small-home

Small Flats Attract Both Home Buyers, as well as Rental Property Investors

According to the data of the Statistical Office, a total of 2264 residential properties were built in Tallinn in 2016. Only 6% i.e. 133 of these properties built were one-room flats. 850 of the properties i.e. 38% were two-room flats, while 35% or 790 properties were three-room flats. 22% i.e. 491 of the residential properties built in 2016 were flats with four rooms and above

This shows that the residential property development process in Tallinn is clearly skewed towards two- and three-room flats. Such predominance of flats with smaller number of room is caused by better liquidity of flats of such size, i.e. the estimated shorter selling period. A shorter selling period allows developers to exit from the project within an optimum period of time and keep their risks at a controllable level.

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Housing Loan Market Growth Is Supported By Property Values And New Borrowers

The number of transactions at the Tallinn apartment market is high and on an upward trend; also, the transaction prices are rising. The vast number of transactions and other positive trends of property market are to a large extent backed by the loan market. The turnover of housing loans is thriving upon low interest rate and this gives more and more people an opportunity to buy a home with a housing loan.

The number of apartment transactions is showing a strong increase

The number of apartment transactions in Tallinn is robustly growing. In Q1 2017, 2,449 apartment ownership deals were signed in Tallinn. This corresponds to an annual growth of 19%. The number of transactions has gone up in terms of home buyers as well as rental investors. Demand has been supported by rising wages, high employment rate, but also favourable loan conditions and low interest rate.
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Statistics: For an average apartment in Harju County, 7.4 years’ mean wages have to be paid

In an Estonian average, 5.7 years’ mean net wages have to be paid on a transaction with an apartment. In Harju County, wages are higher; however, real estate there is also the most expensive. As a result, far more – 7.4 years’ wages – has to be paid on an average transaction with an apartment in the capital and its vicinity.

On an average transaction with an apartment, sellers of real estate charge 5.8 years’ wages in Tartu County and 4.1 years’ wages in Pärnu County. (more…)

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Dos And Don’ts When Letting Out Rental Property In Tallinn And Estonia: Part Two-The Don’ts

Following on from our article yesterday in which we outlined what you should do when letting out property in Estonia, here as promised is part two, in which we detail the ‘don’ts’…

1) Don’t wait to secure the highest rental rate possible. Profits can be washed out by the additional vacancy time; in addition, market conditions can change rapidly. By the same token, don’t keep rental rates high and accept a high vacancy rate while waiting for market conditions to improve. High levels of vacancy can lead to high tenant improvement costs and free rent as additional concessions due to the market being a tenant’s market. At the time of writing, the rental market is quite buoyant and so obtaining the market rate for your property without a long wait should be viable.

2) Don’t rule out proposedtenant improvements-losing a potential tenant by refusing to make improvements could lead to additional vacancy time.

3) Don’t make the mistake of cutting out promotional work on your apartment as well as search feesas the market tightens again. If you are not competitive in these areas, you risk fewer tours, which will mean less qualified tenants, which could lead to longer vacancy times.

4) Don’t halt refurbishment and improvement plans in a hot market. These plans can take months to develop and come to fruition. Tenants want the level of service and quality of appearance to be maintained over the life span of their lease. This may attract them to stay for another lease term, saving you money. That being said, you should keep your tenant improvement costs as low as possible. It’s a good idea to stay on top of the repair and maintenance needs of your property by repairing or replacing any item that is not functioning as soon after being notified as possible to prevent further damages or tenant dissatisfaction.

5) Don’t impinge on your tenant’s privacy: inform them about any potential visit well in advance and certainly at least 24 hours.

6) Do not leave anything of great financial or sentimental value in a property which you are letting out.

And that’s it! We hope you have found this advice helpful, and we’re waiting to hear your comments, questions or experiences!

Goodson & Red Tallinn Property Consultancy is a premier real estate service in Estonia, specialising in residential and commercial Tallinn real estate, with a strong focus on consultancy services for overseas property investors in Estonia. Our recent media accolades include mentions in both the UK quality newspaper the Daily Telegraph, and the New York Times.

 

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Dos And Don’ts When Letting Out Rental Property In Tallinn And Estonia: Part One – The Dos

Following hot on the heels of our recent posts on where to buy in Tallinn, Estonian real estate terminology getting lost in translation, and top tips when buying in Estonia, all of which we hope you’ve found helpful, we thought we’d continue on that trajectory.

This time, the topic is letting out properties. So here are the main ‘dos’ when letting out an apartment here or, for the most part, anywhere:

Many people become a ‘landlord’ in Estonia or elsewhere for that matter with little knowledge of the realities of what the process involves.

Even if you are an existing landlord already, you can never have too much advice, and there may be some differences between Estonia and wherever you hold your other properties.

A lack of knowledge about being a landlord can lead to such unwanted scenarios as unexpected expenses, void periods or problem tenants.

To help you avoid any of these undesirable situations, here are some of the most significant do’s and don’ts when letting out property in Estonia.

Do…

1) Make your property as appealing as possible to potential tenants (neat and clean, in order, decorated). If the property was formerly your personal home or part time home, or contains fixtures and fittings left over from a former occupant, be prepared to make the necessary internal alterations in order to successfully attract a tenant. One’s own personal tastes may not match with those of other people. Experience has shown that tenants on the whole prefer light, neutral colours and modern, contemporary (but not too extreme) fixtures and fittings. Time to get rid of that lime-green ceiling or novelty lampshade! ‘Minimal is king’, is a useful watchword here. At the same time, thoughtfully-located and attractive pictures which are in keeping with the overall design of the apartment can make all the difference, as can a few well-placed mirrors. Plants also make a huge difference, although naturally there is the issue of getting tenants to water them once an agreement has begun. The property should also be wisely furnished (e.g. take away unnecessary furniture pieces, have modern and clean furniture which is in keeping with the property etc.)

2) Steer clear of void periods at all costs, even if this means being flexible about rental levels. This also means you should be flexible in terms of rental periods, for example having a short term let for part of the year and longer terms during the remainder, to maximise profits and minimize void periods. This can have the effect of earning 10-15 per cent more per year. Naturally having a fully-managed service will mean that the hassle of organising this is out of your hands.

3) Consider letting the property out as a part-furnished property. Whilst many tenants may be travelling light or interested in short term lets and therefore more likely to choose a fully-furnished property, some scope for their own additions to the furniture can be attractive. What constitutes essential furniture in a part-furnished property? Naturally beds should be provided in the primary bedrooms at the very least; mattresses should be included only if they are relatively new (ie no more than 4-5 years old) and clean. Sofas and chairs should also be included where necessary, and substantial storage space in particular for clothes (wardrobes, walk in wardrobes, chests of drawers etc) is also a must. Kitchen fixtures and fittings should natrually be included and utensils, cutlery, crockery etc can also be provided inexpensively.

4) Provide as much detailed description of your property as possible. There are two very good real estate portals (kv.ee and city24.ee) which list properties available under quite detailed search parameters, in English and with plenty of photos. Your real estate broker will also be able to advise and guide you through the process of marketing your property.

5) Once you have a tenant, make sure that you have a proper lease agreement in place (certainly ask for a tenant’s documentation; get all the important terms of the tenancy in writing). You should also check the potential tenant’s background if possible (credit info, personal info, family, pets, smoking etc). An agent can advise you on this. It is worth having a detailed inventory compiled. This will be signed by both landlord and tenant, thus avoiding any unpleasant disputes arising surrounding any damage at the end of a tenancy. It should cover not only major items such as any furniture, but also details of the overall qualities of the walls, painted areas, flooring etc to account for any damage that might occur. You might also consider obtaining property insurance to cover for damage, and a security deposit, usually of one month, is also worth getting. It’s worth having an inventory taken (even in unfurnished properties).

6) Consider getting a property professionally cleaned at the end of a tenancy period. This can work wonders in attracting a new tenant, breathing new life into worn carpets and making grubby tiles sparkling again. First impressions last and it would be a shame to put off a potential tenant simply because of an unpleasant odour or dirty bathroom.

7) A certain amount of reasonable wear and tear should of course be expected, so expect it! Over time items will need to be replaced. As a general rule, fridges and other white goods will need to be replaced as they become outdated or cease to work over the years, and a property will need small redecoration works and maintenance works approximately every four years. Wooden parquet flooring also requires attention from time to time.

8) If you are living outside Estonia, it is well worth arranging for a managing agent who will not only find and reference tenants for you, but also draw up contracts, manage the collection of rents, bill payments, see to any maintenance or emergency repairs which may arise, advise you on any refurbishments that may need doing etc. Keep in touch: your managing agents can advise you about developments at the property, maintenance issues etc, but always respond to emails and queries on this promptly. This will lead to a better relationship with a tenant and an increased likelihood that they will want to stay on.

….and the ‘don’ts’ will follow in a later installment!

Goodson & Red Tallinn Property Consultancy is a premier real estate service in Estonia, specialising in residential and commercial Tallinn real estate, with a strong focus on consultancy services for overseas property investors in Estonia. Our recent media accolades include mentions in both the UK quality newspaper the Daily Telegraph, and the New York Times.

 

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“Why You Should Be Investing In Tallinn Real Estate – Your Essential Guide to the Tallinn Property Market”: Available Soon!

Goodson & Red‘s Tallinn Property team is proud to announce that our new must-have guide “Why You Should Be Investing In Tallinn Real Estate – Your Essential Guide to the Tallinn Property Market” will be available in the next few days!

This replaces our previous guide, the hugely successful “How to Profit From One of the Biggest Property Booms in Eastern Europe”, written by Darren Goodson and first published in 2005.

With all the shifts that have taken place in the market since then, we have completely overhauled the book and included a lot of information which had previously been unavailable, to give you an unparalleled advantage in the real estate market in Tallinn.

What’s more, as we are publishing the Guide as an e-book only, it will be available to you absolutely FREE of charge!

The Guide includes:

  • All you need to know about Tallinn and Estonia and why it is a sound destination for the investor.
  • Which areas of Tallinn are hot, and which are not.
  • A detailed overview of the current market situation, which complements our regular Market Review.
  • Invaluable legal information from top baltic law firm Sorainen.
  • Crucial advice when buying and letting in Tallinn.

We feel you wont be able obtain comprehensive information, in English, on the Tallinn real estate market, to rival anything like that contained in the Guide, still less free of charge, so watch this space and download the Guide soon!

Goodson & Red Tallinn Property Consultancy is a premier residential and commercial property service based in Tallinn, Estonia, with a strong focus on consultancy services for overseas property investors. Our recent media accolades include mentions in both the UK quality newspaper the Daily Telegraph, and the New York Times.

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Statistics: 50 per cent of New Accomodation in Estonia is Made Up of 2 and 3 Room Apartments

According to a report on Tõnu Toompark’s Estonian Property Adaur blog, 50 per cent of new residential accomodation in Estonia consists of two and three room apartments. Tõnu bases his report on data from the Estonian statistics office.

On the other hand, one room new apartments have diminshed in number, making up only six per cent of the total (compare with 2006 where the figure was 14 per cent).

The economic downturn beginning in 2008 and bursting of the bubble in real estate in Estonia are the factors behind this change, says Tõnu. In economically difficult times, when demand is inhibited, there will be fewer apartments built, and with smaller room sizes, but with fewer single room apartments (which tends to take place during boom times to maximise value per square metre) Tõnu goes on. At the same time, the number of single-family dwellings with a larger number of rooms will necessarily be proportionately larger, Tõnu adds.

For the original article (in Estonian) including detailed diagrams on how the proportions and numbers of different types of dwellings (from 1 to 6+ rooms) from 1993-2011 and regional variations in Estonia as regards numbers and sizes (in square metres) of residential permits issued since 2000, plus statistics on residential types in Estonia since 2000, visit Tõnu’s Adaur blog.

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Tallinn Real Estate Market Report Third Quarter 2011

We have just been putting the finishing touches to a fresh copy of our quarterly review of the Tallinn property market and the review.

Our latest Tallinn Property and Rental Market Quarterly Review covers all developments in the third quarter of 2011, and as always the review contains a brief look at the Tallinn residential market:

  • situation regarding mortgage loans, consumer security
  • information on average asking and transactional prices
  • current state of the central Tallinn rental market
  • invaluable sample transactions
  • advice on rental business considerations

Get the Tallinn Property Market Review 2011 Q3

We would also very much like to hear your views re the property market. Or if you have any suggestions regarding topics. Please do not hesitate to write or tweet us, or leave us a comment below or on our Tallinn Property Facebook page.

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Estonia Property Prices Lowest Since Downturn, Offers Increase

Positive changes in residential offer prices in Estonia as reflected in the kv.ee index are, despite positive forecasts, not apparent, with the index showing its lowest figure since the 2008-2010 crash, standing at 61.0 on 3 July, 2011, writes Tõnu Toompark on his adaur blog.

This, however, does not represent a catastrophic drop; the figure is only 1.5 per cent lower than a year ago.

Over the past year the index has fluctuated, albeit in the narrow range of just two points. Unfortunately the index is thus far a long distance from the 10 per cent rise predicted at the beginning of the year.

That said, there has been a 10 per cent rise in the level the number of offers year-on-year. At that time the number of offers in the kv.ee portal stood at 18 900, whereas at the time of writing the figure is 20 700, Tõnu writes.

The deals cited consist of offers on apartments and residential houses. The latter are primarily to be found in provincial Estonia (The biggest change was in provincial Estonia, in Paide – not that houses predominate there, of 185 per cent).

In Tallinn the number of residential offers has increased by 9 per cent year-on-year; in the second city of Tartu, and the south Estonian town of Võru, the number of offers have actually decreased, by -6 per cent and -7 per cent respectively, according to Tõnu.

The original article (in Estonian) including a table showing changes in number of offers for all regions of Estonia, can be found here.

The kv.ee index, which commenced on 18 February, 2008 (i.e. this is the date on which the value of the index is calibrated at 100) measures the week on week change in residential real estate prices in Estonia. The data has been measured back anachronistically to 1 January, 2005, when the index stood at an “all time” low of 49.9. The “all time” high came on 7 May, 2007, when it stood at 108. As noted the lowest figure since the downturn of 2008 onwards, of 61.0, has just been recorded.

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