Association wants tax break incentive for landlords renting to refugees

Apartment buildings in Tallinn.
Apartment buildings in Tallinn. Source: Siim Lõvi/ERR

The Estonian Homeowners' Association has submitted a proposal to the government to encourage the offering of rental homes to war refugees by offering landlords a tax exemption on rental income for a period of three years.

In a letter to Minister of Finance Keit Pentus-Rosimannus (Reform), Estonian Homeowners' Association board chairman Priidu Pärna said that the situation on the rental market is complicated — according to real estate offices, more than half of those seeking apartments are war refugees, however landlords prefer to rent to locals.

The war in Ukraine may continue for a long time, due to which a significant amount of the tens of thousands of refugees to arrive in Estonia cannot return home anytime soon and need a more permanent place to live already.

"When renting homes to war refugees, [landlords] first and foremost are afraid that they may not be as solvent as local residents, or about what will happen if [tenants] don't pay rent or utilities," Pärna said.

He noted that these fears on landlords' part may be understandable, as background checks, which are typical when renting an apartment out to someone, aren't possible for war refugees, and because their solvency, i.e. ability to pay, may not be stable.

"It's also often not possible for war refugees to pay three months' rent as a deposit, further worsening this target group's opportunities for concluding rental agreements," Pärna added.

The association is thus proposing that the state incentivize offering rentals to refugees by offering landlords who are sole proprietor (FIE) a temporary exemption on rental income tax — for a period of three years, for example.

As the state has fixed war refugees' status, this incentive could motivate private persons to give priority to refugees when renting out their property, they said.

The association also reiterated a previously made proposal to make the rental of one apartment tax exempt for FIEs.

"By doing so, we'd encourage private individuals' investments into rental real estate and the supply of rentals would increase, which may also bring rent down," Pärna stressed.

The Ministry of Finance told ERR on Thursday that as they had only just received the association's proposal, they have not yet been able to formulate a position regarding it.


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Editor: Aili Vahtla

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