,000 yen/20 m2 Scratch, stain, and slip prevention
Pet-supporting cloth 50,000 - 80,000 yen / 20㎡ Easy stain removal, durability
Soundproof mat 30,000-50,000 yen/20 m2 Noise reduction effect
Reinforcement of ventilation system 100,000-200,000 yen Odor control and air circulation

Introduction of facilities dedicated to pets

In order to differentiate the house from others, it is worth considering the installation of facilities dedicated to pets. Installing a foot-washing area near the entrance, installing a pet door, or installing a catwalk are all attractive amenities for pet owners.

However, the cost-effectiveness of these facility investments should be carefully considered. It is important to fully investigate whether the investment is worth the additional rent and whether it meets the needs of the tenants before implementing it.

3) Restoration Agreement and Covenants

Clarification of the extent of the tenant's responsibility to restore the property to its original condition

Restoration agreements for pet-friendly properties need to be more detailed and clear than those for ordinary rental properties. According to the Ministry of Land, Infrastructure, Transport and Tourism's "Troubles and Guidelines Concerning Restoration to the Original Condition," a special agreement that the tenant bears the burden of any wear and tear caused by pets without regard to the age of the pet is considered effective in properties where pets are allowed.

Specifically, the contract must clearly state that the tenant bears the cost of removing scratches on the flooring, stains and damage to the wallpaper, and odors caused by the pet's claws. However, the owner will still be responsible for any deterioration over time due to normal use.

Appropriate setting of special clauses

Special clauses regarding pet-ownership must be reasonable and clear in order to ensure legal validity. Clauses that are excessively disadvantageous to tenants may be deemed invalid, so it is important to set clauses within an appropriate range.

If a covenant is set to collect a fixed amount for deodorization and disinfection costs, the amount must be reasonable and commensurate with the actual cost of the work. Generally, a fixed amount of 10,000 to 20,000 yen is common, but adjustments should be made according to the size of the property and local market prices.

4. management system and operating policy

Strengthen cooperation with management companies

Close cooperation with rental management companies is essential for proper management of pet-allowed properties. The management company must have expertise and experience in pet-ownership, so it is important to select a company with a proven track record.

A system must be in place to check the status of pet-ownership and promptly respond to complaints from nearby residents through regular property inspections. It is also important to conduct educational activities on manners for pet-owners and clearly define procedures for dealing with any problems that may arise.

Consideration and Explanation to Neighboring Residents

It is important to explain the change to a pet-allowed property to existing tenants and neighboring residents in advance and gain their understanding for smooth operation. By informing them of the rules and manners concerning pet-ownership and clarifying who to contact in the event of a problem, you can prevent problems before they occur.

In addition, clearly demarcate rooms where pets are not allowed and rooms where pets are allowed, and do not forget to give consideration to tenants who do not own pets. It is important to establish rules when pets are allowed in common areas and maintain a comfortable living environment for all tenants.

Conclusion

Converting to a pet-allowed property is an effective strategy that, with proper preparation and management, can improve the profitability and differentiation of your rental business. However, simply allowing pets can lead to unexpected problems and losses.

The key points for success are as follows.

First, it is essential to establish detailed and clear pet-ownership rules. Specifically defining the types and number of pets allowed, registration procedures, pet-keeping etiquette, etc., will prevent conflicts of understanding with tenants and prevent problems before they occur.

Next, it is important to maintain competitiveness while covering the risks associated with pet-ownership by setting appropriate security deposits and rents. Strategic pricing based on market research can improve profitability.

With regard to property renovations and pet-friendly remodeling, it is important to systematically implement such measures as changing to pet-friendly flooring materials and wallpaper, soundproofing and odor control measures, etc., so that the maximum effect can be obtained with the minimum investment required.

In the restoration agreement , it is important to ensure legal validity and clearly define the extent of the tenant's burden to prevent problems at the time of vacating the property.

Finally, strengthening cooperation with the management company and giving consideration to neighboring residents will help ensure stable operations over the long term.

When considering a change to a pet-friendly property, we recommend that you comprehensively consider these points and proceed with caution while receiving expert advice. INA&Associates Inc. supports owners in their rental management based on our extensive experience and expertise in managing pet-friendly properties. Please feel free to contact us for more information.

Frequently Asked Questions

Q1: How much can I raise the rent by changing to a pet-friendly property?

A1: Generally, it is possible to add 5,000 yen to 15,000 yen to the monthly rent. However, the appropriate amount will vary depending on the location, age of the building, and surrounding competitive properties. A higher amount can be set for properties near train stations in urban areas, while a more modest amount may be appropriate for properties in suburban areas. The key is to set an appropriate price based on market research.

Q2: How do you deal with existing tenants?

A2: It is important to explain the situation to the existing tenants in advance and obtain their consent. Make them aware of the rules and manners regarding pet-ownership, and clarify who to contact in case of problems. It is also necessary to clearly distinguish between rooms where pets are not allowed and rooms where pets are allowed, and to give consideration to tenants who do not keep pets. Obtaining agreement to the new terms and conditions at the time of contract renewal can avoid legal problems.

Q3: What are the most important points to keep in mind when managing a pet-friendly property?

A3. The most important thing is to prevent problems with neighbors. Noise and odor problems, as well as bad manners in common areas, are the main causes of trouble. Regular property inspections, continuous education of tenants on good manners, and a prompt response system in the event of a problem are essential. It is also important to work closely with the management company to ensure a professional response.

Q4. What is the payback period for renovation costs?

A4. Generally, the recovery period is 3 to 5 years. If you can add 5,000 yen per month to the rent, the income will increase by 60,000 yen per year, and a renovation investment of 300,000 yen can be recovered in 5 years. However, the actual payback period may be shorter if the effect of shortening the vacancy period is also taken into account. To maximize the return on investment, we recommend starting with the minimum necessary renovations.

Q5. What should I do if there is a problem with a pet-friendly property?

A5. It is important to respond promptly and appropriately. First, accurately ascertain the facts and interview all parties involved to ascertain the situation. Decide on a course of action based on the contract and the terms and conditions of keeping, and seek professional advice if necessary. In the case of a serious breach of contract, we will take a step-by-step response (caution → warning → termination of contract). As a daily preventive measure, it is essential to continuously educate tenants and strengthen the management system.