Former Tallinn deputy mayor urges fix for Estonia's unregulated short-term rental market

Former Tallinn deputy mayor Joosep Vimm has criticized Estonia's Ministry of Economic Affairs and Communications for postponing decisions on regulating short-term rental apartments for four years, repeatedly commissioning new studies instead of acting.

According to Vimm, an estimated one-fifth of Tallinn's accommodation beds are located in short-term rental apartments. Because no functioning registry of these properties exists, it is unclear who the potential taxpayers are or how much tax revenue the state is losing. The Estonian Hotel and Restaurant Association has estimated the losses at nearly €50 million a year.

Unfair competition and a deteriorating living environment

Vimm points out that the law does not classify many short-term rental operators as accommodation businesses, meaning they are exempt from standards and guest registration requirements. This gives them an unfair pricing advantage over operators who pay their taxes in full.

At the same time, residents of Tallinn's Old Town have for years complained about a sharp decline in their quality of life. Recurring problems linked to neighboring short-term rentals have pushed some permanent residents to give up their homes — homes that are often then listed for short-term rental themselves, reinforcing the trend.

At a 2023 tourism roundtable hosted by the ministry, then-Minister Tiit Riisalo and officials acknowledged the problem but chose to wait for the effects of new EU rules on intermediary platforms and to conduct further analysis. Vimm says he predicted at the time that the ministry would use the analysis to shelve the issue — a prediction he says has now been confirmed, with the ministry stating outright that no regulation is needed.

Vimm warns that unchecked growth of short-term rentals risks further driving up housing costs, as has happened in other European cities, pointing to anti-tourism protests in Spain as a cautionary example. He stresses he is not calling for a ban, but rather for giving local governments additional powers, formally classifying short-term rental apartments as accommodation establishments, and creating the necessary registry.