The City of Tallinn has warned the practice can mislead buyers. Deputy Mayor for Urban Planning Tiit Terik (Center) said situations where people believe they are buying an apartment, when legally the property is actually registered for commercial premises, for instance for offices or hotel accommodation, is unfortunately on the rise.

Developers may choose this approach when an existing detailed plan already permits an office building, and the developer chooses not to amend the zoning plan.

"They may describe it as a guest apartment or as commercial premises, but if you look at their ads, they often give the clear impression that what is being sold is an apartment intended for residential use," Terik said.

He pointed to the extension of the Oru Hotel on Narva mnt, being marketed at present by developer Metro. "Looking at the adverts, there is little room for interpretation. At first glance, people are clearly led to believe they are buying a home," Terik noted.

Metro management board member Mait Allas said the Oru Hotel extension is a commercial building with accommodation units, comprising both commercial premises and accommodation spaces, and that these are being marketed accordingly.

"These are not apartments in the traditional sense. They are intended as accommodation units, and owners can also rent them out for short-term stays," Allas said.

Allas conceded once a guest apartment or office apartment has been sold, how the new owner uses the property, including whether and how often they spend the night there, is beyond the developer's control. As a result, these types of properties could end up being permanent residences.

The deputy mayor called for developers to be transparent about a building's intended use from the outset, when handling planning and permitting, warning that otherwise they could face issues, including the completed building not even receiving an occupancy permit.

Those who have purchased a unit and moved in before finding out it is legally classified as commercial premises cannot be evicted as a result, however, Terik noted.

The new owners and residents may face other repercussions, however, including land tax issues. "On the other hand, land tax for commercial property is different from that for residential property, where owners may even qualify for a partial exemption," Terik said.

Any developers caught using misleading advertising in creating the impression that a unit is something other than what it legally is may result in city authorities asking the state to intervene, he added.

In any case, the city's urban planning department has developed a proper approval procedure which allows office buildings to be legally converted into residential buildings.

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