Photo/IllutrationThe operator of women-only share houses called Kabocha no Basha (Pumpkin Carriage) said it is struggling to find tenants. (Satoshi Kubo)

  • Photo/Illustraion
  • Photo/Illustraion

Many investors in “share house” properties are now sharing complaints and anger over advertisements that proved too good to be true.

They said they were guaranteed a fixed monthly amount over an extended period if they invested money with real estate companies that used the funds to set up and manage share house facilities.

In an ideal setting, tenants would sub-lease rooms from the real estate companies and bring in a steady and continuous supply of rent, a portion of which would go to the investors.

But in real life, the companies could not find enough tenants to fill the rooms, leaving investors, who are the owners of the properties, in a lurch. Many of them are company employees who took out loans of 100 million yen ($902,690) to invest in the system and are now unable to pay off their debts.

Some real estate companies have asked the owners to accept a reduced monthly amount. At least one company is currently paying nothing.

A Tokyo-based nonprofit organization that deals with sub-lease problems said it received more than 100 consultations in the past month.

“I was asked to accept a reduction in payments,” said one owner.

“I want to change the real estate company that manages my share house property,” another investor said.

Smart Days Inc., operator of women-only share houses called Kabocha no Basha (Pumpkin Carriage), told its several hundred investors in the Tokyo area on Jan. 20 that it could not pay them from this month.

The company said it has been financially distressed because the occupancy rate of the share houses has dropped below 50 percent.

“We would like to respond sincerely to owners toward the reconstruction of our business,” said So Sugasawa, president of Smart Days.

The National Consumer Affairs Center of Japan has also received complaints about real estate companies in the share house system.

The center is urging share house owners to be vigilant in scrutinizing their contracts with the real estate companies, particularly over stipulations regarding nonpayment of rent from their properties.

(This article was written by Satoshi Kubo and Tomoya Fujita)