Below we list some of the main features of buy-to-let investment in Estonia and provide useful tips on what to consider when sourcing your rental property.
An established rental market - although many Estonians are now in a position to purchase their own properties, quality rental accommodation both in the main cities and in tourist resorts is still in very short supply, giving rise to a ready market for your buy-to-let investment.
A high demand for rental accommodation in prime locations, eg. Tallinn city centre and Parnu seaside resort, provides a strong market for buy-to-let investors: already there is a massive shortage of hotel accommodation during peak summer periods, to such an extent that it is sometimes impossible to find a hotel room. Additionally, increased average wages of some 7-10% per year - way above inflation - mean that locals are now in a better position to rent out top-notch property that was previously beyond their means.
A strong tourist market from Scandinavians - the country’s relatively low prices - often 300% lower than in Finland - are highly appealing to most visitors. GBP 15 will buy you a meal for two and beer will set you back just 50p. This undoubtedly gives Estonia added appeal as a holiday and investment location.
Rental yields reach at least 6% p.a. which suggest a reliable rental market in which to operate your buy-to-let investment strategy.
Easy availability of mortgage finance is good news to purchasers. The affordability and availability of home loans from Estonian banks (locals can borrow up to 95% of the property value) is currently fuelling demand for property in Estonia, providing buy-to-let investors with a ready and growing market when they eventually wish to sell on their properties.
Low interest rates at around 4.25% for 30 years, or up to 65 years of age are the norm. from Estonian banks.
Low prices - for a small investment of, say, GBP 10-15,000 for off-plan units valued at around GBP 35-40,000, you can reap the rewards from a buoyant market while financing your investment with your tenants’ money.
Steady capital growth of 10-12% p.a. In 2007, the Estonian economy produced an impressive GDP of 7.1% with inflation of 3.7%, indicating an investment climate that will continue to attract growth in many sectors.
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