Fierce Competition Has Started Lowering Rental Prices

Increasingly intense competition in the rental market has begun to lower prices for the most common sizes of rental apartments. At the same time, the time required to find a tenant has increased.

Competition has grown most notably especially in the case of 2-room apartments in central Tallinn, as these are offered in the greatest quantity in both new buildings and on the secondary market. This causes price decreases, but also longer listing periods, since the potential tenant has a large selection and apartments of quite different quality levels are being offered at the same price.

Thus, there has been more negotiation about price as well. Both the rental amount and utility costs are taken into account, and the decision is made based on the total sum. By the way, tenants know very precisely that renovation funds and other building maintenance-related costs do not have to be their responsibility. Owners must accept this.

Of course, competition is also increased by the fact that more people have started buying real estate instead, as in the context of high rental prices, the sum required for loan repayment is no longer a problem.

Tenant requirements for the rental apartment itself have also increased. Very important are the existence of a parking space, the quality of the apartment's furnishing and finish, and of course the aforementioned utility costs. A storage room also adds value and can sometimes be a serious argument for choosing a particular apartment.

Be flexible

In the rental business, owners who are more flexible in their terms have an advantage. For example, allowing pets in the apartment (taking 2-3 months' rent as a deposit in that case) and concluding contracts for shorter periods as well.

Flexibility is especially important for younger tenants. A typical one-year contract might intimidate them somewhat, as lives are fast-paced and changing, and one year can feel very long. As a result, one could offer shorter or open-ended contracts as an alternative.

For larger apartments, one could also consider placing different people in different rooms. Often there is fear of taking, for example, two students, as it is assumed that there will be partying all the time and the apartment will be destroyed. Actually, the rental income would come from two different sources, and in the end one could ask for a slightly higher rent (taking into account the price per room). If the owner has concerns about such a situation and has no desire or ability to manage it themselves, then a management service would be one solution. A manager visits the apartment a few times a year and keeps an eye on things on an ongoing basis.

Many owners still fear allowing registration of residence. It is thought that this gives the tenant the rights of a homeowner and later they cannot be deregistered from the apartment anymore. Actually, this is not the case. The tenant needs registration for dealings with the local municipality, and if the owner allows this, it is a definite advantage over other rental apartment owners.

Rental price must have an increasingly greater justification. The argument that it is an apartment in the city center in a new building is no longer important. Additional value, flexibility, and a competitive price are the package that the potential tenant expects. Browse rental apartments here.

Source: Uusmaa Real Estate Bureau