A land lease is automatically renewed by the parties, and the lessor cannot refuse the renewal without “a justifiable reason.”

Generally, justifiable reasons are not easily recognized by the Japanese courts. It leads to the weakened status of the lessor’s rights in Japan.

For example, the typical case that would be considered as “a justifiable reason” to refuse the renewal of the lease is an offer by the landlord of compensation for the non-renewal, in addition to other reasons. If, as a landlord, you are going to agree to a land lease, a fixed-term land lease is recommended in general, if you are not ready to rent out the land for a long time.

This is why the landlord would not agree to rent the land for if the lessee’s intention is to own the building.