Real estate guides
Real estate guides serve to advise you in the matters of dealing with real property in Latvia. When foreign investors come to Latvia to do business or immigrate, they usually find themselves in need of premises for various reasons. Residence, offices, retail space and legal company headquarters are the most demanded products on the Latvian property market. Consequently, these guides are designed for anyone, who plans to stay or maintain legal presence in Latvia for any length of time. We provide answers to the following questions:
- how to purchase property abroad?
- where to find the best apartments in Riga?
- what are the options for cheap property in Latvia?
- how to become an owner of an EU property?
- what is the best real estate for sale in Latvia?
- many other questions
The guides, which this article links to, are step-by-step instructions on how to buy, sell, find, assess, rent, lease or build real property in Latvia.
Finding real property
Finding real estate in Latvia starts with defining your goals and aim concerning that property. Here is a list of most common uses for property:
- legal presence (including a legal address required to register any company in Latvia)
- retail premises
- office space
- TRP (Temporary residence permit) acquisition through real estate purchase
The aim determines what sources of information you are going to use in order to find real estate. In general, message boards are most suitable for those, who are looking for cheaper, low-quality (there are exceptions, of course) premises or premises for a short-term stay. This is primarily due to these websites being filled with old and damaged apartaments - searching for good options there is time-inefficient. More serious options, especially the ones related to incorporating in Latvia, require qualified assistance from local real estate and legal support companies. Sometimes this also applies to establishing contacts with local retail space providers, e.g. shopping centres.
For general information about various pieces of real property, one can use government data portals, where it is possible to view certain legal information about any type of property, be it a building or land. You may also want to contact real estate agencies in order to order a valuation or property assessment. This will help you determine of a specific property is priced reasonably and does not include any unwanted encumbrances or any other problems that are not apparent at the first sight.
Buying real property
When you have found a suitable piece of real estate, you can proceed to buying it. This is a two-stage process, consisting of financing the operation and finalizing the transaction.
Unless you possess personal funds that are sufficient to cover all the costs, an external source of financing your real estate purchase is needed. For this, there are two main sources - bank and non-bank real estate credits, also known as mortgage. You are, of course, free to choose any of these two, but, if you are a foreigner applying for a credit in a Latvian credit institution, it is essential to consult a local finance management agency. This is due to the fact, that, naturally, crediting systems of different countries are also different. Such consultations will protect you from mistakes, which may arise because of the lack of experience with the local crediting system.
The other part of the real estate buying operation is related to legal questions: preparing and signing necessary documents, paying government fees and registering with the relevant authorities. The documents in question include not only the transaction agreement, but also a number of documents to be submitted to authorities, such as the so-called 'Application of attestation' (nostiprinājuma lūgums). Once again, it is a lot easier to perform all the operations through a single local real estate assistance firm, which would guarantee the uniformity of all the acts, as well as aid you with the process of payment.
Renting real property
The process of renting Latvian real estate ('renting' as in 'paying money to the owner of a property in exchange for the right of use', not renting out your own property) overlaps with the process of buying, but is generally not as complicated. The question of finding a property remains exactly the same - please refer to the previous chapter.
What differs are the documents needed. When renting a piece of real property, no matter its type - residential, commercial or industrial - a renting contract (īres līgums or nomas līgums in Latvian; there is a difference in these two terms, but in daily conversations they are often used interchangeably) is signed, and it becomes the basis for any interaction between the renter and the tenant.
While many individuals rent premises without proper documentation, on the basis of a verbal agreement only, it is, illegal to do so. While not having a contract is a law violation itself, it also implies a number of other violations - mostly on the renter's part - chiefly tax evasion. In this case, the tenant will lose its tenant status, meaning that it will have no legal place of residence and/or registration. This can subsequently lead to various other problems, from inability to conduct business to the extradition from Latvia. This is the reason why it is very important to consult a law agency when signing such a contract, in order to make sure that everything is in accordance with the law. It is also advisable to look for real estate via a property assistance agency, as it will sort out all the unscrupulous renters who might push you to not conclude a rent agreement.
Selling real property
If you are interesting in selling a Latvian property you own, e.g. to fund another part of your business, it is advisable to start with making sure that all the appropriate documentation is in place. Among other things, it means checking if the property is registered with the Land Book, if no illegal constructions works are to be legalized, etc. Any of these issues can prolong the process of selling and make it unnecessary complicated, because the transaction can not be legally completed until all of them are solved.
The next major step is to determine the prices. While it may be tempting to make the decision based on the initial buying price, it is still worth consulting a property valuation company. This is because any real estate can accumulate encumbrances and change its legal status based on its age and/or condition, and not all of these changes are noticeable or even known to an untrained individual.
Another major property selling aspect is making sure that all the relevant taxes are paid. When you sell a property, you gain income, which, in general, can be viewed as a source to be taxed. However, this highly depends on the type of property and on the status of your ownership, which can drastically change how relevant taxes should be paid - in full, diminished or not paid at all.
Leasing real property
Leasing Latvian property, in the context of this article, refers to the process of renting out a piece of real estate, i.e. someone pays you money exchange for acquiring the right of use of the property in question. The process of leasing out is somewhat similar to selling your estate, meaning that one should start with making sure that the the premises in question are legally sound (proper registration, no illegal parts constructed, etc.).
The next step is to valuate the property, but this also depends on the way you to choose to put the property on the market. If you decide to do everything yourself, it would be wise to outsource the valuation process to a specialized agency. Of course, you can adjust the price yourself after that, but such an assessment will nevertheless give you an understanding of the real value of the property.
An essential reminder is that leasing out a property means generating taxable income for the renter. As a consequence, one must either register as a taxpayer and legal person and pay a certain set of taxes, or not register and pay the taxes under different circumstances. This choice is highly dependent on both the rent income and the preference of a renter, which is why it would be beneficial to consult a tax management firm beforehand.
Building real property
Building real estate in Latvia heavily depends on what is it that you would like to build. Thus, it can be either an easy or a complex process, but nevertheless it will be highly individualized in each particular case. It must be noted that even the smallest constructions works must be legalized through appropriate documentation. This documentation, in its turn, depend on the legal type of building you would like to build, demolish or renovate, which is why it is advised to start any such procedures by consulting a Latvian real estate guiding agency.