Home Rental: 6 Tips to Keep in Mind When Choosing a New Home

Renting a home is an important step in life, and the rental market has not been untouched by the volatile economic environment of recent years. In addition to changes in rental prices, when renting an apartment, one must also account for initial one-time startup costs, which can become a significant expense. Kinnisvara24 and Holm Bank provide an overview of what to keep in mind on the rental market and how to plan finances related to moving costs.

Overview of the rental market

The situation in the Tallinn and Harju County rental market has changed somewhat compared to a year ago. The number of offers has increased by 35%. Thus, oversupply has emerged in the rental apartment segment, allowing renters to choose from a larger number of offers.

Two-room apartments with reasonable maintenance costs and in good condition are selling the most. Therefore, landlords must also reckon with greater competition among equivalent offers. To the joy of smaller and medium-sized families, the selection of 3- and 4-room apartments has improved significantly. There is a noticeable decline in the number of apartments with five or more rooms.

The most preferred areas are those that are well equipped in terms of various infrastructure, but environmental value and safety also play an important role. The most popular areas in Tallinn are Mustamäe, North Tallinn (Kalamaja, Pelgulinn), City Center, Lasnamäe, and Haabersti.

Last year, there was a noticeable increase in the volume of rental offers and an accompanying approximately 8% decline in prices.

What should be considered when renting an apartment?

Renting an apartment is an important step and associated with significant fixed costs. To find a suitable home, you must consider several factors:

1) Familiarize yourself with rental prices and think through the budget related to renting – think carefully about what proportion of your income you are willing to spend on rent and additional utility costs. Also account for the possibility that utility costs may unexpectedly increase during the rental period. Therefore, it is advisable to set aside a small buffer for unforeseen changes. Try to find a balance between comfort and your budget, ensuring stable and sustainable living arrangements.

2) Do preliminary work to find a rental space – familiarize yourself with different areas and determine whether they have the necessary public transportation connections, shops, entertainment and service businesses. Also research what the rental pressure in the area is like, to understand whether the asked rental price is fair and matches the market conditions of the area. Once you have found a suitable apartment, research your neighbors before signing a lease. Especially if you prefer quiet and peace, or if you yourself have noisy hobbies, pets, or children, which could later create conflicts with neighbors.

3) Contact different landlords – create a selection of different possible rental offers for yourself. Be sure to contact the landlord as well, ask as many clarifying questions as possible to make a choice, and examine the apartment carefully. Also keep in mind that good apartments find new tenants quickly.

4) Background information and signing the lease – conduct a background check on the landlord to the extent possible. This helps avoid potential future conflicts. When renting, read the lease carefully and consult a specialist or broker if you have questions.

5) Personal property protection and liability insurance – if possible, also consider concluding insurance. This makes it possible to prevent unexpectedly incurred costs if your or rental property is damaged due to an accident, theft, or your own fault.

6) Think about how long you would like to live in your chosen rental home – although the initial lease is usually concluded for one year, it is worth considering the location of your new home and other pros and cons in the longer term. In some cases, a slightly higher price or one-time startup costs – including both deposits and, for example, furnishing an unfurnished apartment – may be a more rational choice from the perspective of comfortable long-term living arrangements.

What are the main costs to consider when renting?

When renting an apartment, you must account for several costs. These can vary depending on the area, the size of the apartment, and the conditions.

1) Rental and utility costs – these depend greatly on the chosen apartment. While the rental price is determined mainly by the condition of the apartment and the market price, utility costs can vary depending on the area, the heating system, the age and condition of the building, administrative costs, and also whether repair and/or loan costs fall on the tenant. So utility costs can differ by several hundred euros. When renting an apartment, be sure to ask to see previous bills.

2) Startup costs – here you should certainly account for the first month's rent and A broker fee may also be added to the first payment, which in Estonia is generally one month's rent. The security deposit amount can range from one to three months' rent. By agreement with the landlord, this can also be paid in installments, but nevertheless you should account for a significant additional sum. The security deposit can also be replaced with mandatory insurance. In addition to startup costs, there are also moving costs and if necessary, expenses for furnishing. If you rent an apartment through a broker, there are also broker or contract fees, which are usually equivalent to the rental price and to which VAT is usually added.

Although it is often preferred to choose a new home by renting directly from the owner to save on costs, the selection of these apartments is limited. Often the decisive factor is time or the rental object itself – if finding a home is urgent or a suitable apartment is mediated by a real estate office, the decision is made in favor of the most suitable living space despite the additional broker fee. Using a broker also provides professional support in negotiations and later in resolving disagreements.

Choosing a home is an important decision, so one-time startup costs should not be the only obstacle in finding the most suitable rental space for yourself. To solve this problem, Holm Bank now offers, in cooperation with Kinnisvara24, the possibility to spread the apartment startup costs into monthly payments over a longer period instead of a single large expense. Next to all Kinnisvara24 rental listings you will find a calculator for this, where you can enter the total amount of your startup costs and calculate the monthly payment. If you want to make your new rental home cozier with new furnishings or need new household goods, it is also possible to include these costs in the amount calculation.