Estonia Property Buyers Guide

As a foreigner, it is important to be aware of the purchase procedure when buying property in Estonia. Below is an account of the formalities to expect.


Overseas buyers can purchase Estonian real estate without restrictions. Many purchasers choose to set up a limited company in Estonia in order to avoid tax until profits are distributed. Dividends are taxed at a standard 22% rate, but if profits are re-invested in the company, no tax is payable. This is a major factor behind many companies’ decisions, particularly from Finland, to invest in Estonia.

We will gladly guide you through each step of the buying process in Estonia to ensure that you are fully informed and you avoid any potential pitfalls.

The procedure:

  1. The developer or vendor will produce a simple Reservation Agreement in English, which can be signed remotely if necessary, using fax or email. A reservation fee will then need to be transferred in order to secure/reserve the property.
  2. The Preliminary Agreement is then notarised and drawn up between the vendor and the buyer. This is a legally binding document, setting out all the terms and conditions of sale, including the deposit amount and the price payable upon completion. After signing this agreement, if the buyer or seller withdraws from the sale, financial compensation will be necessary on both sides. A deposit of around 10-20% of the purchase price (less the Reservation Fee) is payable upon signing the Preliminary Agreement.
  3. Once legal checks have been completed or when the property is fully constructed, the buyer has a time period to inspect off-plan property and ensure that any outstanding snagging problems are dealt with prior to completion.
  4. Provided all is according to the Preliminary Agreement, the final balance is payable to the notary in time for the completion date.
  5. Buyers must attend the notary’s office for completion, to sign the Purchase Contract, though a power of attorney can also be arranged. The Contract is normally in Estonian, but can be translated into English for a small fee.

Following completion, the buyer must pay Stamp Duty to the local authorities before receiving the Purchase Agreement.

Ongoing maintenance charges on developments are normally paid to the property management company responsible for the complex on which you buy. Charges cover common usage of utilities, insurance, heating etc. for approx. £20 - £50
per month for an average 2 bedroom apartment.

Costs

Costs of purchase are relatively low, particularly as notaries rather than solicitors are used to oversee the sale:

Notary charges 0.5% of the sale price

Land registry fee 0.25% of the sale price

Contract translation approx 1,500 EEK (£70)

A typical 1,500,000 EEK property therefore could cost less than £500 to purchase.

You will need to set up a bank account in an Estonian bank in order to efficiently pay ongoing maintenance/community charges. This is a simple procedure and most banks in Estonia offer internet banking facilities, enabling you to keep track of your transactions with ease.

Money Transfer

The purchase transaction will need to be concluded in Estonian Kroons.

Funds are sent directly from your own bank to the seller’s bank account in Estonia. We strongly recommend you use a professional currency exchange bureau for the transfer of funds which, due to daily currency exchange fluctuations, could save you thousands on the day you transfer your funds.

We work in close partnership with a professional FX company, and will gladly put you in touch with them in order to avoid potential losses.

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