Landlord and tenant law has remained largely unchanged for close to two decades, ERR reports, and despite the safeguards for landlords explicit in the bill, the ministry said in its explanatory memorandum that the bill was aimed primarily at developing the rental market from a tenants' side.

The current law, the Law of Obligations Act, is too tenant-biased, landlord lobby groups say, and is holding up the market's deelopment and the consequent choice of properties available to tenants.

While the ministry did not say that the Law of Obligations Act favors either side unduly, it found that the law needed clarifying and greater contractual freedom was needed for all parties.

The bill most significantly allows for tenancy agreements to require tenants to cover wear and tear costs at the end of a tenancy period, so the apartment would be returned in the same condition at the end of a tenancy as it was at the beginning.

Items would include the repainting of ceilings and walls, patching up holes or dents in the same, deep floor cleaning, and other tasks which don't require any special skills.

The ministry also allowed for the eventuality that a tenant may have left the apartment in such good order that no obligation to carry out such works at the end of a tenancy, as well as the tenant paying for the work rather than carrying it out themselves.

Fixtures and fittings including boilers, furniture etc. would not be included, the ministry said,

Penalties

The proposed bill would also allow landlords to claim damages for breach of agreement if, for example, a tenant took a pet or smoked in the premises, if the contract stipulated against it.

Disturbing the neighbors would reportedly be grounds for damages – if such a clause were included in the contract – as would failing to change smoke detector batteries.

Penalties themselves would be at a maximum of 10 percent of the monthly rent per violation, with total penalties imposed in a month not to exceed 20 percent of the monthly rent.

Security deposits would also be off-limits to landlords when claiming damages, making the process more active than a landlord passively holding on to a deposit at contract end, on the grounds that the tenant had incurred damages.

In the case of rental defaults, the bill would allow contracts to be terminated earlier and higher rates of interest on outstanding rent permissible, it is reported.

The law also would aim to codify and legitimize an informal practise of passing on communal building repair costs and similar to tenants, to a certain extent. The practise already exists and is the subject of much debate, but a tenant is reportedly not required to bear any such costs under current law.

The new bill would aims to make these proportionate, related to the length of a tenant's stay to the project in question so that, for instance, a short-term tenant would not have to contribute costs to a major renovation of an entire building.

The bill would also reduce the accrued debt before a landlord may terminate a lease, from three months as at present, to two months, with two week's written notice required.

The maximum default interest rate would be three times the maximum Estonian defualt interest rate – currently around two per cent per year, or 0.022 per cent per day. This would make the maximum interest payable by defaulting tenants 0.066 per cent per day.

The bill reportedly safeguards tenants renting a property whose ownership changes, making buyers aware that tenants are in place.

In the event of a property being sold due to bankruptcy proceedings, three months' notice can be given on tenants living there.

The period during which a landlord can unilaterally increase rents will be extended from six months to a year, in the case of open-ended leases, it is reported.

Estimates of around 100,000 people live in rented accommodation in Estonia at present, or around 15-20 percent of total households, with the bulk of these being rented from one individual to another, and the ministry estimates the number of landlords at less than 90,000.

Download the ERR News app for Android and iOS now and never miss an update!