Article 11 of the Commercial Building Lease Protection Act (hereinafter referred to as “this Act”) stipulates the right to request a rent increase or decrease. The right to request a rent increase or decrease under Article 11 of this Act is a right recognized only in cases where it is obviously unfair and unjust to bind the parties to the agreed rent due to an increase or decrease in the public burden on the leased property or changes in economic conditions (Supreme Court Decision 2010Da50113, October 14, 2010).
The right to request a rent increase or decrease is a right that is recognized only when there is an increase or decrease in taxes, public charges, or other burdens on the leased building after the lease agreement is signed, or when economic conditions change. An increase or decrease in taxes and public charges on the leased building is only one example of an “increase or decrease in other burdens,” and although the increase or decrease in other burdens and changes in economic conditions are stipulated in parallel, increases or decreases in taxes, public charges, and other burdens are ultimately only one aspect of changes in economic conditions in a broad sense. Meanwhile, in relation to the COVID-19 situation, changes in economic conditions due to Class 1 infectious diseases (COVID-19 is classified as a new infectious disease syndrome under Article 2, Paragraph 2 of the Infectious Disease Prevention and Management Act) have been added as grounds for exercising the right to request a rent increase or decrease. Accordingly, all changes in economic conditions that are related to determining rent, such as increases and decreases in the price of the leased building and its land, changes in national income, economic booms or recessions, increases and decreases in business performance, changes in the wage index, increases and decreases in the costs of maintaining, managing, and improving the leased building, differences in rents compared to similar buildings nearby, and changes in the method or purpose of use of the leased building, can be considered grounds for a request for an increase or decrease in rent.

Even if there is no change in the overall economic situation of the country, a change in circumstances limited to a certain area where the leased building is located may also be a reason for a change in economic conditions. In other words, if the land price and commercial price in a specific area increase due to the construction of roads and railroads, the construction of new stations, the development of industrial complexes or large-scale housing development, or the lifting of the green belt, or if the land price or commercial price in a specific area decreases due to the closing of mines or the entry of polluting companies, etc., and if it becomes insignificant compared to the rent of nearby stores, a claim for an increase or decrease in rent may be made. Since the lessor has a repair obligation under the lease agreement, even if repair costs are paid, this is not a reason for a rent increase in principle. However, if repair or improvement work becomes necessary due to an unforeseen force majeure such as a typhoon, flood, earthquake, or fire, or if the area where the leased building is located changes from a commercial area to a residential area, these may be reasons for a change in economic conditions. The party exercising the right to request a rent increase or decrease has the burden of proof for all facts that satisfy the requirements for establishing the right.
The issue is the extent to which the deposit or rent fluctuations must be sufficient to allow a claim for rent increase or decrease. This issue should be decided by taking into account the extent of rent fluctuations, the intention of the parties, the purpose of the lease, the total period of the lease, the elapsed period, and the remaining period, as well as social policy considerations such as legal stability.
The extent and degree of change in economic conditions that warrants a request for a rent increase or decrease can be said to be cases where the economic conditions that were the basis of the contract at the time of signing have changed significantly beyond the parties’ ability to foresee, making it significantly unfair to bind the original terms of the contract, and the changed economic conditions are expected to continue for a considerable period of time.