The rental contract

According to fair rental practices the rental contract should always be written. It is not advisable to trust in a verbal agreement. It is difficult or even impossible to prove the contents of a verbal agreement, if there is dispute considering the contract. If the contract is made for a fixed period, the contract must be written. A contract made online is also considered to be a written contract.

The rental contract has the personal information of the tenant and the landlord. It should also have the contact information for both the tenant and the landlord. It is advisable to use the contact information that can be used when matters considering the rental apartment are discussed. The tenant needs to know where or to whom tenant needs to inform about possible damages that come to the rental apartment. If the landlord lives abroad it is even more important to have the right contact information. Both parties need to keep their contact information up to date and let the other person know, if there are any changes to the contact information.

Both parties need to show their identification to each other. In addition, the landlord needs to tell the tenant what their right to rent the apartment is based on. According to the law the landlord has the right to check the credit information of the tenant.

The rental contract must be clear and simple. The rental contract should not be ambiguity. The rental contract must contain everything that has been agreed on and all the terms of the contract. If the terms change during the lease these changes must be written on the contract as well. These changes must be included to every copy of the rental contract there is. This can be done with attachments. If the rental apartment is rented furnished it is advised to make a list of all the furniture and attach the list to the rental contract. The rental contract must include a list of all the attachments the parties want to have as a part of the contract. These attachments need to be in accordance with the law and the fair rental practice.

It is advisable to check the condition of the apartment before making the rental contract. When the tenant and the landlord check the condition of the apartment together before signing the contract it is advisable to write down all the observations and take pictures. This benefits both of the parties. 

There are rental contract forms in the internet that can be used when making the contract. It is advisable to notice that even though there are rental contract forms available online, not all of them are in accordance with the law or with the fair rental practice.  You can find rental contract forms that are trustworthy from Kiinteistömedia's online store.

If the rental contract forms do not seem like the right choice for you, you may use these forms as a guidance and write your own contract. If there is not enough space in the rental contract forms, it is not a reason to make an unclear contract or to leave things out. 
 

Things that should be agreed on the rental contract
 

1. The length of the contract

It is possible to negotiate the length of the rental contract.
For the length of the rental contract there are two options. These options are a fixed term contract or a contract that is valid until further notice. A contract that is valid until further notice ends when either of the parties gives a written notice of termination. If it is the landlord who terminates the contract the term of notice is three months if the rental contract has not lasted over a year. If the contract has lasted for over a year the term of notice is six months. When the tenant terminates the contract the term of notice is always one month. The law regulates the length of the term of notice. It is not possible to lengthen the landlord's term of notice or shorten the tenant's term of notice in the rental contract.

If the parties of the rental contract want to secure the length of the rental contract it is possible to agree when is the first possible date to terminate the contract. The parties can for example agree that the first date to terminate the contract is 1.4.2021. No matter when the contract is terminated the term of notice will start from the date 1.4.2021. In this example the notice of termination can be dated 1.4.2021 and the term of notice will be the month of May if the tenant is the one to terminate the contract. If the landlord would terminate the contract the term of notice would end in the end of July if the contract has lasted less than a year. If the rental contract has lasted over a year the term of notice will end in the end of October.

When the contract is made for a fixed term the start and end date of the contract is negotiated when making the contract. A fixed term contract ends when the term ends. A fixed term contract binds both of the parties. It is not possible to terminate or suspend a fixed term contract. Only way to end a fixed term contract before the term has finished is with an agreement. Both parties should agree to end the contract. If you are thinking about committing to a fixed term contract it is important to really consider if you can live in the apartment and pay the rent for the whole term. It is also important to consider that according the law a fixed term contract should always be written. 

 

2. The rent and user fees

Paying the rent is the main duty of a tenant. 
According to the law if the rent is paid with money it should be paid on the second day of a month unless the parties have agreed something else.  If the second day of the month is a Saturday or a public holiday the due date is the following weekday. It is sufficient if the rent leaves the tenants account on the due date. In other words, on the due date the rent does not need to be on the landlords' account. According to the fair rental practice the tenant should let the landlord know if they are having any difficulties in payment. If you are ever in a situation where you are not able to pay rent, you should contact your landlord.

If any kind of separate fees are not mentioned in the rental contract, it is considered that the amount of rent contains these kinds of fees. Water fee and the electricity fee are examples of these kinds of separate fees. If there are these kinds of separate fees, they must be paid on the date that is agreed to be the due date.

Usually the amount of rent is discussed when showing the apartment. If the apartment is in good condition the rent is usually always higher than if the apartment was in fair condition. The location of the apartment also affects the amount of rent. If the maintenance responsibility is passed from the landlord to the tenant this should also be considered in the amount of rent. 

 

3. Inspection of the rent (Increasing the rent) 

The parties need to agree on increasing the rent on the rental contract. 
Often the justification for increasing the rent is agreed on the rental contract. The most common justifications for increasing the rent are percent raise or index raise. The index raise is the most common one. The justification for the rent increase and the time of the increase should be stated clearly in the rental contract. 

If the condition considering the rent increase is only possible for the landlord to count the landlord needs to inform the tenant considering the new amount of rent and when it is needed for the tenant to start paying the new rent. Landlord should let the tenant know about this in advance, for example one month before it is needed for the tenant to start paying the new rent. According to the fair rental practice the landlord should tell the tenant about the amount of the rent increase also when it is possible for the tenant to count it by themself.

If the apartment building is a subsidized housing building the rent increase is based on the law called Aravarajoituslaki. This law gives the landlord permission to charge the tenant the amount of rent equivalent to the amount that is needed in addition the other profits to cover the costs of these apartments and fees of the property management.

The most common justification for increasing the rent is the index rate. This means that the rent is bound to a certain index that follows the development of the economy and living expenses. The commonly used index are the consumer price index and the consumer index. When the rent is based on either of these indexes, it should be inspected once a year. The index raise is counted in the following way: The index score of the time of the inspection is divided by the index score of the time when the contract was made, then this ratio is multiplied by the original amount of the rent.

Example:

1663 (the score of the time of the increase) / 1621 (the score of the time of the original contract) = 1,026 (ratio)

The ratio is multiplied by the original rent. The answer is the new increased rent.

Further example:

1,026 (ratio) x 500 € (original rent) = 513 € (new increased rent)

If the parties have not agreed on increasing the rent, according to the fair rental practice the negotiations of increasing the rent must be started six months before the increase is intended to be effective. The increase should be reasonable, and the increased rent should match to the value of the apartment. The increase should not be over 15 percent unless there have been major renovations to the condition of the apartment.