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It has been pointed out that liquefied petroleum (LP) gas charges for rental apartments are relatively high. It is important to ensure transparency in the rates to protect customers.
The Economy, Trade and Industry Ministry has announced that it will prohibit the addition of costs for equipment unrelated to the gas supply to LP gas rates for rental housing complexes. Penalties will also be imposed for violations. The relevant ministerial ordinance will be revised with the aim of enforcing the policy in fiscal 2027.
There has been a long-standing practice in the LP gas sector in which companies have installed air conditioners, water heaters and other equipment in rental housing at no charge to landlords, while passing the cost along to tenants in their monthly gas bills. It is reported that in some cases, intercoms and bidet toilet seats have even been provided “free of charge.”
The system lightens the burden on owners of rental housing units and the gas companies benefit as owners mediate contracts with tenants.
On the other hand, it is difficult for residents to know whether gas rates are appropriate. Transparency is lacking. Building owners decide which gas companies tenants can conclude contracts with, which is highly disadvantageous for residents, who have no choice in the matter.
Such organizations as the National Consumer Affairs Center of Japan have received a number of complaints that tenants are being forced to pay unreasonably high rates.
LP gas is used by about 22 million households nationwide, mainly in rural areas where city gas pipeline networks are not developed. About 40% of all households use LP gas. It is only natural that efforts are made to correct opaque business practices.
According to a draft of the ministerial ordinance revision, installation costs for equipment such as air conditioners and hot water heaters would have to be recovered by building owners through rent, not gas charges.
The ministry will be able to conduct on-site inspections of gas companies and issue recommendations and orders in the event of violations. It will also be possible to revoke business registrations and impose a fine of up to ¥300,000.
The ministry created guidelines in 2017, requiring gas companies to disclose the cost of equipment that was passed onto customers in their gas bills, but because there were no penalties, the guidelines were rarely implemented.
While the introduction of penalties is a major step forward, challenges remain. There are about 16,000 gas companies in Japan. It will not be easy for the ministry alone to check all of their rates, so it will be essential to strengthen monitoring in cooperation with LP gas industry associations and other organizations.
It is also important to deal with housing unit owners. According to a government survey, 60% of gas companies installed equipment free of charge at the request of owners. In some cases, owners reportedly refused to deal with gas companies that rejected such requests.
The Land, Infrastructure, Transport and Tourism Ministry, which has jurisdiction over the real estate industry, should not leave this issue to the industry ministry. It must step up supervision of rental housing unit owners to ensure that unhealthy business practices are corrected.
