Real estate in Latvia

Latvia is distinguished by its business friendly real estate market. The average A-class office space rent price in Riga is 14 EUR/m2 - the lowest of all the Baltic countries. For B-class offices the average price is 10 EUR, again the cheapest price among the Baltic capitals. The average living apartment price in Riga is 664 EUR/km2 for mid-level housing estates, and the average price for high-end apartments in the centre of Riga is approximately 1 063 EUR/km2.

Buying real estate

Buying real estate in Latvia as a part of market entry processes is an easy and straightforward task. The only noteworthy issues here is that the real estate in question must be bought separately from the land it is built on. The purchase of land by foreigners must be allowed by the local government, where each case of purchase is reviewed separately.

Before purchasing a real estate in Latvia, the title of the immovable property needs to be verified by the respective authorities. It is an online procedure and costs either 2.85 EUR (online) or 4.27 EUR (in person).

When buying a real estate, the buyer and the seller draft a preliminary contract. If both parties are satisfied with it, they sign the contract and the buyer pays 10% in advance as a deposit. Then, the buyer's law consultant (solicitor) draft the contract of purchase. Both parties sign this final contract in the presence of a notary, and upon this the property is sold to the buyer.

Registering real estate

Before a purchased real estate is legally transferred to the buyer, he/she must register it with the National Real Estate Cadaster of Latvia. The procedure is rather straightforward, but may take up to 10 business days to process. There is also a fee for registering the property, which consists of several parts:

14.23 EUR

title registration fee

7.11 EUR

registration certificate fee

2% of either the real estate price or the purchase price, whichever is higher

title registration stamp duty; cannot exceed 42 686.15 EUR

It should be noted that land and buildings are registered separately, the same as it is with selling them.

Real estate construction

If a business intends to build its own premises in Latvia, it must first acquire a building permit from the local municipality. The government will then decide if you building-to-be corresponds to the general layout and the planning of the city and does not violate any rules of that particular area. If the permit is issued, it will come together with technical requirements for the premises.

Then, there is a number of requirements, approvals and permissions to be acquired from the related specialist institutions:

• technical requirements from the Latvian Environment Agency
• technical requirements and design approval from a water and sewage company
• an approval of the building design of the premises
• an approval of the building conditions

After all the clearances have been acquired, the premises must be connected to the water and sewage system.

In the process of building, there will be three inspections from government agencies: the Latvian Environment Agency, the Fire Safety and Rescue Department, and the Acceptance Commission at the very end. The Acceptance Commission will issue a certificate, proving that the new building correspond to all the government standards. After that, the building must be registered with the National Real Estate Cadaster of Latvia.

Electricity supply

The reliability of electricity supply in Latvia is rated as high, meaning power outages are uncommon and tools to prevent and repair them are reliable. This is important, considering that almost any building need some kind of electricity supply to function.

Getting electricity in Latvia is a straightforward, but lengthy procedure. First, a business needs to submit an application to the 'Sadales Tīkls' JSC in order to receive the necessary technical conditions. It is a free procedure, but requires up to 14 calendar days to complete. Then the business needs to hire an electrical design company to plan the network layout and implement it. This may take up to 3 months. Finally, when the electrical infrastructure is complete, the business may sign an electricity supply contract with a relevant provider.

Real estate taxes

If a property is used for business purposes, a tax of 1.5% is payable on the cadastral value of the real estate. This, however, is a default rate and can be modified by the municipality, which can set the property tax at 0.2% to 3% of the cadastral value. The tax can be deduced for income tax purposes, but this applies only to property used for business.

Immovable property unrelated to business also must pay a real estate tax, which has several margins:

• up to 53 000 EUR - 0.2% of the cadastral value
• 53 001 EUR to 100 000 EUR - 0.4% of the cadastral value
• over 100 000 EUR - 0.6% of the cadastral value