Guide to Buying Property in Latvia
Latvia Property Market
Since the liberation of the Baltic states, since
the countries of the Baltic (including Latvia) regained
their independence, there has been nothing short of
a remarkable building boom in every major urban center
in the region. In addition, there is far more activity
by foreign nationals in the Latvian real estate market.
Historically, foreigners paid premium prices -- due
to additional taxes and other charges and assessments
-- when it came to purchasing real estate in Latvia.
However, beginning the mid-1990s, the Latvian government
took what amounted to rather drastic steps to eliminate
the monetary penalties that accrued to foreign investors
who were interested in purchasing real estate in that
country. In today's Latvia, a foreign national essentially
stands in the same shows as a Latvian citizen when
it comes to the purchase of real estate, when it comes
to the costs associated with buying property in
Latvia.
Investment Property in Latvia
One of the most significant changes that has occurred in
the Latvian real estate market since the turn of the century,
since the dawn of the 21st century, has become the heavy
activity of foreign nationals in that particular real estate
marketplace. At the present time, foreign nationals heavily
are involved in the development and ownership of real estate
projects and enterprises throughout Latvia. Foreign investors
in the Latvian real estate market have initiated fairly
significant development projects in all of the major urban
centers in the country as well as in some more remote and
rural areas as well. In this process, many foreign nationals
from different countries around the world have begun to
realize some very significant profits from these real estate
ventures.
Most real estate analysts predict that the number of foreign
investors who are actively participating in the Latvian
real estate market will continue to increase over the course
of the coming two decades. There remains much development
and modernization to undertake throughout the country --
and a seemingly bottomless number of foreign nationals who
are interested in diving into the Latvian real estate game
not only today but well into the future .
Residential Real Estate in Latvia - Single Family Properties
Many foreign nationals have taken to purchasing single family
residents in different parts of the country. Indeed, many
of these foreign real estate buyers are purchasing older,
quaint properties. Throughout the country, there truly are
some magnificent older properties on the market.
With that said, and considering the age of this type of
real estate, foreign nationals strongly are encouraged to
undertake a very thorough structural assessment of these
types of properties before they invest in them. Once a buyer
enters into a sales agreement for real estate, the concept
of "buyers beware" really does enter into the equation in
Latvia. Truly, it is the responsibility of the buyer to
make certain that the real estate he or she is purchasing
is in sound and stable condition. In Latvia, a buyer really
does take the property in the condition it is in -- including
hidden defects -- unless the seller has engaged in serious
fraudulent conduct in hiding different negative aspects
of the property.
Residential Real Estate in Latvia - Apartments
Apartments in Latvia - Throughout the Baltic region there has been a tremendous amount
of development when it comes to the construction of apartments.
This holds true in every single major urban area throughout
the Baltic states. Latvia is following this same trend.
Many foreign nationals have been highly involved in the development
of these new apartment projects in the major Latvian urban
centers. In addition to being involved in the development
and construction of these properties, foreign nationals can
also be found making the purchase of a great number of these
apartments. Due to the economic growth that is being experience
in the Baltic region, many foreign nationals can be found
spending a goodly share of each year within the country. In
this regard, these business men and women do require places
in which to reside and are finding purchasing apartments in
Latvia to be a perfect solution .
Holiday Property in Latvia
Latvia is one of the most historically interesting countries
in the entire world. As a result, since Latvia regained its
independence from the Soviet Union, tourism has become a major
industry and enterprise in the country. Thousands of foreign
nationals stream into the country each and every year, including
those that are making regular and extended stays in the country.
With the growth in the tourism industry in the country, a
growing number of foreigners are now making the purchase of
real estate for holiday usage. When this trend commenced in
the late 1990s, many foreign nationals were buying apartments
in the major cities in the country and in the major resort
communities, particularly along the Baltic coast itself. Since
the turn of the century, there additionally has been an increase
in the percentage of foreign nationals who are buying more
substantial residential dwellings -- including villas and
larger homes -- in both urban and rural areas in the country.
These larger residences are proving wonderful destinations
for people who prefer extended holidays away from the hustle
and bustle of every day life in the day to day world.
Mortgages Options
When considering the options for a mortgage on your overseas
property there are a couple of choices to consider:
- Do you consider raising finance on your existing property
in the UK to cover the whole cost of your purchase abroad?
A good idea if the interest rate in the country in question
is a lot higher than it is here in the UK as you will
pay a lot less in monthly repayments.
- Do you secure a mortgage against the property from a
local bank in the country of purchase? This can be a wise
option especially if the interest rate is lower than our
current UK interest rate. Most overseas mortgage / bank
lenders will require upto 30% deposit on mortgages. However,
you will need to give some thought to how you will service
your mortgage payments each month especially if you are
not living or earning in that country as you may well
lose out on exchanging money each time to cover monthly
expenses. Check out our Foreign
Currency page to see how you can save money in this
example
- Some Builders and developers may well offer their own
mortgage facilities on their properties for sale. This
can be beneficial to both parties depending on the logistics
of the mortgage or loan facility. Always check and compare
with the two options above before making your final descision.
For more details on Mortgages
in Latvia visit our Mortgage page in the Latvia
section.
Specific steps to Buying Real Estate Property in Latvia
When it comes to the buying selling of property in Latvia, it is important to remember
at the outset that there is very little dickering over price.
In many other countries around the world, the listed sales
price for a piece of real estate really is intended as a starting
point for negotiations. In many instances, a seller intentionally
hikes the listed sales price upward to allow for some bargaining
space and room with a potential buyer of the real estate.
In Latvia, and in other Baltic countries, the listed sales
price more often than not likely will be the ultimate selling
price of the real estate. Simply, there just is not much bargaining
or haggling over the price of real estate in Latvia and the
other nations of the Baltic region.
In Latvia, a notary performs the major functions associated
with the buying and selling of real estate in that country.
The notary is responsible for holding in escrow any deposit
posted for the property by the buyer, making certain that
the title to the real estate is genuinely held by the seller
and making certain that there are no liens or encumbrances
on the real estate.
The initial step in the real estate sales process in Latvia
is the execution or signing of the initial contract for sale.
It is at this juncture that the seller will pay to the notary
a deposit, which normally is in the amount of 10% of the overall
purchase price for the real estate.
After the initial contract has been executed, the notary will
go about his or her business in determining if the title to
the real estate properly is held by the seller and to make
certain that there are no encumbrances on the title that will
impact a transfer of ownership to the buyer.
It is also at this juncture that the buyer needs to have a
structural engineer check out the real estate being purchased.
As was referenced previously, this is important when dealing
with an older property. However, and unfortunately, there
have been a notable number of situations in which newer construction
has not been undertaken in an appropriate and professional
manner. In some instances, builders take terrible shortcuts
(like not putting studs in walls) which can have horrific
consequences down the road. Thus, and once more, a thorough
inspection of the real estate is necessary on the part of
the buyer. As an aside, it is imperative that the initial
contract contain an escape clause for the buyer -- including
a refund of his or her deposit -- if the structural report
reveals serious defects with the property.
Once these various tasks have been concluded, the buyer and
seller more forward to the execution of the final agreement
which will result in the conveyance of the real estate from
the seller to the buyer. Upon the execution of this contract,
the title will be revamped to demonstrate the ownership interest
of the buyer in the subject real estate. The title will then
be filed with the land registry authorities in Latvia.
As a final note, foreign nationals (and Latvian citizens as
well) need to remember that there is a value added tax attached
to and associated with the sale of real estate in Latvia.
The value added tax normally amounts to 18% of the total purchase
price of the subject real estate. Therefore, it is vital that
the buyer keep this tax in mind when he or she is looking
for financing and a mortgage loan. The value added tax assessed
by the Latvian government in a realty transaction is significantly
higher than similar taxes imposed in some other countries
around the world
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Further Reading on Latvia