SAPPORO--One month after the new “minpaku” private lodgings law took effect, Sapporo surprisingly had recorded the most registrations of rooms for rent among municipalities, including Tokyo's 23 wards and Osaka city.

Lower rents in Sapporo and also the seasonal nature of tourism and popular events such as concerts that create a demand for housing are factors in the high number.

The Private Lodging Business Law, which went into force on June 15, sets rules on the business of renting out properties designated for general residential use to guests on a commercial basis.

By June 29, authorities had received registrations from private lodging business operators concerning 4,911 housing properties across Japan. By local governmental jurisdiction, Sapporo had received the most, or 742, which accounted for 15 percent of the total number. The capital of Hokkaido was also the national leader in terms of the number of registrations accepted, accounting for 533 of the 3,451 cases around the country.

“The new legislation has raised the hurdles for private lodging businesses,” said a male 30-something, who has been operating an unauthorized private lodging business with his partners in six or so properties, including vacant studio apartments in Sapporo, for about two years. “Many of the operators are therefore withdrawing, but demand is rising on the contrary, so you are sure to obtain reservations if only you clear the hurdles.”

Before the new legislation took effect, private lodging services could officially only be operated either under a license pursuant to the Inns and Hotels Law or within a government-designated “national strategic special zone.”

Under the new law, businesses are now allowed to operate private lodging services if they have notified prefectural or municipal governments and have obtained approval. New hurdles, in the meantime, have also been created.

The services can be provided only for a maximum of 180 days a year. The owner’s approval is required in the case of a rental property. In some cases, the property may be required to have hotel-grade equipment, including an automatic fire alarm system.

“The majority of the existing private lodgings are being operated without the knowledge of the property owner, so, many of them are probably being withdrawn because the owner’s approval is not available,” the man said.

The low rents in the housing market represent one of the factors facilitating private lodging businesses in Sapporo.

Figures of the Zenkoku Chintai Kanri Business Kyokai (National association of rental property management businesses) show that the mean housing rent in Hokkaido, averaged over properties of different plans and types, hovered between 66 and 70 percent of the corresponding average rent in Tokyo during the first five months of this year. That is less than the average rents in Osaka Prefecture (79 to 85 percent of the Tokyo levels) and in Aichi Prefecture (74 to 75 percent).

“Many probably believe that you can make a profit here if only you properly manage your properties, unlike in Tokyo, where a private lodging is seldom profitable as long as you are only allowed to operate it half of all days in a year,” the man said.

Another factor lies in the seasonal fluctuations in the number of tourists, which are larger here than in Tokyo and elsewhere.

“Many tourists visit Sapporo, but there are so many of them during one period and so few of them during another, so the 180-day cap on the number of operating days will do little harm,” said Ryuta Watanabe, a 33-year-old certified administrative procedures legal specialist who provides counseling on private lodging businesses in Sapporo. He also helps clients notify authorities concerning their private lodging properties.

Watanabe said he has been approached by business operators in Honshu, who have asked him if he could help them locate housing properties, because they believe that the private lodging business is well worth the cost in this northern city.

The man who operates private lodgings said that, in the case of his properties, demand is especially high in the five months of July through September, December and February, the last being the month of the Sapporo Snow Festival.

“During the period of the Snow Festival, you get your properties booked up even if you set the charge at 30,000 yen ($266) per night, because hotel rooms are either unavailable for reservations or are available only at even higher rates,” he said.

The man said he can earn 200,000 yen to 300,000 yen per property in February if everything goes well, far in excess of the typical monthly sales of 50,000 yen to 100,000 yen when there are few tourists.

The man accepts reservations only through brokerage websites. He said he keeps his properties unbooked for the Snow Festival period until about a month prior.

“I begin taking reservations, at high rates, around the time all hotel rooms have been booked up and fellow private lodging operators have started to raise their rates,” the man said.

He said he does the same thing ahead of pop star concerts at Sapporo Dome: he begins to take reservations only immediately prior. It is essential to remain updated on major events, which are expected to bring along large numbers of lodgers, the man said.

The man has notified the authorities of his properties in accordance with the new law, and his registrations have already been accepted.

“I am not totally satisfied with everything in the new legislation, which is aimed at the opportunistic use of private lodging businesses,” he said. “But it is beneficial to us that we are now allowed to operate our businesses in broad daylight.”

Watanabe, the legal specialist, also emphasized the significance of the private lodging industry.

“Private lodgings are really convenient in the sense that they allow vacant properties to be used as accommodation facilities to meet the demand of inbound visitors,” Watanabe said. “For the industry to take root, business operators should do their best to abide by the law and thereby improve the image of their industry.”