The bill introduced by the government to amend the law on the Code of Obligations was passed in the 101-seat chamber with 73 to 8 votes.
The changes will allow market participants to regulate the relationships between them more flexibly, taking into account the need for balanced solutions, said spokesmen for the Riigikogu, pointing out that the regulation on renting apartments in Estonia has remained unchanged for almost 20 years .
“The law assumes balanced solutions that ensure adequate protection for the tenant as the weaker side of the contractual relationship, exclude the possibility of abuse and at the same time offer the landlord a feeling of security. I believe that more flexible regulation will facilitate the development of a rental housing stock good quality and the emergence of trustworthy tenancies in the coming years, “said Justice Minister Raivo Aeg (Isamaa), according to the ministry’s spokesman.
The changes abolish the absolute prohibition of contractual penalties in rental contracts, set a maximum limit for the delay in rental contracts and allow more comprehensive agreements than before with regard to the division of the obligation to repair.
To protect the tenant, the right to extraordinary withdrawal from the contract is provided in the event that the rent unilaterally increased by the landlord is not acceptable to the tenant and in this case an increase in the rent is excluded until the lease expires.
The lessor is entitled to withdraw from the contract in the event of a lower amount due or a shorter delay period of two months instead of three months.
At the same time, restrictions on the amount of the contractual penalty, various requirements for content and form in relation to agreements on the obligation to repair, as well as more comprehensive information requirements for the landlord in the event of withdrawal from the contract due to default have been established.
In addition, the new owner can more easily terminate a rental contact acquired by him as a result of a sale in the context of bankruptcy or enforcement proceedings.
Real estate companies think new regulations are insufficient
Rental regulations in Estonia have been unaffected for 20 years and changes to the law have long been discussed. Merike Roosileht, attorney at the state-subsidized law firm Hugo.legal, said the laws passed on Wednesday were beneficial for landlords.
“I am convinced that the amendments will not benefit the tenants, but rather the landlords. The landlords can impose more obligations on the tenant, such as general repair money and loan payments. Also, they can ask for a contract penalty for breach of obligations, which the previous law didn’t provide, “said Roosileht.
Among other things, tenants can contractually be fined if they bring pets, smoke, make loud noises or leave the batteries of a smoke alarm unchanged. Roosileht assessed that the changes will generate a wave of lawsuits until the new situation becomes clearer.
However, real estate companies find that the regulations that have been passed are not enough, as it is still not possible to evict a person who is breaking the lease without a long process.
1Partner Kinnisvara CEO Martin Vahter stated that the new law will not resolve disputes between tenants and landlords. “The problem of parasite tenants where the tenant refuses to move out. That is, if the tenant fails to comply with the law, nothing will change in light of the changes,” he said.
From January an agreement can be made that obliges the tenant to carry out repairs – paint ceilings or walls, change wallpaper, etc. – or at least cover the repair costs when moving out.
Estonia’s largest apartment rental company Lumi Capital says it will not take advantage of the new options immediately.
“I think most people who rent their house don’t have to worry about their lease. The contracts stay as they are today. That’s one less thing people should worry about over the vacation. It’s only an option and I think it will be. ” gradually implemented in new contracts. But only if the tenant agrees, “said Martin Rekor, leading partner at Lumi Capital.
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