Aug. 1, 2016
For citizens of countries of the former USSR (and not only for them) the residence permit in Latvia through the purchase of real estate has long been considered a popular way to get to Europe. The conditions for obtaining the coveted Golden visa up to 2014 were a very attractive: applicants were only required to buy the object in the amount of €143 000, while in most other countries had higher requirements.
In 2016, the Latvian government has made some adjustments in the program of issuing residence permits for investors. Vladimir, the managing partner of the "Baltic house", described to us the process of obtaining and extending a residence permit in Latvia and told about the latest trends in the Latvian real estate market.
Window to Europe: new rules for obtaining and extending a residence permit
In principle, nothing terrible happened, the buyers of real estate in the amount of up to €250,000 can apply for a Golden visa in Latvia. Primary residence permit is issued for 5 years, but it must be confirmed every year. There is now only an additional payment of €5 000, which is payable in the renewal permit for the next 5 years. This applies to those who bought the property after 2014. Foreigners who have acquired Latvian square meters before 2014, should pay this amount after the second "five-year" residence permit.
In fact, measures of the Latvian government can be easily understood. People who have property in Latvia and the right to live in the country, must either regularly deposit a certain amount in favor of the treasury, or sooner or later come to receive permanent residence and thus to integrate into society.
On the other hand, €5 000 in 5 years — not such a big amount. Only €83 per day per person.
Soon in Latvia the time of the elections to the Sejm will begin, there will be also presidential elections. A lot of business-oriented politicians pretend on places there, and they are unlikely to give up income-generating investment program.
Refusals in residence permit
Another nuance: in accordance with the new order, Latvia may stop the process of issuing residence permits to any nationalities, if they feel any kind of threat. Again, there is nothing extra ordinary in this rule — the government is trying to extricate itself from the European refugee problem.
As for the Russian-speaking population, we are not faced with refusals, although are issued about 100 permits. In general, refusals in residence permit for investors in Latvia — is quite a rare phenomenon. The process may take longer time only for citizens of countries such as Iran or Afghanistan.
The main costs when buying property in Latvia is a state duty in the amount of 2% of the amount, as well as a contribution in the amount of 5% to obtain a primary residence permit.
The transaction is made through a Bank, which guarantees the safety of sale. The buyer must open the bank account and transfer money from his personal account. Bank fee may vary, but the average is 0,3-0,4% of the amount. After receiving the papers confirming that the payment has been credited to the account, a complete package of documents is submitted to the Land Committee. The buyer will receive them back within 14 days. After that, the parties to the transaction come back to the Bank, the seller receives the payment.
Who and why is buying real estate in Latvia?
Until recently, 60-70% of buildings in Latvia were built with the expectation of non-resident demand. In addition to Russian-speaking buyers, a few years ago in Latvia were active investors from China.
After the fall of the ruble the quantity of buyers from Russia, of course, has decreased. However, due to the development of the local market, total number of real estate transactions in Latvia has not practically changed. Last year, the most expensive transaction (in Jurmala) was concluded by the citizens of Latvia. Increase in local demand is characteristic for all Baltic countries. In neighboring Lithuania and Estonia are also seeing unprecedented demand at the local market.
Thus, if earlier the local market and the market of non-residents existed separately, now these 2 segments combined, and gradually improve the cost per square meter. This is a positive trend showing that the market is becoming more holistic.
Despite the fall of the ruble against the euro and the dollar, many Russians continue to buy property in Latvia. For some of them Latvia is a quiet and comfortable area for living, leisure or work. Couples with children are coming to Latvia because of good environmental conditions. In addition, there are many good international schools and educational institutions, soft and pleasant climate.
With regard to the economic climate, it is more or less stable in Latvia. Investment in local real estate liquidity will help to keep your assets. So for professional investors Latvia is of particular interest.
What to buy in Riga?
If the locals prefer housing in the far ring of the city — in the residential, green and ecologically clean districts, foreigners often choose properties in the heart of the city. Non-residents are buying 90% of apartments with an area from 100 sq m, located in the Central part of Riga.
Average price per square meter in the capital of Latvia is from €1 200 to €2 500.
A lease business in Riga is quite developed. However, we are talking about a seasonal rental: in summer, of course, houses are rented very well. When the season is over (after August-September), begins the period of silence — up to the December holidays.
Average price per square in Jurmala — from €3 500 to €5 000, there are objects that are for sale at €7 000 - €10 000. This is despite the fact that there is a lot of new complexes currently— for every taste and color. So now there are few transactions in Jurmala. It seems that the prices will decrease over the next few years.
A lot depends on how successful would be the attempts of local authorities to attract in the region of non-Russian tourists. Now Jurmala attracts a lot of Germans, Lithuanians, Estonians.
Saulkrasti is the second largest resort in Latvia. It has many advantages over better known and promoted Jurmala. The beach here is long, the sea is cleaner. However, a large tourist flow is not observed. For these reasons, many wealthy Latvians buy property in Saulkrasti.
Around the city there is a lot of suburban cooperatives. Saulkrasti can be compared with the writers dachas near Moscow. It is quiet and peaceful. Few population guarantees a comfortable stay.
Real estate prices depend on proximity to the sea, location, year of construction and class. You can find good property in Saulkrasti for €1 650 per square.
Text – Alena Eliseeva, ee24
Photocredit Depositphotos.com and flickr.com