How and When to Change Your Property Management Company: From Contract Termination Notice to Tenant Notification

"Vacancies don’t fill quickly," "Reports are delayed, so I don’t know what’s happening." Many property owners feel dissatisfied with their management company but postpone changing due to the hassle of the process. In practice, once you check the contract and arrange the handover, you can switch without causing significant burden to tenants.

This article organizes the signs that indicate you should consider changing your management company, the termination notice period and penalty fees to check in your property management contract, procedures for handing over deposits, tenant information, keys, and delinquency status, tenant notifications, and the schedule leading up to the change.

Key points of this article

• The Ministry of Land, Infrastructure, Transport and Tourism’s (MLIT) "Standard Rental Housing Management Entrustment Contract" leaves the termination notice period blank as "○ months prior," so it is decided by the parties involved. First, check the termination clause and stipulations on payments substituting notice in your contract.
• The average asking monthly rent for 15–30㎡ units near five Tokyo stations ranges approximately from 88,000 to 113,000 yen. For a 10-unit apartment, a 1% difference in management fee rate equates to 106,000 to 135,000 yen annually (October 2026, Urbalytics rental listings data).
• An existing vacancy lasting about 1.2 months for one unit cancels out a 1% difference in management fee. When selecting a management company, consider not only the fee rate but also their ability to fill vacancies quickly and the thoroughness of the handover process.

Signs You Should Consider Changing Your Management Company

You should consider changing your management company if repeated issues occur with vacancies, reporting, or financial flow and efforts to improve do not change the situation. Decide based on recurring problems, not single errors.

• Vacancies persist for a long time: There is a long gap between tenant move-out and new contract, with no concrete proposals for rent or marketing condition adjustments.
• Reporting is insufficient or delayed: Only statements of income and expenses arrive, without details on inquiries, viewings, or leasing status.
• Tenant support is slow: Responses to equipment breakdowns or complaints are delayed, and tenants contact the owner directly.
• Repair estimates lack justification: Repairs are quoted only as "lump sum," with no proposals for competitive bids.
• Payments and settlements are unclear: Rent transfer dates are delayed, and explanations about deposits and entrusted funds are inadequate.
• No proposals to improve profitability: No discussion on additional income such as parking lots or vending machines (ancillary income beyond rent) or cost reduction measures.

If you are unsure whether to continue with entrustment or revert to self-management, reviewing costs and workload in "Self-Management vs. Outsourced Management: Which Is Better?" will help clarify your decision.

What to Check in the Property Management Contract Before Changing

The first step is to read your current property management entrustment contract and confirm the termination notice period, penalty fees, and contract duration. Failing to check this can cause overlapping management fees from the old and new contracts during the transition.

Termination Notice Period

Article 21 of MLIT’s "Standard Rental Housing Management Entrustment Contract" allows either the owner or management company to terminate the contract by submitting a written notice "at least ○ months prior." The period is left blank to be defined individually. Calculate your switch date backward from the number of months stated in your contract. Use a method that can prove the date later (e.g., recorded postal mail) to avoid disputes.

Penalty Fees and Payments in Lieu of Notice

Paragraph 2 of the same Article 21 states that if "the equivalent amount of management fees for ○ months" is paid, the contract can be terminated any time without waiting for the notice period. If you want to switch quickly, check if this clause exists and how many months it covers. Also, review any penalty fees stipulated for terminating during the contract period in the special provisions.

Contract Period and Renewals

For contracts with automatic renewal, confirm whether notice before the renewal date is required or if the contract can be terminated any time with notice after renewal. Also, "sublease (specified lease agreement)" contracts, where the management company leases the property itself, are separate from management entrustment and may require justifiable reasons under the Law on Land and Building Leases for termination by the owner. Confirm procedures separately if switching from sublease to management entrustment.

Explanations from the New Management Company

The Rental Housing Management Business Act mandates management companies to explain important matters in writing before contract execution (Article 13) and provide written documents upon contract signing (Article 14). It also requires segregated management of rent and deposits as separate from the company’s assets (Article 16) and periodic reports to owners (Article 20). Management companies managing 200 or more units must register with the MLIT Minister, so confirm the registration number of your new management company.

Evaluating the Profitability of Changing Management Companies Using Vacancy and Fee Rates

When comparing management companies, focusing only on fee rates can be misleading because differences in vacancy length often have larger financial impacts. We aggregated asking rents for single-occupancy units (15–30㎡) at five Tokyo 23-ward stations using Urbalytics data.

Source: Urbalytics rental listings data (Tokyo area, units 15–30㎡ near each station, mainly from January to September 2026). Listings for Ikebukuro, Kamata, and Kinshicho capped at 500. Figures represent asking rents, not contracted rents. "Annual difference for 1% fee rate" is estimated by average asking rent × 10 units × 12 months × 1%. Data collected on October 2, 2026.

For a 10-unit apartment, a 1% difference in fee rate leads to an annual difference of 100,000 to 130,000 yen. In contrast, a vacancy of one unit for one month causes a rent loss of 88,000 to 113,000 yen. Calculations show that a 1% difference in fee rate is offset if a vacancy lasts about 1.2 months for one unit. When comparing fee rates, inquire about typical vacancy-to-next-tenant move-in periods. You can learn more about adjusting rent and marketing conditions in "Apartment Vacancy Measures."

Also, suspensions in leasing activities during the handover lead directly to vacancy loss. Choose a change date when there are few planned move-outs or listings, and if vacancies exist, arrange for the new management company to start leasing from day one by handing over photos and marketing materials.