Rent increases for residential leases

When can the landlord raise the rent?

For an open-ended lease, the landlord is presumed to be able to raise the rent, when immovable property is leased, each time a year has passed since the contract was concluded, and for furnished rooms, separately leased parking spaces, garage spaces and the like, each time a month has passed since the contract was concluded (VÕS § 299 lg 1) [1].

For a fixed-term residential lease, it depends on the contract:

• a residential lease with a term of at least three years may provide that the landlord has the right to raise the rent unilaterally; such an agreement is valid only if the landlord may raise the rent no more than once a year, and the basis for the increase must be precisely set out in the contract (VÕS § 299 lg 5) [1];
• an agreement on periodic rent increases is valid only if the lease has a term of at least three years, the rent increases no more than once a year, and the amount of the increase or the basis for calculating it is precisely set as a specific sum, a percentage or an index (VÕS § 300 lg 1) [4]. The rent may then increase on dates agreed in the contract or upon notice to the tenant; in the latter case the landlord gives notice of the increase in a form reproducible in writing at least 30 days in advance (VÕS § 300 lg 2) [4].

For a residential lease with a shorter fixed term, the law does not give the landlord a right to raise the rent unilaterally. In a residential lease, an agreement deviating from the law to the tenant's detriment is void (VÕS § 275) [5].

If the parties have agreed that the tenant bears the costs needed to improve the whole building, raising the rent because of those improvements is void (VÕS § 292 lg 1¹) [6].

How must the landlord give notice of an increase?

The landlord of a dwelling must notify the tenant of a rent increase in a form reproducible in writing at least 30 days before the increase and give reasons for it (VÕS § 299 lg 2) [1]. The notice must clearly state:

• the extent of the increase and the new amount of rent;
• from when the rent is increased;
• the reasons for the increase and its calculation;
• how the increase can be challenged (VÕS § 299 lg 2) [1].

According to the Supreme Court (Riigikohus), the requirement is not met if the landlord gives as the only reason that the new rent is in line with the market price: the notice must set out both the reasons for the increase and its calculation (Supreme Court judgment 2-16-10710/78) [7].

A rent increase is void if the landlord does not give notice of it in the manner and form required by law, or warns the tenant that he will terminate the lease if the increase is challenged (VÕS § 299 lg 3) [1]. The same rules apply where the contract allows the landlord to change other terms unilaterally and he changes them to the tenant's detriment, in particular by reducing the services previously provided or imposing new additional costs on the tenant (VÕS § 299 lg 4) [1].

When is a rent increase excessive?

A rent increase is not excessive if it is economically justified (VÕS § 301 lg 3) [8]. Under the law, an increase is economically justified in particular if:

• it is based on a rise in the average rent of dwellings of the same location and condition;
• the landlord's expenses on the dwelling or his obligations increase;
• the increase is needed for reasonable improvements and changes, including bringing the premises to the condition such premises usually have, improving energy efficiency or otherwise increasing their use value (VÕS § 301 lg 3) [8].

The landlord may raise the rent to a proportionate extent, taking into account in particular that the costs of the improvements and changes are spread over a reasonable period (VÕS § 301 lg 4) [8].

How can a rent increase be challenged?

The tenant may challenge an excessive increase in the rent of a dwelling within 30 days of being informed of it (VÕS § 303 lg 1) [2]. Within the same period the tenant may also challenge a unilateral change to the tenant's detriment, in particular a reduction of services or the imposition of new additional costs (VÕS § 303 lg 2) [2].

To resolve a dispute arising from a residential lease, the tenant or the landlord may turn to a rental committee (üürikomisjon) or a court under the Rental Dispute Resolution Act (üürivaidluse lahendamise seadus, ÜVLS) (ÜVLS § 1 lg 1) [9]. A rental committee may be set up by a local authority (ÜVLS § 2 lg 1) [10]. A committee resolves disputes over dwellings located in its area (ÜVLS § 1 lg 3) [9] and does not decide money claims exceeding 3200 euros (ÜVLS § 1 lg 1¹) [9]. A committee resolves a dispute if the same matter has not been taken to court before (ÜVLS § 1 lg 2) [9]. The committee takes up a dispute on a written application, which states, among other things, the clearly expressed claim, the facts supporting it and the evidence (ÜVLS § 5 lg 1 and 2) [11]. A party who disagrees with the committee's decision may bring the same dispute to a county court within 20 days from the day after receiving the decision (ÜVLS § 21 lg 1) [12].

Can the tenant terminate the lease because of the increase?

Yes. If the landlord raises the rent under VÕS § 299, the tenant may terminate the residential lease within 30 days of receiving the notice of increase, giving 30 days' notice (VÕS § 303¹) [3]. In that case the rent is not deemed to have been increased (VÕS § 303¹) [3].

What the law says

• „Eluruumi üürileandja peab teatama üürnikule üüri tõstmisest kirjalikku taasesitamist võimaldavas vormis vähemalt 30 päeva enne üüri tõstmist ja seda põhjendama.“ [1] (translation: the landlord of a dwelling must notify the tenant of a rent increase in a form reproducible in writing at least 30 days before the increase and give reasons for it; VÕS § 299 lg 2) – an oral notice or a notice without reasons does not meet the requirements.
• „Üüri tõstmine on tühine, kui üürileandja ei teata sellest käesoleva paragrahvi lõigetes 1 ja 2 nimetatud viisil ja vormis või hoiatab üürnikku, et üüri tõstmise vaidlustamise korral ütleb ta üürilepingu üles.“ [1] (translation: a rent increase is void if the landlord does not give notice of it in the manner and form required, or warns the tenant that he will terminate the lease if the increase is challenged; VÕS § 299 lg 3) – a notice not given in the required manner and form, or a threat of termination, makes the increase void.
• „Üüri tõstmine ei ole ülemäärane, kui see on majanduslikult põhjendatud.“ [8] (translation: a rent increase is not excessive if it is economically justified; VÕS § 301 lg 3) – the key question in a dispute is whether the increase has an economic reason.
• „Üürnik võib vaidlustada eluruumi üüri suuruse ülemäärase tõstmise käesoleva seaduse § 301 tähenduses 30 päeva jooksul selle talle teatavaks tegemisest.“ [2] (translation: the tenant may challenge an excessive increase in the rent of a dwelling within 30 days of being informed of it; VÕS § 303 lg 1) – the deadline for a challenge is short.

What to do

1. Check your lease: is it open-ended or fixed-term, and does it contain an agreement on rent increases? For a fixed-term residential lease, an increase agreement is valid only in a lease with a term of at least three years (VÕS § 299 lg 5; VÕS § 300 lg 1) [1] [4].
2. Check the notice: was it given in a form reproducible in writing at least 30 days before the increase, and does it state the new rent, the start date, the reasons and calculation, and how to challenge the increase (VÕS § 299 lg 2) [1]? A mere reference to the market price is not enough (Supreme Court judgment 2-16-10710/78) [7].
3. Note the date you received the notice: you have 30 days to challenge the increase (VÕS § 303 lg 1) [2] and, if the rent is raised under VÕS § 299, 30 days from receiving the notice to terminate the lease because of it (VÕS § 303¹) [3].
4. If you believe the increase is not economically justified, challenge it in time (VÕS § 301 lg 3; VÕS § 303 lg 1) [8] [2]. If no agreement is reached, file a written application with a rental committee or go to court (ÜVLS § 1 lg 1; ÜVLS § 5 lg 1) [9] [11].
5. If the rent is raised under VÕS § 299 and you decide to move out instead, terminate the lease within 30 days of receiving the notice of increase, giving 30 days' notice (VÕS § 303¹) [3].

Frequently asked questions

How often can the landlord raise the rent?

For an open-ended lease of immovable property, the landlord is presumed to be able to raise the rent each time a year has passed since the contract was concluded (VÕS § 299 lg 1 p 1) [1]. In a lease with a term of at least three years, an increase agreement is valid only if the rent increases no more than once a year (VÕS § 299 lg 5; VÕS § 300 lg 1 p 2) [1] [4].

Can the landlord threaten to end the lease if I challenge the increase?

No. A rent increase is void if the landlord warns the tenant that he will terminate the lease if the increase is challenged (VÕS § 299 lg 3) [1].

Is it enough if the notice says the new rent matches the market price?

No. According to the Supreme Court, the requirement is not met if the only reason given is that the rent is in line with the market price; the notice must contain both the reasons and the calculation (Supreme Court judgment 2-16-10710/78) [7].

Can the landlord pass building renovation costs on to the tenant and also raise the rent?

A tenant of a dwelling bears the costs of maintaining and improving the building, to a reasonable, proportionate and foreseeable extent, only if this was agreed when the lease was concluded in a form reproducible in writing. If the tenant bears the costs of improving the building, raising the rent because of the same improvements is void (VÕS § 292 lg 1¹) [6].

Is there a rental committee in every municipality?

A rental committee may be set up by a local authority (ÜVLS § 2 lg 1) [10]. A committee resolves a dispute over a dwelling outside its area if the local authority concerned has an administrative contract with the authority that set up the committee (ÜVLS § 1 lg 4) [9]. A dispute can also be resolved by a court (ÜVLS § 1 lg 1) [9].