Minister of Regional and Agricultural Affairs Piret Hartman (SDE) discussed the existing experience with the rental housing program and the construction of new residential buildings in smaller locations.

"So far, the goal has been to have the state contribute part of the funding, with the remainder coming from either local governments or the private sector. If we want to attract experts or teachers to areas like Ida-Viru County, Valga or Rapla County, it's important to provide apartments for these specialists. We also want young people to stay in these smaller places, so we need to provide comfortable, modern and attractive living spaces," said Hartman.

She could not specify exactly where new rental buildings are planned, stating, "We haven't reached the point of mapping out specific locations yet. These could be county centers, but not just larger cities – also smaller settlements."

Between 2017 and 2019, 13 new buildings were constructed and eight were reconstructed under the rental housing program, resulting in nearly 500 new homes. The projects cost a total of €42 million, of which the state covered €19 million.

Hartman mentioned that the scale of the upcoming projects would likely be similar. "I hope that agreements will be reached during the state budget negotiations in August and September," she added.

Hartman also noted that the proportion of contributions from various parties is still under discussion. After conversations with some local government representatives, it is clear there is interest in building complexes where part of the apartments could be sold, in addition to those available for rent.

"I believe that the private sector is interested in taking these steps, but may be hesitant to do so alone," she said.

Hartman emphasized that the rental housing program is not merely a cost burden on the budget, as the construction of buildings creates jobs and contributes to the economy and state budget through taxes.

According to Hartman, county centers have highlighted a significant current demand for rental apartments.

State to the rescue where the market fails

Host Johannes Voltri asked Hartman why the state needs to subsidize living in rural areas where there may not be significant interest.

Hartman responded, "The state must step in where the market doesn't function on its own. It's the state's responsibility today to ensure a good living environment across Estonia. We have certain areas that are developing very well and others that are not. One of the reasons is housing, which we need to support as a state to create motivation."

Hartman suggested that legislation should be amended to give local governments the right to shape urban housing development.

"Local governments can set certain conditions through planning, but to give them stronger authority, we need to amend the existing draft law," Hartman said.

She explained that when a private developer erects a building, the first and second floors could be handed over to the local government for rental purposes. Wealthier individuals could buy apartments, while those who cannot afford to buy can still move into the same area by renting.

This approach, according to Hartman, would help ensure that city centers are not exclusively populated by higher-income individuals.

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