Renting out property in Latvia
The process of renting out Latvian real estate is rather straightforward, and is somewhat similar to the process of selling a property, but simpler. While a specialized guidance of a real estate agent is not obligatory, it may still be useful to hire one for certain services, especially when it comes to paying taxes.
In general, renting out a Latvian property involves the following steps:
- document preparation
- determining the price
- searching for a buyer
- signing a rent agreement
- registering residential tenancy in a Land Book (if needed)
As a rent contract does not include a change in ownership, merely in residence rights, the only document you are likely to need in most circumstances is the rent contract itself. This is further reinforced by the fact that in Latvia people who are leasing a property are seldom interested in anything other than the price and the living conditions. Nevertheless, below you can find a list of documents that might be asked for by your potential tenants, so it would be wise to prepare them in advance, just in case.
- a Land Book excerpt
- A Land Book excerpt contains information on the ownership and legal status of a property, including thing such as easements and encumbrances. The data basically act as a proof to the fact that the property leasing deal is legal and honest.
- Technical and landscape documents
- The State Land Services provides a variety of technical documentation about any property, including building and land plans. Sometimes tenants are interested in the building/apartment plan, especially if it is residential property you are selling. Naturally, for industrial and commercial real estate the surrounding land plan is almost essential, as their infrastructure often strongly influences the area in the vicinity.
Determining the price
For a property renter, the price of a real estate is weighed against its value to him/her, which means that determining a correct and attractive price is the question of making or breaking the deal. To set a correct price, it is advisable to follow certain principles:
- Do not set the price based on what is offered by others
- According to Latvian real estate experts from ‘Realia’ property agency, one of the most widespread mistakes in setting a price is looking at what others ask from their potential tenants. It is important to remember: the price that real estate owners ask for their property (offer price) does not always equal what they eventually get as a result of negotiations (deal price). Deal prices are known to real estate agencies, and they usually are willing to share the knowledge with their clients, which is why it is advisable to become one.
- remove personal belongings and objects that are not sold together with the property from the frame
- make wider, horizontally positioned pictures that include at least three walls, or at least as much horizontal space as you can - this helps understanding the real appearance of the space
- take the photos at the level of human eyes, so that the potential buyers can have a better feeling of the premises
- do not forget to show all the vital parts of the property, including as many internal spaces (e.g. rooms in an apartment) as possible and auxiliary property that is sold together with the main one (e.g. land, parking spots etc.)
- prepare a lease contract, including the details of a property, the obligations and liabilities of all parties, as well as the procedure of the actual transfer of rights and money
- discuss the contract with the tenant and sign it
- if stipulated in the contract, wait for the buyer to transfer any beforehand payments
- supply the buyer with all the necessary information and object related to the property (i.e. keys, auxiliary building accessibility information etc.)
Preparing a presentation
Before making a decision, buyers usually wish to take a look at the property in question, both in person and even before the visit. This is why preparing a good presentation is essential - it has a high chance of determining the first impression, which in some cases decides the fate of the whole deal.
First, a pre-visit presentation is necessary, as almost all real estate agencies include online advertisement in their marketing strategy, and that requires visuals, specifically photos, of your property. The following are some tips on how to make a good property presentation photos:
When employing the services of a real estate guidance agency, you usually do not need to worry about good photo presentation, as they hire professional photographers to do the job. So, if you want to save time and ensure high quality, it is advisable to hire an agency.
The preparation for a client's visit is somewhat similar to preparing the premises for taking good photos, and follows the same principles - exclude anything unrelated, include everything related, make it understandable for the buyer. If it is impossible to remove personal belongings, try to place them in an orderly fashion. If the piece of real estate is big, prepare a building plan, so that any buyer is able to understand which part of the property is what. And, once again, do not forget to demonstrate auxiliary and common property, such as basements in apartment complexes.
Searching for a buyer
The best way to search for a tenant for your property is to hire a real estate agency. Their marketing strategies usually combine all the most effective methods, both digital and offline. Even more so, agencies have their own client database, which is a source of information unavailable anywhere else. Provided that the property in question does not have any critical flaws and the pricing is adequate, such an approach is almost guaranteed to yield good results and find you a number of potential tenants.
When acting on your own, the most viable option is to use various online advertisement portals, including ones not necessarily specializing on real estate. Social media marketing is also viable, but without special knowledge will mostly be limited to posting in thematic real estate groups.
Meeting with potential tenants and negotiating is the step where all the previous preparations start paying off. One should be prepared that the tenants can be people of all kinds - some are only be interested in taking a look at the property, others will be skeptical form the very beginning, others will neutral or optimistic. Same with the time of visits - it may be very random, and will need to be adjusted to each buyer individually. Once again, hiring a real estate agency negates the necessity to meet with buyers personally, as a specialized professional will handle the job instead.
Signing the contract
Signing the rent lease contract is the stage when the when the tenant acquires the right of residence in your property and the deal is closed. Depending on the contract, the tenant might also pay some money in advance.
In order to grant the right of residence, you will need to perform the following steps:
Registering residential tenancy in a Land Book
If you rent out your property as a legal person, registering a tenant in a Land Book is technically optional, but highly advisable. Any residential property belonging to a legal person that has no registered residents is a subject to a 1.5% real estate tax. However, if it is registered as a property being rented out, the tax rate is reduced to 0.2% to 0.6%, depending on the decision of a particular municipality. Naturally, it is in your best interests to register in a Land Book, as it means paying less taxes.
When all the steps are completed, the deal can be considered closed, and you have successfully rented out your property.