House Hunter: Estonia

Is it easy to buy an apartment in Tallinn?

The problem

The problem

ALISTAIR GANSTON WRITES: My partner and I recently spent a long weekend in Tallinn, Estonia having found some extremely cheap plane tickets on the internet. To our delight we were absolutely blown away - it was beautiful. Particularly striking was the old town with its cobbled streets, onion-domed towers and magnificent old buildings.

Since returning to Britain, we have been playing with the idea of buying a property over there, as I imagine the prices are fairly reasonable and will allow us to buy something that wouldn't be possible for us anywhere else in Western Europe.

Obviously we do have a budget so I'm aware that fairytale castles will be out of the question. I am thinking more along the lines of a spacious apartment in a historical building in the heart of the Old Town.

Could you give us some ideas of prices for this kind of property and recommend some agents selling in the old part of the city? Also, is there a complex buying process involved when purchasing property in Estonia? Is there anything we should particularly watch out for?

KATY POWNALL REPLIES: You are not the first to catch on to the delights of Tallinn. The medieval Old Town is one of the best preserved in the world with attractive grey stone buildings dating from 1400. Since the late 1990s many of them have been restored and some have been converted into beautiful apartments of the type you seek. Brits, Russians and Scandinavians have been buying in Estonia for years and prices, particularly in Tallinn's Old Town, have increased rapidly - last year, prices grew by 12 per cent.

The good news is that prices are still well below the European average. In the Old Town you can buy a two-bed apartment in a restored medieval building for £250,000, and it is possible to get smaller ones for around £100,000.

Due to limited stock, capital appreciation on the sort of property you seek should be excellent and, with tourism really getting a foothold in Tallinn now, rental rates are also good. An average of 5 per cent rental yield should take some of the sting out of the higher than expected outlay.

For lower prices and higher rental yields, search Tallinn's suburbs. Viimsi and Piritia which are next to the beach and 10 minutes from the Old Town. A two-bedroom flat there can cost just £50,000 and offer a rental yield of around 8 per cent.

Buying in Estonia is frighteningly easy; as an EU citizen there is no restriction or limit on you purchasing property there. All property is registered through an efficient Land Registry system, so most is sold freehold. Much like the French system, state-regulated notaries represent both buyer and seller.

They check legal title and oversee the sale. Though these notaries are neutral, it is advisable to seek independent legal advice. The fees and taxes are minimal - typically around 1 per cent of the purchase price and the entire process can take as little as 30 days from start to finish.

You don't mention what your budget is but, should you need it, mortgages from Estonian banks are available to EU citizens at 70 per cent of the purchase price, with interest rates from 4 per cent.

The advice

Property one: A historic apartment in Tallinn's Town Hall Square.

Price: £107,000.

Agent's details: Town Hall Square (Raekoja Plats) is the hub of Tallinn's dining and café scene, so this one bedroom apartment is in a perfect location for absorbing the al fresco culture. Set in a wonderful historical building that was fully refurbished in 2001, the property is 60.5 square metres and boasts high ceilings, large windows and a Finnish-style sauna.

Agent: Property Invest, 00372 648 0388, www.property.ee.

Property two: A historic apartment near the Old Town walls.

Price: £240,000.

Agent's details: In the heart of the Old Town, this lovely two-bedroom penthouse is around 158sqm. It features large windows, jacuzzi, sauna, fireplace and terrace and combines the historic location and building with a very modern interior. All notary fees and taxes are included in the price.

Agent: Churchill Properties Overseas, 01983 550 400, www.churchilloverseas.com.

Property three: A historic apartment on Pikk Street.

Price: £190,000.

Agent's details: This third-floor apartment is just under 140 sqm in area. It contains a traditional sauna and most rooms boast wooden floors, beams and exposed brickwork. The steeply sloping roof in which this apartment is set gives many rooms a very unusual shape.

Agent: Someplace Else, 020-7731 2200, www.someplaceelse.co.uk.

If you would like House Hunter's help in finding a property in the UK or overseas, write to: The Independent, 191 Marsh Wall, London E14 9RS, 020-7005-2000 or e-mail: househunter@independent.co.uk