Apartments For Rent In Tallinn Increase Y-o-Y Slightly In Number, Greater By Rent Price

There has been a y-o-y increase in rental prices in Tallinn of 18 per cent, to July 2012, according to Tõnu Toompark on his adaur blog.

This undoubtedly is connected with the short supply of rental properties in Tallinn at the moment.

According to Tõnu and citing data from real estate portal kv.ee, the volume of rental apartments on the market has increased y-o-y, but not by much, which may put a downward pressure on residential rental prices through the summer and autumn – as noted there has been a rise up to now.

Tõnu cites more data from kv.ee which states that there were 1 996 apartments up for rent on the portal in June, which is only a two per cent increase y-o-y.

However, the shortage in availablility of rental items is not as perceptible today as was the case a year ago, Tõnu continues.

This will be predominant in those areas of Tallinn where more apartments have come on to the rental market, which has happened in all districts. writes Tõnu, except North Tallinn (which includes Kalamaja and Kopli) the Soviet-era residential district of Mustamäe and the leafy, sought-after outer suburb of Nõmme. These three areas have seen a fall in the volume of rental apartments available (by as much as -37 per cent in the case of Nõmme).

Fallinn demand may be the result of rising rental asking prices (as well as the latter being the result of falling supply). The average rental asking price in Tallinn was a 6.10 Euros per square metre in July 2011; a year later that figure had risen to 7.20 Euros per square metre.

In any event this makes the rental market attractive for investors; a shortage of supply and rising rental levels mean a property could be let out very quickly and at higher prices, ensuring good cashflow.

The district of Tallinn with the highest rise in number of rental apartments available y-o-y to July 2012 was the residential suburb of Kristiine, according to Tõnu’s data, at 23 per cent. The city centre (which includes the Old Town) saw a 10 per cent rise in number of available apartments over the same period, from 736 to 806 items (also by far the highest total number of items of any region, as might be expected).

Outside of Tallinn, Pärnu saw an 18 per cent rise in apartments available for rent, whereas Tartu saw the opposite trend with a -26 per cent fall over the same period.

The figure for the whole of Estonia was a -4 per cent fall.

The original article (in Estonian) and data is here.

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Individuals In The Rental Market Need Tax Exempt Status

At a recent round table meeting of the EKFL (Eesti Kinnisvarafirmade Liidu), an association of Estonian real estate agents, construction companies, developers and other related interests, on 26 October, the question of issues related to tax relief for rental income was raised. The meeting found that, in order to increase transparency and competition in the rental market, measures concerning such tax relief would be necessary.

“Today’s rental market happens to be rather opaque, with activities largely being directed by business considerations from private individual to private individual” said EKFL board member and regular contributor to Tallinn Property Tõnu Toompark.

“This opacity means that rental agreements tend to be either weak or entirely missing” Tõnu goes on, “with uncertainty for both tenant and landlord, and, to be frank, unfair maneuvering regarding taxes”.

As far as taxation goes, there is a grey area in the rental sector which leads to a significant competitive advantage to those landlords who are not paying taxes. The EKFL proposes eliminating this advantage and giving rental housing tax-exempt status, for example for a 10 year period.

“Income tax exemption will reverse the advantage given to the unfair competitive advantage that exists” Tõnu continues. “It will encourage those landlords who want to enter into sound and correct lease agreements and the honest moving of money through bank accounts” Tõnu explains.

Tax incentives can lead to rental offers on new apartments, thus expanding the sector. Currently around 15 per cent of people in Estonia rent their living space; this number can potentially grow towards a level in line with the Western European countries of around 25-35 per cent.

A wider share of the rental market will give all people a better choice of accomodation and facilitate greater mobility of labour. A bigger rental market will also help to keep prices stable and lead to various mini-booms in the rental market.

This proposal for an income tax free rental market is motivated by the situation this autumn, where the supply of rental accomodation is standing at a level of around 30-40 per cent less than this time year ago. This low rate of offers has led to a price ceiling and a certain amount of difficulty in finding accomodation. The EKFL believes that the Estonian economy and real estate market, which the rental market is an integral part of, will be greatly improved when a reasonable level of stability can be forecast.

The EKFL is a network of real estate mediation, development, management and consultants. The EKFL round table is a group of active members who meet on a monthly basis as an effective think tank.

The original press release (in Estonian) can be viewed here.

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Tallinn Real Estate Market Report First Quarter 2011

Tallinn Property and Goodson & Red are pleased to announce that our latest Tallinn Property and Rental Market Quarterly Review is ready.

Covering all developments in the first quarter of 2011, as always the review contains an in-depth look at the Tallinn residential market, the situation regarding mortgage loans, information on average asking and transactional prices, the current state of the central Tallinn rental market, and also offers invaluable sample transactions and advice on rental business considerations.

In case the link above did not work you can copy and paste the following to your address bar: http://www.goodsonandred.com/sharedfolder/tallinn-property-market/marketreview-tallinn-real-estate-q1-2011-web180411.pdf  

The review comes at an exciting time for us as the company expands to include four highly experienced team members. You can meet our new property consultants and agents at Goodson & Red Property Consultancy site. Whatever your requirements for Tallinn property, Andrew, Kati, Tuuli and Erki are there to help you achieve your aims.

We would very much like to hear your views regarding the Tallinn or Estonian property market. Furthermore, if you have any suggestions regarding topics, please do not hesitate to leave your comment or tweet us, or write on our wall.

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Tallinn Real Estate Market Report December 2010

To wrap-up 2010 and look ahead to 2011, please don’t hesitate to check our latest Tallinn Property and Rental Market Quarterly Review.

As always our review contains an in-depth look at the Tallinn residential market, the situation regarding mortgage loans, information on average asking and transactional prices, the current state of the central Tallinn rental market, and also offers invaluable sample transactions and advice on rental business considerations.

You can find the full report at: http://www.goodsonandred.com/sharedfolder/tallinn-property-market/marketreview-tallinn-real-estate-q4-2010_web151210.pdf

We would very much like to hear your views regarding the Tallinn or Estonian property market. Furthermore, if you have any suggestions regarding topics, please do not hesitate to leave your comment or tweet us, or write on our wall.

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Ten Tips Which Landlords Should Keep In Mind

Why invest in Tallinn and not another European city, particularly in the former Eastern bloc? Well, now is a very good time to consider investing here. Prices are at around a five year low and the rental market is buoyant. Furthermore Tallinn will be European Capital of Culture in 2011, undoubtedly bringing with it a rise in already-high levels of tourism and associated businesses, and Estonia routinely scores higher in corruption indices than its baltic neighbours, for example. Furthermore Estonia joins the Euro zone on January 1, 2011.

But more than all this, the buying process here is quite simple in comparison with some other countries. For instance, it is not necessary for both parties in a transaction, the buyer and the seller, to find their own solicitor and to suffer the inevitable delays, not to mention cost, of paperwork and procedures during this stressful time. Here in Estonia the process is very transparent and it is sufficient for both parties, upon agreeing a sale, to make their way to one of the many competent notaries, who will carry out all the necessary procedures. This takes place with both parties present (together with a sworn translator where necessary) in a short space of time and for a very reasonable fee (including the standard state fee).

Nevertheless, many people become a ‘landlord’ with little knowledge of the realities of what the process involves. Maybe they are moving out of their former home or part time home, but wish to retain it and let it out. Or maybe they invested in property at the height of the boom here in Tallinn. Or perhaps they came by a property through family connections. Whatever the case, 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 important pieces of advice that we will give to any aspiring, or existing, landlord!

  1. Be prepared to be flexible in rental prices. Sometimes a happy situation will arise where a property will immediately be let out for its full asking price, but at other times, particularly when it is a renter’s market, it might be wiser to accept a reasonably reduced offer from a potential tenant rather than hold out for the full amount and carry the burden of a void period for any length of time.
  2. Steer clear of void periods at all costs, even if this means being flexible about rent figures. 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 the remainder, to maximise profits and minimize void periods. This can have the effect or 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. 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 (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.
  4. 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.
  5. It’s worth having an inventory taken (even in unfurnished properties). This lists in detail all the items which have been left in the property for the tenant’s use, and the condition of the apartment in general. This will be signed by both landlord and tenant, thus avoiding any unpleasant disputes arising surrounding any damage at the end of a tenancy.
  6. Expect a certain amount of wear and tear. This is only inevitable, and 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.
  7. Do not leave anything of great financial or sentimental value in a property which you are letting out.
  8. Location, location, location: something of a cliche but true nevertheless. Experience shows that the best chance of investing in a successful rental property falls within the central part of Tallinn. This incorporates the old town, the ‘Kesklinn’ (city centre) and to a certain extent the areas of Kadriorg and Kristiine, to the east and west of the centre respectively.
  9. Do think about the type of property you are investing in. Is it likely to be suitable for a student, foreign national or young professional(s)? How old is the building? What are communal areas like? Are there likely to be any planning permission issues? Is there much storage? Is there a parking space? A garden? What are the communal charges? Is it near public transport links, retail outlets and other facilities?
  10. 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.

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