Estonia Property Buyers Guide
On first blush, many investors who are interested in putting money in foreign real
estate might flip past Estonia without giving it any thought. Indeed, historically
Estonia has not been a country in which foreign nationals have been active in the
real estate market. In point of fact, for a significant portion of the history of
Estonia, foreign ownership of real estate was prohibited for tightly and highly
regulated.
The Estonian Property Market
Of course, one of the primary reasons that foreign investors have not been active
in the Estonian real estate market
historically is the fact that through much of its history, Estonia has been occupied
or controlled by other nations.
Over the course of the past decade, as Estonia has gained its independence, the
government has worked to liberalize the laws governing the ownership and sales of
real estate in that country. This has included opening the door wider to more foreign
investment in real estate in Estonia.
While there has not been a rush of foreign nationals buying
property in Estonia as of this point in time, there is a steady stream of
these people buying real estate in different
locations in Estonia. Industry analysts believe that the number of people
who will invest in Estonian real estate should continue to increase at a steady,
but not flooding, pace.
Investment Property in Estonia
As referenced previously, historically Estonia has not been a country that attracted
a great deal of foreign investment in real estate. This is starting to change at
this point in time. Thanks to a relaxation of the laws governing foreign investment
in real estate, some foreign nationals are taking another look at
investing in property in Estonia.
In this regard, people who have taken the step of investing in real estate in Estonia
are doing so on the gambit that property values in that country will increase as
the country becomes more active on the world economic stage. Most analysts believe
that this is, in fact, a safe bet.
Primarily, foreign nationals are investing in commercial and residential properties
at about an even pace. In many instances, foreign nationals are
buying real estate in Estonia and then working to develop it for either
commercial or residential purposes. In some areas in the country, foreign nationals
have been leading the way in real estate related development projects, particular
citizens of European nations.
At the present time, there are no significant restrictions regarding foreign investment
in real estate. Again, the government of Estonia has been dedicated to streamlining
and liberalizing the real estate sales process -- including for foreign nationals.
Residential Property in Estonia
The state of the single family, residential real estate market in Estonia varies
significantly depending on what part of the country is being considered. For example,
in the larger cities in the country, a more concerted effort is being made to develop
new residential properties in single family style. In addition, a more concerted
effort is being made to rehab and renovate older single family residential properties
in Estonia to bring these properties into the 21st century.
In some instances, older residences that were once designed for single families
are now being retrofitted to be used as multiple apartment units. Indeed, many of
the newly available apartment units in many of the major urban centres in Estonia
are in fact rehabilitated residences that once upon a time housed single families.
In the Estonian countryside, there are some stunning and elegant villas and estates
that can be purchased for a moderate price. More often than not, these properties
do require some renovation work to bring them into livable condition. Some foreign
nationals are becoming involved in rehabbing these properties for resale to others.
Residential Real Estate - Apartment in Estonia
Apartments in Estonia have attracted the most significant number of foreign nationals
to the real estate market at this point in time. Foreign nationals seem to buying
apartments in Estonia for two primary reasons.
First, there is a growing number of foreign nationals who are coming to Estonia
to take part in the economic development that is beginning to occur in that country.
Consequently, these foreign nationals need and require affordable housing while
they are in country. By and large, these foreign nationals have found purchasing
an apartment for their time in Estonia to be a solid course to take.
Second, some foreign nationals have taken to purchasing apartments for leasing to
other individuals, including other foreign nationals. This includes newly developed
apartments as well as older buildings and structures that foreign nationals are
purchasing and remodeling for usage as updated apartments. These foreign nationals
appear to be turning a decent profit by purchasing and investing in these types
of apartments. In addition, more foreign nationals are becoming involved in this
types of investment as we move further into the 21st century.
Holiday Properties in Estonia
The vacation real estate market in Estonia is only now on the verge of moving forward.
Presently, the tourist trade into Estonia is not one of the most significant industries
in that country. However, the government as well as certain elements of the private
sector are working to attract more visitors and tourists to Estonia each year.
Some foreign nationals have begun to make modest investments in the vacation real
estate market. Some foreign nationals have come together with Estonian nationals
to develop apartment complexes and some stand alone villas in Estonia for holiday
purposes.
While most real estate analysts do not anticipate an explosion in the vacation real
estate market in the immediate future, these analysts do believe that there will
be steady growth in this area which will continue to involve foreign nationals.
Indeed, there are some attractive resorts that are now in development in Estonia
that should be completed within the coming five years.
Specific Steps to Buying Property in Estonia
The process of buying real estate in the
Republic of Estonia can seem a bit complicated on the surface. With that said,
the government of the Republic of Estonia has worked rather diligently to liberalize
and modernize the laws governing the buying and selling of real estate in that country.
In this regard, a good deal of effort has been expended making it a bit easier for
foreign nationals to buy real estate in Estonia.
There are two primary contracts involved in the sale of real estate in Estonia.
Both documents are prepared by a notary. Indeed, in Estonia it is mandatory that
a notary be involved in the real estate sales process, that a notary prepare these
primary documents. (As an aside, in some instances the notary does not need to prepare
these documents his or her self. But, if someone else drafts these documents, the
notary is legally required to review them in detail to make sure that they meet
the requirements of Estonian law and reflect exactly the agreement that has been
made between the parties.)
The initial agreement in the Estonian real estate sales process is the sales-purchase
agreement. This agreement is prepared by the notary and is executed by the buyer
and the seller once the seller makes an offer on the property that is for sale.
Generally speaking, once the oral offer is made by the buyer to the seller, the
sales-purchase agreement can be prepared and executed with a period of ten to thirty
days (depending on what needs to be included in the agreement itself).
During the period of time between the execution of the sales-purchase agreement
and the final agreement in the sales process, the buyer obtains financing and the
seller makes certain that the property physically and legally is in a position to
be conveyed and transferred to the buyer. In addition, during this interim period,
the buyer must pay to the government what is known as a state fee -- which is in
the amount of 0.4% of the value of the real estate being sold and purchased.
The final agreement in the real estate sales process in Estonia is entitled the
transfer of ownership in real estate agreement or document. When this document is
duly executed by the parties, an application is made to the Land Register Office
to transfer the ownership of the real estate from the seller to the buyer. In addition,
following the filing of this application, a public notice of the change in ownership
of the real estate is published in the Official State Gazette, the official publication
in Estonia that publishes legal notices of this nature.
In summary, the process of buying real estate in Estonia does include a number of
hurdles that seem confusing and complicated on the surface. But, as has been noted,
the laws have been modernized and liberalized in recent years. Chances are quite
good that the government of Estonia will continue to work to make the real estate
laws in that country a bit more "user friendly" and less cumbersome in the future.
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Further Reading on Estonia