Latvia: A Buyer’s Guide

There are no restrictions on foreign property investors buying land in Latvia provided all the correct procedures are followed. In fact, Latvia is currently encouraging foreign investment in the country making it a prime target for property investors. In particular, the off plan market has taken off in the past few years with many properties being snapped up by investors.

Although buying in Latvia is a fairly straightforward process, it is important to note that Latvia is a former Communist state and it suffers the same problem as other former Soviet states have in that land ownership is often hazy – check all land titles carefully before purchasing to ensure that the current ownership is legal.

Why Invest in Latvia?
Latvia encourages foreign investment, including in the property and real estate markets, therefore the buying process should be a fairly smooth one. Latvia joined the EU in 2004 and this gave the country’s economy a massive boost and this boost is reflected in property prices which have been growing since they joined. The country looks set to adopt the Euro in the next few years and this will probably have a positive effect on the economy, and in turn, ensure property prices continue to grow. This all means that property in Latvia could make good returns in the short to medium term.

The most popular part of the country is Riga. Despite being popular, prices remain low. There is plenty of off-plan property available and more is set to come in the next few years. It would be wise to invest now whilst prices are still low and there is still relatively low interest in comparison to other European countries. Buying into the local market is also not a bad idea as wages are continuing to rise meaning rental potential is also looking good for the future.

Latvia Property – The Buying Process
It is advisable to hire a knowledgeable local lawyer to help you through your property purchase – although there tend to be few problems for foreign property investors, there may be slight nuances within regional laws that you need to be aware of.

When you have found a property that you wish to purchase, firstly you must check that it is listed in the local land book and that the ownership details are what you expected. At this point, your deposit for the property should be paid to the vendor – deposits are normally in the 10-25% range. At this point, if you back out of the transaction, you will not receive your deposit back. However, if the seller backs out at this point, they will be required to pay you back your deposit twice as a penalty.

A contract should now be drawn up between vendor and buyer and each party should sign in front of an authorised notary. The contract will then be sent to the local government for approval – there may be pre-emption rights on the property meaning that the local authority has a chance to purchase the land or property before the individual does. Normally, this will not pose a problem as your lawyer should have checked out the pre-emption rights beforehand and warned you if there were pre-emption rights on the property.

Once the contract has been approved by the local authority, the remainder of the monies owed is transferred to a third party’s bank account where it remains until the land registry book has been updated to reflect the new ownership details. Once the bank is satisfied that this has taken place, the money is transferred to the vendor.

You should expect to budget in the region of 5% for taxes and fees, although these will vary from region to region, and company to company.

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