The Property Banks Buyers Guide to Latvia
The property market in Latvia
seems to be increasing in appeal almost daily as more properties
become available for sale at such incredibly attractive prices. This
guide to the property buying process in Latvia covers all the
details for overseas real estate investors.
Because there are very few restrictions on foreigners wishing to buy
property in Latvia the market has gained wide appeal and foreign
direct investment into the real estate sector is now flowing freely.
If an overseas property purchaser wishes to own land or property
other than an apartment in Latvia they will have to incorporate a
local company structure in order to do so. A company can be
established in 7 - 10 working days at a cost of around GBP 400 by
any lawyer or estate agent - which takes away any stress from the
investor. The process is so common that buyers should just consider
it an additional step and small fee in the whole property buying
process in Latvia.
As with all emerging markets it cannot be stressed strongly enough
that independent legal representation for the investor is an
absolute must. The intricacies of property law in Latvia are such
that a lawyer is a necessity to ensure a property’s title deeds are
in order and that any real estate being bought is not protected by
the state from being developed for example.
Those interested in property investment in Latvia can choose to
employ the services of a lawyer before beginning their search or, at
the latest, once they have submitted an offer to purchase a
particular property. In Latvia the asking price for property is
usually inflexible but it does often contain the estate agent’s fees
and also the VAT; it’s worth bearing these facts in mind when
looking at properties and checking which if any will incur
additional agent’s fees or value added tax.
In terms of whether to solicit the services of an estate agent, it’s
very much up to the individual to decide - however, as Latvians will
tell you, no one know Latvia better than a Latvian therefore a local
estate agent may well be aware of properties available for sale that
match an investor’s objectives perfectly, thus making the whole
search process that much simpler.
Once a suitable property in Latvia has been found and an offer made
and accepted, it’s usual to sign a preliminary contract that is
conditional to satisfactory searches being conducted. When the
contract is signed a 10% deposit is usually paid. This can be held
in an escrow account by the lawyer or notary handling the legal side
of the property buying process.
As with the majority of emerging real estate markets worldwide there
are occasionally issues in Latvia relating to the correct
registration of title deeds with some properties being without title
deeds and some having mortgages and claims against them. It is
therefore imperative that the investor’s solicitor conducts thorough
and detailed research and examination of the specific property’s
title deeds in the central land registry known as The Land Book
before the Notary Act is signed and the sale completed.
Having paid the 10% deposit the property will be removed from the
open market while title searches are conducted. Once all is found to
be in order with the property the Notary Act or Contract of Purchase
can be drawn up by the buyer’s solicitor and this will then need to
be signed in front of a notary in Latvia, or in the buyer’s local
Latvian embassy if they cannot be in the country on the day of
contract completion.
If a real estate investor in Latvia chooses to purchase off plan
then this final contract is not actually signed until the property
is completed. Property taxes in Latvia are an additional 1.5% of the
value of the property as assigned by the state; this value is always
lower than the actual purchase price of the property. And a property
investor should be aware that they will also have to pay their
lawyer’s fees, state duty of 2% for the title deed to be registered
in their name and sometimes a value estimation fee of around GBP
100.