Faced with a shortage of hotels, Tokyo's Ota district has approved renting out rooms and private homes to accommodate a growing number of tourists.
Japan received 19.7 million tourists in 2015, a 47 per cent jump from 2014, and a new record for the country.
To cope with the tourism boom, districts such as Ota and Osaka Prefecture recently approved an ordinance to allow private homes to be used as prepaid accommodation.
Ota authorities have begun accepting applications from residents and businesses in the area who are interested in renting out their properties to tourists, Kyodo news agency reported.
The move, however, was not well received by locals who are worried about noise and improper management of waste and the hotel industry who say it violates the hospitality law.
In order to address these issues, Ota district will require applicants to meet a number of requirements, such as notifying neighbours in advance that the property will be rented, and maintaining guest records for at least three years.
The Japanese government is also considering extending this change of regulation in the run-up to the Tokyo Olympic Games in 2020 when around 30 million tourists are expected to visit Japan.