The new draft will shorten the terms of cancellation of the agreement due to late payment, to two months instead of three.

"This means that the landlord will be able to terminate the contract more quickly with a tenant who has delayed the fulfilment of their obligations," Kaidi Urgas, an adviser to the private law service of the Ministry of Justice, told "Vikerhommik".

Urgas said the second most important change is that the new regulation allows the landlord to leave the apartment repair fund to the tenant, something which currently causes confusion. It also allows the tenant and landlord to agree that the tenant should repair the apartment to the same condition as when they moved in.

A contractual penalty may also be imposed on a tenant under the conditions provided in the lease agreement.

Urgas said there are exceptions in the draft and the landlord can demand, for example, the replacement of worn wallpaper, but not the repair of the washing machine.

The new regulation no longer offers tenants as much protection as before, but limits are set for contractual penalties in order to prevent abuse and so the owner of the apartment cannot create a new source of income from contractual penalties.

Chairman of the legal affairs committee Jaanus Karilaid (Center) said that tenancy contract regulations have remained unchanged for nearly 20 years and the bill is geared at boosting the functionality of the rental market and granting parties greater flexibility in making agreements.

"We want to foster stable long-term yet flexible tenancy relationships that guarantee a profit for the landlord and sufficient protection and sense of security for the tenant," Karilaid said.

Member of the committee Heljo Pikhof (SDE) noted that protection of the tenant as the more vulnerable party must be ensured and the landlord's risks must not be disproportionately transferred to the tenant.

"It is also important, however, that the risks should not be borne by private individual landlords alone and that handling tenants who have not complied with their obligations should be facilitated by more efficient legal remedies," Pikhof said.

Minister of Justice Raivo Aeg (Isamaa) said that the bill seeks to ensure more efficient protection of deposits in case enforcement or bankruptcy proceedings are launched against the landlord.

Pursuant to the bill, the parties may agree to a higher interest rate for late payment than the one established by law. Parties will also be able to agree that before returning the rented space, tenants will eliminate signs of wear created in regular contractual use of the space or cover the reasonable and necessary costs relating thereto. 

The government-initiated bill aimed at amending the Law of Obligations Act is planned to be put to first reading in the Riigikogu on October 22.

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