Buyers Guide

Advice on buying Estonia Property

You have found an Estonia property you wish to purchase what next?

Estonia Property Buyer's Guide explains the legal fees, legal procedures, purchase taxes and mortgages.

Purchasing property in Estonia.

Buying Estonia property is a straightforward and safe procedure.
The wheels of the Estonia bureaucratic machine move fairly efficiently, meaning that you could have title transferred in as little as four weeks.
This combined with the closing gap between foreign and local salaries mean that far fewer people, foreign or local, are being taken advantage of.
Most Estonia agents meet certain standards within real estate protocol and foreigners getting fleeced is not something to be concerned about.

Can I obtain a mortgage and How much can I borrow in Estonia?
Estonian banks and financial institutions are happy to give finance and mortgages to foreigners.
Interest rates are very competitive, and can be as low as 3%.
The issued loan amount will depend to some extent on the type of property.
For renovated or new property in Tallinn, Estonia, banks will generally lend up to 70% of the property value for a first property, and 50% of the value for subsequent properties in Estonia.
As is standard with many European countries, loans will be conditional to the property being insured and independently valued if it hasn't already had a valuation placed on it by the bank, which is sometimes the case with new buildings.

How much room for Haggling?
There is generally some scope for negotiation on property prices in Estonia. However, unlike some countries the asking price does tend to be very close to the selling price. However, you might expect to haggle 5 to 10% off new properties in Estonia around 5-6% off the price off resale properties. Every situation needs to be assessed on its merits but the selling price is rarely more than 5 - 7% lower than the asking price. Estonia property market is experiencing a building boom, needing up to 3000 new housing units a year, haggling might be a luxury you can't afford.

Buying without an agent in Estonia?
Not recommended!
Buying without a property agent in a country you are unfamiliar with, even for the most experienced property investor, is looking for trouble.

Additional Charges
The Notary is responsible for overseeing the transfer of ownership of property in Estonia.
Notaries play a necessary role in the closing process and are paid separately.
In Estonia, their fees are fixed by the state ranging from 0.4 to 1.0% of the transaction value.
A notary will perform the function of a legal representative making sure the title is genuine and that there are no claims against the property you are buying.
However, it is important to remember that the notary is a neutral party and acts accordingly.

Price Overview
Residential Estonia Property
The most expensive housing is situated in the old town and city centre areas.
You might expect to pay between £1800 and £2400 per sq metre in the more exclusive streets of Tallinn's old town.
However, the average price level in Tallinn is around £900 - £1200 per sq m.
In Tallinn's suburban areas, prices can be as low as £550 per sq. metre for older apartments.
You shouldn't expect to pay much more than £700 per sq. metre.
For newer apartments in the suburbs prices range from £900 to £1600 per sq. metre.
Over the past five years prices in Estonia property have increased by more than 100%.
Most new builds sell off the plans and are sold complete with interior decoration. Demand in Estonia for 2- 3-roomed apartments has grown, particularly in the suburbs.
This is in contrast to its Baltic counterparts, Riga and Vilnius, where demand is largely for 1 -2 roomed apartments.
The result is a 5% rise in average prices for 3-roomed apartments.
Also expect to pay up to 40% more for any type of property for sale in Tallinn's old town. Demand for such properties has increased significantly over the past year in both the buyer and rental markets.
Investor's interest in new build apartments around the city centre has led to less demand for houses in Estonia. It is possible to find bargain properties in Estonia's rural areas at extremely low prices and the past year has seen far more of these properties come on the market than in previous years.

The Buying Process
The settlement process in Estonia,a member of the European Union, is fairly efficient, typically taking between 30 to 60 days, although it can be sooner depending on how quickly an appointment can be arranged with the Notary.
The Role of the Notary
The notary will oversee the transfer of ownership and ensure that it is in accordance with Estonia law. If it is not, recommendations for change will be made since the notary is financially responsible for potential mistakes or violations of the law. Once approved by the Notary, the documents are then signed in the Notary's office. Bear in mind that the notary's role is neutral. You will not be advised on any aspects of title, searches or burdens that they property may carry. The Notary will can also handle payments for the property through their account if required. Each party will be issued copies of the contract on signing at the notary office.
Notary Fees
The most equitable agreement for paying notary fees is to divide the cost equally between the buyer and the seller. Be sure to negotiate this before the meeting. There will also be a small amount of tax [state duty] to be paid by the buyer. This amounts to approximately 0.4% of the property value and is seldom more than 1.0%.

The Contract or Pre-Purchase Protocol
The "pre-purchase protocol" is the agreement that commits the buyer and the seller to the property sale.
It usually requires the payment of a deposit, set at around 10%.
The pre-purchase protocol is immediately binding and under Estonian law there is no opt-out period.
Once the contract has been signed, you are legally obliged to follow through on the terms of the agreement.
Estonian property purchase contracts are generally "firm sale only".
In contrast to other countries where you may negotiate an Estonia property purchase conditional on getting bank finance or selling another property, it would be very rare for an Estonian property seller to accept conditions on a property sale.
Always beware of contracts that have been translated from Estonian to English.
A bad translation may compromise the terms of the contract. You are legally obliged to have an accredited translator with you at the notary's office to take you through the contract and to ensure that you fully understand the terms of agreement.
To ensure that the pre-purchase protocol is legally valid, it must be signed by an Estonian Notary.
Many agents however do not insist on this procedure since it incurs extras costs.
However, without a formal signing at the notary's office, the terms and conditions of the contract do not have any legal sway.
Deadlines may extend longer than they should and other problems may arise. As a final note of caution, make sure that the director of the agency you are working with signs the contract. In order for a contract to be valid under Estonian law, the director of the company and not the agents working for the company must sign the documents.
Don't expect to be handed the deeds of the Estonia property once the purchase has been completed.
In Estonia, there are no property deeds.
A notorized application is made to the Land Register to transfer the ownership of the property to the buyer in the land register book. This cannot happen until the state fee is paid.
After this process, the title is legally valid.
Public notice of the transfer must be published in the Official State Gazette, though this does not affect the title, which is secured after being noted in the land register book.

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These guidelines are meant for guidance only and describe a straightforward purchase scenario. However this information is not meant to replace proper legal advice, which we always insist you take.

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