Buying real estate in Estonia as a foreigner?

We've created a guide to help you avoid pitfalls, save time, and make the best long-term investment possible.

Buying property in Estonia as a foreigner: a full guide

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Everything you need to know is included in our Estonia Property Pack

Estonia, with its picturesque scenery, rich cultural history, and friendly locals, draws in many foreigners seeking real estate investment opportunities.

Nevertheless, understanding the complexities of buying property in a foreign country can be daunting, particularly regarding the legal framework and regulations in place.

That's why this guide is here to help! We'll explain how the property market works in Estonia in an easy-to-follow manner, covering all the information you need to know.

Also, for a more in-depth analysis, you can check our property pack for Estonia.

Can you purchase and own a property in Estonia as a foreigner?

If you are American, we have a dedicated blog post regarding the property buying and owning process in Estonia for US citizens.

Buying real estate in Estonia as a foreigner involves navigating a set of rules and regulations that differ somewhat from those for local buyers.

Here's a comprehensive overview to help you understand the process and requirements.

As a foreigner, you have the right to buy property in Estonia, including residential and commercial real estate.

However, when it comes to owning land, there are certain restrictions. In general, non-residents can purchase land in urban areas without much difficulty. But for agricultural or forest land, there are more stringent rules.

You might need to obtain permission from the local government, especially if the land exceeds a certain size.

The fundamental rights to purchase property are similar for foreigners and locals. The main difference lies in the acquisition of land, as mentioned above, and in some cases, additional scrutiny or approval processes might be required for foreign buyers.

The Estonian real estate market does not broadly discriminate based on the buyer's country of origin.

However, citizens of the European Union (EU), European Economic Area (EEA), and Switzerland generally face fewer restrictions compared to those from non-EU/EEA countries.

You do not need to be a resident of Estonia to purchase property there. Foreigners, regardless of their residency status, can own real estate. This openness makes Estonia an attractive destination for international property investors.

Buying property in Estonia does not automatically require a specific visa or residence permit. However, owning property can be an advantage if you decide to apply for residency.

For non-EU/EEA citizens, different rules may apply, and owning property might facilitate the process of obtaining a long-term visa or residency permit.

For certain types of property, such as agricultural land, you might need specific authorization from local government bodies. This process is in place to protect strategic interests and maintain control over crucial land resources.

There is no general minimum investment requirement for buying property in Estonia. The investment threshold may vary based on the type of property and its location.

Can you become a resident in Estonia by owning a property?

Estonia does not offer a direct real estate investment program leading to residency, unlike some other countries that have Golden Visa schemes.

However, there are pathways to residency that can be indirectly associated with property investment.

Estonia offers residency options for business investment but not explicitly for real estate investment. If you establish a business in Estonia and your investment in that business is substantial, you may qualify for a residency permit.

Owning property can be a part of your overall business strategy, but it's not a standalone route to residency.

If you're considering using investment as a path to residency, you'd typically need to start or invest in an Estonian business. The investment should be significant enough to contribute to the Estonian economy. This might involve creating jobs or introducing new technologies or services.

There's no fixed minimum investment amount for obtaining residency through business investment, but the investment should be substantial and justify the need for your presence in Estonia.

The evaluation is somewhat subjective and depends on the perceived value of your business to the Estonian economy.

Initial residency permits for business investment are usually issued for a short period, like one or two years, and can be renewed.

The criteria for renewal generally include maintaining your investment and demonstrating that your business is active and contributing to the local economy.

Holding a temporary residency permit for a certain number of years can make you eligible to apply for permanent residency. Permanent residency and citizenship, however, have additional requirements, including language proficiency, continuous residence, and an understanding of Estonian society and law.

Simply owning property or having a business investment does not guarantee a path to citizenship.

Specific statistics on how many people have gained residency through business investment in Estonia are not readily available. It's a less common route compared to employment or family-based residency permits.

Thinking of buying real estate in Estonia?

Acquiring property in a different country is a complex task. Don't fall into common traps – grab our guide and make better decisions.

buying property foreigner Estonia

Market data

You can find fresh and updated data in our pack of documents related to the real estate market in Estonia.

By examining the the the GDP per capita indicator, we can see that Estonian people have become 8.1% richer over the last 5 years.

As people's wealth grows, the demand for real estate could rise, resulting in potential price increases down the road.

Looking at the data reported by Numbeo, we can see that rental properties in Estonia offer gross rental yields between 2.2% and 4.9%.

These moderate rental yields indicate a balanced return on investment for property owners or investors

To know more, you can also read our dedicated article: is it a good time to buy a property in Estonia?

Daily life of an expat

Living as an expat in Estonia can be an exciting and rewarding experience.

The country is known for its progressive attitudes towards foreign workers, and the government has taken steps to make it easier for expats to live and work in the country. Estonia is a modern, tech-savvy nation with a great quality of life and a low cost of living.

The capital, Tallinn, is a vibrant and cosmopolitan city with plenty of cultural attractions and activities. The country also has some of the best beaches in the Baltic region, and its forests and lakes offer plenty of outdoor activities.

Expats in Estonia will find that the locals are friendly and welcoming, and the country is easy to navigate. The country also has a strong healthcare system and excellent education opportunities.

All in all, living as an expat in Estonia can be a great experience.

What are the best places to purchase a property in Estonia?

This table summarizes some of the best places to buy a property in Estonia.

City / Region Population Average Price per sqm (EUR) Strengths
Tallinn ≈ 440,000 1,500 - 3,500 Capital city, UNESCO World Heritage Site, vibrant cultural scene, tech hub
Tartu ≈ 95,000 1,200 - 2,500 University town, intellectual and creative center, historic architecture
Pärnu ≈ 40,000 1,000 - 2,500 Seaside resort, sandy beaches, summer events, spa and wellness
Narva ≈ 55,000 500 - 1,500 Historic border town, cultural diversity, unique architecture, Narva Castle
Viljandi ≈ 17,000 800 - 1,500 Small town charm, picturesque lake, annual folk music festival
Kuressaare ≈ 14,000 800 - 1,500 Island town, medieval castle, marina, nature trails
Haapsalu ≈ 10,000 800 - 1,500 Coastal town, historic spa resort, medieval castle, cultural events

Do you need a lawyer to buy a property in Estonia?

When purchasing a property in Estonia, engaging a local lawyer can provide valuable assistance in navigating the legal aspects and ensuring a successful transaction.

One important document they can assist with is the Purchase Agreement (Kinnisvara ostu-müügileping), a legally binding contract between the buyer and seller that outlines the terms and conditions of the sale.

The Estonian lawyer can also help with conducting a Land Registry Search (Kinnistusraamatu väljavõte) to verify the property's ownership status and identify any potential legal issues or encumbrances.

Furthermore, they can guide you through the process of obtaining necessary permits and approvals, such as approval from the local municipality or relevant authorities.

They will ensure that all applicable taxes and fees, such as the Property Transfer Tax and Notary Fees, are paid correctly and in compliance with Estonian laws and regulations.

What are the risks when buying real estate in Estonia?

We've got an article dedicated to the risks associated with purchasing property in Estonia.

One risk when buying a property in Estonia is that the seller may not have a valid title to the property.

This means that the buyer may not be able to register the property in their name. It is important to ensure that the seller has the legal right to sell the property before entering into a contract.

Another risk is that the buyer may not be aware of any restrictions or limitations on the use of the property. For example, the local government may have certain regulations in place that limit what a buyer can do with the property. You have to research any potential restrictions before entering into a contract.

Finally, there is a risk that the buyer may not be able to obtain a mortgage in Estonia. While many banks in Estonia offer mortgages, they may not be available to foreign buyers. It is important to research the availability of mortgages before signing a contract.

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Everything you need to know is included in our Estonia Property Pack

What is the list of documents needed for a real estate transaction in Estonia?

When buying a property in Estonia, the following documents are required:

1. Identity documents of the buyer and seller, such as a passport or ID card.

2. The purchase contract, which should outline the details of the sale and include information about the property, the buyer and seller, and the purchase price.

3. A certificate of title, which is a document that proves the seller's ownership of the property.

4. Building permits, if applicable, which are documents that prove the building has been approved by the local authorities.

5. A certificate of non-encumbrance, which is a document that proves that the property is free of any debts or claims.

6. The deed of transfer, which is a document that transfers the title of the property from the seller to the buyer.

7. The registration of the transfer of the property with the Land Registry.

We review each of these documents and tell you how to use them in our property pack for Estonia.

How can you approach negotiations with Estonian people?

When engaging in property negotiations in Estonia, it is crucial to understand and appreciate Estonian culture, which is characterized by a blend of Nordic influences and Baltic heritage.

Estonian culture values honesty, directness, and efficiency. When negotiating, it is recommended to adopt a straightforward and transparent approach, clearly articulating your expectations and terms. Estonians appreciate factual information, so providing accurate data and details during negotiations is highly valued.

Respect for personal space and privacy is important in Estonian culture. It is essential to maintain a sense of privacy during negotiations, respecting individuals' personal boundaries. Being attentive to non-verbal cues and maintaining a respectful distance can foster a positive negotiation atmosphere.

Consensus-building is a significant aspect of Estonian culture. Decision-making often involves active participation from all parties, and it is essential to engage in open discussions, considering multiple perspectives. Demonstrating patience, attentiveness, and a willingness to find mutually agreeable solutions can contribute to successful negotiations.

Punctuality is highly regarded in Estonian culture. Being punctual for meetings and appointments reflects professionalism and respect for others' time. Arriving well-prepared and organized demonstrates your commitment and enhances your credibility during negotiations.

Embracing Estonian culture and showing interest in their traditions and customs can foster positive connections. Learning about important national celebrations like Independence Day (Eesti Vabariigi aastapäev) and appreciating their love for nature, music, and sauna culture can help build rapport and create a pleasant negotiation experience.

Can foreigners obtain a bank loan in Estonia?

Foreigners can get property loans in Estonia, but the eligibility criteria and requirements vary depending on the lender and loan terms.

To obtain a property loan in Estonia as a foreigner, you typically need a valid residence permit, a stable income, a good credit history, and may be required to make a down payment of a certain percentage of the property's value.

Some banks in Estonia that can grant mortgages to foreigners include Swedbank Estonia, SEB Estonia, and Luminor Bank.

Moreover, mortgage rates in Estonia for a 20-year term range from 0% to 4%, which are considered highly favorable, providing borrowers with excellent financing opportunities.

What are the taxes related to a property transaction in Estonia?

Here is a breakdown of taxes related to a property transaction in Estonia.

Tax Description Calculation Who pays
Value Added Tax (VAT) A tax on the sale of newly constructed buildings 20% of the sale price of the property Buyer
Land Tax An annual tax levied on the ownership of land, including real estate properties Between 0.1% and 2.5% of the property value, depending on the municipality Owner
Rental Income Tax Tax on rental income generated from the property 20% on total rental income Owner
Capital Gains Tax A tax on the profit earned from the sale of a property 20% on the net capital gain (the difference between sale price and acquisition cost) Seller

For a deeper dive into the calculation, refer to:
- the Estonian Tax and Customs Board's website
- the Estonian Tax and Customs Board's website
- the Estonian Tax and Customs Board's website
- the Estonian Tax and Customs Board's website

What fees are involved in a property transaction in Estonia?

Below is a simple breakdown of fees for a property transaction in Estonia.

Fee Description Calculation Who pays
Registration Fee Fees for registering the property transfer 0.25% of the property value Buyer
State Fees Fees paid to the state for various administrative procedures related to the property transfer Between 0,3% to 0,5% of the property sale price Buyer
Real Estate Agent Commission Fees paid to the real estate agent for their services in facilitating the property sale Varies From 2% to 4% of the property's sale price, negotiable with the real estate agent Seller
Notary Fee Fees charged by the notary public for their services in facilitating and certifying the property transfer Between 0.02% and 0.7% depending on the property value and the complexity of the transaction Seller and Buyer

Buying real estate in Estonia can be risky

An increasing number of foreign investors are showing interest in Estonia. However, 90% of them will make mistakes. Avoid the pitfalls with our comprehensive guide.

buying property foreigner Estonia