How to Buy Property in Estonia as a Foreigner

Who can buy property in Estonia?

The basic rights to purchase property are comparable for both foreigners and locals. The primary distinction lies in the acquisition of land, where, in some cases, additional scrutiny or approval processes might be required for buyers outside of the European Union (EU) or European Economic Area (EEA). However, in most cases, purchasing an apartment or land in urban areas is typically unrestricted.

Do the research

Estonia stands out for its dynamic digital society and e-governance initiatives, making it one of the world´s most technologically advanced nations. These advancements contribute to a modern and efficient property market, making real estate investment in Estonia particularly enticing. The country´s stable political environment and robust legal framework create a secure foundation for investments. The capital, Tallinn, known for its well-preserved Old Town and thriving economy, presents a range of diverse real estate opportunities. The government´s investor-friendly policies and initiatives further bolster the real estate sector.

Additionally, Estonia´s natural beauty, characterized by its coastline and picturesque landscapes, enhances the overall appeal for both residents and tourists, potentially fueling demand for real estate in the region.

Here are some highly desirable locations for real estate investment:

  • Tallinn - As the capital and largest city, Tallinn is a major hub for business, culture, and tourism. The well-preserved medieval Old Town, combined with modern developments, makes it a sought-after location for real estate investment.
  • Tartu - Known as the intellectual and cultural hub of Estonia, Tartu is home to the country´s oldest and most prestigious university. The city´s historical charm and educational institutions contribute to its popularity.
  • Pärnu - This coastal town is a popular summer resort destination with a beautiful beach, historic architecture, and a vibrant cultural scene. Real estate in Pärnu is influenced by its appeal as a resort town and can be therefore seasonal.
  • Haapsalu - Known for its historic seaside promenade and castle, Haapsalu is a charming town that attracts both residents and tourists. The town´s picturesque setting contributes to its popularity in the real estate market.
  • Saaremaa - Estonia´s largest island, Saaremaa, is known for its unique landscapes, historic sites, and spa resorts. The island´s real estate market is influenced by its popularity as a tourist destination.

Where to find properties online:

Financing

Foreigners are eligible to secure property loans in Estonia; however, the specific eligibility criteria and requirements may differ based on the lender and loan terms.

To acquire a property loan in Estonia as a foreigner, it is generally necessary to possess a valid residence permit, demonstrate a stable income, maintain a favorable credit history, and possibly make a down payment equivalent to a certain percentage of the property´s value. The exact conditions may vary, so borrowers should carefully review the specific requirements set by their chosen lender.

Due Diligence and Sales Contract 

While not legally mandatory in Estonia, due diligence is strongly recommended as skipping this process can lead to risks. In Estonia, the due diligence process in a residential real estate transaction involves a thorough investigation and assessment of the property before finalizing the purchase. This includes checking the legal status of the property and ensuring there are no hidden liabilities or legal encumbrances, such as unpaid taxes or disputes. It is wise to engage professionals like real estate agents, lawyers, or notaries who are familiar with Estonian property law.

In Estonia, the document governing property transactions is referred to as the "kinnisvara ostu-müügileping," or the property purchase agreement. This agreement outlines the terms and conditions of the property sale and becomes legally binding. Crucial details, such as property description, price, payment terms, and any conditions or obligations for both parties, are included in the agreement. It serves as a mutual guarantee, ensuring adherence to the agreed-upon terms.

For international buyers or non-residents, there are no specific regulations or considerations that differ significantly from those applicable to residents.

Property Buying Costs and Taxes in Estonia

Transaction Costs
    Who Pays?
Registration Fee 0.00% buyer
Legal Fees 0.50% buyer
Notary Fees 0.02% - 0.70% (+22% VAT) buyer/seller split
Real Estate Agent Fee 2.00% - 3.00% seller
Costs paid by Buyer 0.52% - 1.20%  
Costs paid by Seller 2.00% - 3.00%
ROUNDTRIP TRANSACTION COSTS 2.52% - 4.20%
Source: Global Property Guide, PWC

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