Expert: Three Property Rental Problems That Can and Must Be Prevented

Renting out an apartment may seem like a simple way to earn additional income at first glance, but in practice, many owners encounter problems that can make rental relationships complex and costly. 1Partner Real Estate consultant and broker Olmer Õigus highlights the most important recommendations and protection mechanisms that help avoid common problems and financial losses.

One of the most common problems rental owners face is subletting without the owner's permission or short-term rental of the premises. Often, the apartment is handed over to third parties or used to offer accommodation similar to Airbnb, which can result in complaints from the homeowners association, increased costs, and insurance risks. "To avoid such situations, it is always advisable to add an explicit prohibition clause to the rental agreement, which, if violated, gives the rental owner the right to demand a contractual penalty and terminate the contract. Additionally, the tenant is responsible for all damages caused by such a violation," recommends the experienced 1Partner broker.

If the owner considers it important, the rental agreement should also include conscious regulation of risks related to pets and even small children. Pets can damage furniture and floors, while for families with small children, one must account for noise, safety risks, and greater wear and tear. "The problem is not children or animals, but unclear agreements. If the contract clearly defines what constitutes reasonable wear and tear and who is responsible for professional cleaning, both parties can have peace of mind," says Õigus. He adds that for families with small children, it is recommended for the apartment owner to conduct a safety inspection of the premises before renting and ensure that, for example, balconies and windows do not pose a safety risk to children. Additionally, a thorough handover report with photos and videos that documents the condition of the apartment at the beginning of the contract also helps avoid potential future disputes.

According to the experienced broker, rental owners should not overlook home insurance combined with liability insurance, especially the self-insured portion of it. Insurance covers damage to the building and furnishings as well as damage caused to third parties. "If the damage is caused by the tenant, insurance covers the damage. However, the self-insured portion should remain the tenant's responsibility, but this must also be clearly specified in the contract," emphasizes Olmer Õigus and reminds that rental income must always be declared, and to avoid later disputes, it is worth adding a clause to the contract that the rental price can be reviewed and adjusted once a year according to market conditions, with at least 30 days' notice given.

A professional broker can significantly help mitigate various risks by conducting a thorough background check of the tenant before signing the contract and drawing up a correct rental agreement with all important agreements fixed in it. "A broker is like a buffer between the owner and the tenant, helping to avoid misunderstandings. Additionally, an experienced broker also knows the market and helps find a trustworthy tenant, which in the end is more important than a few euros in higher rent," says Õigus.