The current coalition agreement includes a promise to protect property owners and solve the problem of "bad-faith tenants," and Pakosta has now brought forward a draft aimed at fulfilling those promises.

According to the draft, improving the functioning of the rental market requires encouraging long‑term and stable, yet flexible rental relationships that ensure a reliable profit for the landlord and sufficient protection and security for the tenant. 

"To ensure that especially private landlords have the motivation to bring living space to the market, we must avoid situations where the economic risks of renting out property fall on them to an unreasonable extent. Effective legal remedies must be guaranteed for landlords to manage relationships with tenants who have breached their obligations," the draft states.

Current law delays termination

Currently, the law allows a landlord to terminate a lease only when the unpaid rent exceeds two months' rent. As a result, the landlord must wait during that period, even as utility costs rise and rent remains unpaid. In practice, there is often little hope of recovering those costs later. 

Now, landlords would be allowed to terminate a lease more quickly in cases of delayed rent payments. The Law of Obligations Act would be amended so that a landlord may terminate the lease if the tenant is late in paying rent, utility costs, or building maintenance costs and the debt exceeds one month's rent — and also if unpaid security deposit obligations exceed one month's rent. 

"To protect the tenant, the obligation to provide a 30‑day additional deadline before termination remains, and in the case of residential and commercial leases, the formal and substantive requirements for a termination notice must be followed," the draft notes.

Eviction orders cover subtenants

In court proceedings, the court would be able to set a clear deadline for vacating the dwelling directly in the judgment, eliminating the need to grant automatic voluntary compliance periods during enforcement.

The scope of enforceable court decisions would also be extended to subtenants, allowing landlords to evict them without initiating separate court proceedings. 

The Estonian Property Owners' Association has previously said it does not understand what problem the government is trying to solve, as owners have not asked for additional protection. 

The association told the ministry that the rental chapter of the Law of Obligations Act needs far more radical changes, as society has changed significantly over the past 20 years and issues related to former forced tenants have already been resolved. 

"Estonia has an unprecedentedly high number of privately owned apartments, which means we do not need to prioritize tenant protection to the same extent as legal systems with a much larger share of tenants," the association explained, adding that the owner is inevitably the stronger party who sets the conditions when renting out their property.

Ministry rejects radical overhaul

The ministry did not accept the association's proposal and stated that residential lease regulation must balance the landlord's property rights and freedom of contract with the tenant's inviolability of home and protection as the weaker party. 

The Estonian Real Estate Companies' Association, in turn, wanted the draft to address not only problematic tenants in residential leases but also issues in the commercial rental market, where similar problems are common. 

The Justice Ministry responded that the purpose of this draft is not a comprehensive reform of rental law, but rather solving specific issues related to lease termination and vacating residential premises. 

According to the ministry's plan, the law will enter into force on 1 October next year.

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