The coalition agreement between the Reform Party and Eesti 200 included a pledge to address the problem of problematic tenants by placing limits on their activities. Justice Minister Liisa Pakosta (Eesti 200) has now developed a concrete plan for how to do that.

Pakosta told ERR that many property owners in Estonia currently keep their apartments or houses vacant because they are afraid to rent them out, fearing they could run into serious problems with tenants.

"We have people in Estonia who live in one place for six months, then move to the next place, stay there for at least another six months and once again pay nothing," Pakosta said.

According to Pakosta, more flexible rules would encourage more property owners to consider renting out their homes, helping to stimulate the rental market.

Under current law, for example, a landlord may terminate a lease only after unpaid rent exceeds the equivalent of two months' rent.

"That means the landlord has to wait two months while all the utility bills continue to accumulate and the landlord receives no rent," Pakosta said.

Under a draft bill submitted for interministerial review, the Ministry of Justice proposes allowing landlords to terminate a lease early once a tenant has failed to pay one month's rent.

To balance the change, landlords would have to give tenants 30 days, instead of the current 14, to pay the outstanding amount. If the debt remains unpaid by then, the lease would be considered terminated immediately.

If a dispute between a tenant and landlord reaches court, judges would be required to specify a deadline for vacating the property in the ruling itself.

To prevent tenants from delaying eviction by moving additional people into the apartment, a court ruling against a tenant would also apply to others living with that tenant. They could then be evicted without the need for separate court proceedings.

"Right now, the situation is that a court orders someone to move out of an apartment, but at the same time, the law allows tenants to have family members live in the rental property with them. In practice, the person effectively continues living there because the court ruling applies only to the tenant named in the case, not to their family members," Pakosta explained.

Owners: We do not need protecting

Andry Krass, head of the Estonian Owners' Association, said it is actually difficult for the organization to understand what problem the government is trying to solve.

"Property owners themselves have not asked for this kind of protection," he said.

According to the 2021 census, one in five households in Estonia lived in a rented apartment or house. Two-room apartments were the most common type of rental housing.

Krass said that because tenants are inevitably in the weaker position, it is reasonable for the law to provide them with greater protection.

"We have not noticed this being a widespread problem for property owners. There are certainly owners who have encountered it, but we also have to keep in mind that renting out residential property is a choice. No one in the Republic of Estonia is required to rent out a home. Every owner decides for themselves what to do with their property. If they choose to rent out a home, they also have to accept the responsibilities that come with that," Krass said.

The change could disproportionally impact tenants having financial difficulties

The explanatory memorandum accompanying the draft bill states that the proposed changes are intended to encourage tenants to maintain better payment discipline when paying rent and utility costs.

It adds that tenants generally meet their lease obligations on time and that when payment delays do occur, they are often the result of simple oversight or lack of time rather than financial hardship.

At the same time, the Ministry of Justice acknowledges that the proposed changes would have a negative impact on tenants experiencing financial difficulties. This could include people with lower incomes, those facing social or economic challenges or large families.

"Overall, the proposed amendments would reduce the legal protections currently afforded to tenants under existing law. This creates a risk that tenants experiencing financial difficulties, along with their family members, could lose their housing more frequently than under the current system, which in turn could increase pressure on the social welfare system," the ministry states.

Association: Rental relationships could be more flexible

Tõnu Toompark of the Estonian Association of Real Estate Companies, however, takes the opposite view, saying that legislation governing rental housing in Estonia should be far more flexible. He said that, for example, an open-ended lease can currently be terminated only with three months' notice, which he believes is unreasonable.

"The terms for entering into and terminating a lease should be based on what the tenant and landlord agree to. They should not be dictated by rigid legal restrictions that, especially in these kinds of extreme situations, are excessively burdensome and place virtually all the responsibility on the landlord. The landlord has to continue paying all the costs while essentially knowing in advance that no one is going to reimburse those expenses," Toompark said.

Toompark explained that Estonia has several thousand small-scale landlords who rent out one or two apartments. If one of them ends up with a bad-faith tenant who stops paying rent and refuses to move out, the consequences for that landlord can be severe.

"For example, the landlord still has to make mortgage payments, obligations to the apartment association remain in place and if the expected rental income does not come in to cover those expenses, it can be very painful. That's why having a way to remove a tenant within a reasonable period of time is entirely appropriate," Toompark said.

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