Renting

When renting a place to live, a written rental contract must always be signed. Even though legislation allows rental contracts to be concluded orally as well, it is much easier in the case of disputes to recur to a written contract to substantiate intent and agreements reached between the parties.

A landlord may be either a private owner or local government (municipality, city, city district). Premises rented out by a local government can be classified as either municipal housing or public housing. Units in municipal housing are allocated to people who are forced to move out of housing in private ownership. Public housing provides shelter for families in difficulties and people who are not coping. Such people can stay in public housing until they have managed to improve their financial security. The tenants must pay for utilities themselves.

The rental relations

The rental relations pertain to two parties – the landlord and the tenant. Rental relations are governed by the Law of Obligations Act, which sets forth the possibility of amending the terms and conditions of a rental contract or of raising rent only in the case of a contract without a term. In the case of a rental contract for an unspecified term, it is possible to change the rent every six months by notifying the tenant at least 30 days in advance.

During the term of validity of a rental contract for a specified term, the rent for a residential space may be raised only if the extent and method of calculation of the increase is precisely specified in the contract, the contract has a term of at least three years and the rent is increased not more than once a year.

If the landlord transfers (sells, gives etc) the registered immovable after signing the rental contract, the contract remains in effect on the same conditions. If the tenant desires to cede the rental right to someone else or sublet the dwelling, this is only possible with written consent from the landlord.

To resolve a dispute arising from a residential rental contract, the landlord or tenant may address themselves to a rental committee or court. A rental committee shall be founded by a local government. The rental committee shall resolve disputes that have arisen due to rental of residential space in their operating district if court action has not previously been filed in the same matter. The landlord must pay income tax on capital gains received by renting out real estate and movable property (such as assets located in the apartment). Gains from rental activity must be declared each year in a tax return filed with the Tax and Customs Board.

Preparing a rental contract

When renting residential space, make sure the landlord is indeed the rightful owner of the space or is authorized by the owner. In the case of a sublet, the landlord must have the written consent from the owner.

A rental contract is a simple written contract between the landlord and tenant. If the parties are individuals, it is not necessary to secure the consent or approval from any authorities.

The rental contract must include the following basic clauses:

  • Description of the object (as precise as possible: name, address, purpose, size, condition).
  • Rent and the procedure for paying it.
  • Procedure for paying and calculating ancillary expenses (utilities).
  • Term of the contract. Cancellation of contract (including procedure for early cancellation).
  • Obligations and rights of the tenant and landlord.
  • If the property being rented comes with any kind of furnishings (furniture, equipment etc), the contract must specify the obligation of preserving and returning these and a precise list of the furnishings must be added to the contract.

When entering into the contract, attention must be devoted to who is responsible for paying the ancillary expenses. If the contract does not make mention of it, the landlord is by law responsible for paying all ancillary expenses.

Compiled by: eesti.ee