|
 Country Owerview
Latvia is situated on the eastern shore of the Baltic sea, sharing
borders with Lithuania to the south, Estonia to the north, Russia to the
east and Belarus to the southeast.
Territory and population
The area of Latvia totals 64,000 square kilometres with 500
kilometres of coastline. The population is a little less than 2.5
million people, of which 58% are Latvian, 29% are Russian, and 4%
Byelorussian. Ukrainians, Poles, Lithuanians, Jews and others reside in
Latvia in small numbers.
Population rates within Latvia are low, with nearly half the country
living in Riga or its environs. The six largest cities and their
population statistics are as follows: Riga (800,000), Daugavpils
(117,000), Liepaja (97,000), Jelgava (71,000), Jurmala (59,000) and
Ventspils (47,000).
Latvia is divided into four historical regions: Vidzeme, Kurzeme,
Latgale and Zemgale. The highest peak is Gaizins Kalns, standing at
311.5 meters. The climate in Latvia is moderate with distinct seasons.
Summers are generally warm and short. Autumn and spring are relatively
mild and rainy. Winter weather is cold and fluctuates a great deal, with
some years snowier and colder than others.
Languages
Latvian is the official language of the Republic of Latvia. Russian
is often spoken as well. Both English and German are spoken to some
degree, with English becoming increasingly common.
State political system
Latvia is a democratic republic. Currently, 1.8 million residents
have the right to vote. However, 480,000 residents continue to bear
“alien” passports, and are not entitled to vote in parliamentary or
municipal elections. The Prime Minister is appointed by the President
of the Republic and is the head of the government. The President of
Latvia is elected by the Parliament for a four year term. The President
possesses little real power, but can block some parliamentary decisions.
International relations
After the restoration of independence in September 1991, Latvia has
sought to join various international organisations. In April of 2004
Latvia became a member of NATO and in May of 2004, a member of the
European Union. Latvia is also a member of the WTO.
How to Get Visa to Latvia
EU
Citizens only require identity cards to enter Latvia. European Economic
Zone (EEZ) citizens require passports. Such citizens may stay in Latvia
for up to 90 days during a six-month period without a visa. For longer
visits, you must register with the Department of Citizenship and
Migration for a residence permit.
Citizens of Non-EU/EEZ Countries who do
not Require Visas: Andorra, Argentina, Australia, Bolivia,
Brazil, Brunei, Bulgaria, Canada, Chile, Costa Rica, Croatia, El
Salvador, Guatemala, Honduras, Hong Kong, Israel, Japan, Macao, Malaysia,
Mexico, Monaco, New Zealand, Nicaragua, Panama, Paraguay, Romania, San
Marino, Singapore, South Korea, Switzerland, The Holy See , United
States, Uruguay, and Venezuela.
Why invest?
Property prices have been rising in Latvia over the past few years, the
most significant increases being seen in the Capital, Riga, where some
areas saw price rises of an average of 30% last year. Latvia joined the
EU in May 2004, which has brought with it much foreign investment and
seen many multinational companies establish offices or subsidiaries in
Latvia. The combination of a high GDP growth and low interest rates (under
4%) ensures high local demand for property, where the average
residential investment yield is 6-8%. There are no
restrictions upon foreigners wishing to buy and sell property in Latvia.
GDP, Inflation and capital growth
The property price increase in the first 6 months of 2005 has
been determined mostly by inflation and the increase of GPD (8.6% in the
last quarter of 2004). The building in Latvia has increased by 15.7% in
the last quarter of 2004. The capital growth in Latvia has been 30% in
2004.
Economic factors
Apartments in Riga, Latvia’s capital, rose on average by 20-30% in 2003,
and 30% in 2004.
High demand for property is fuelled by high GDP growth (6% average
annual growth over the last four years).
Interest rates have decreased significantly and are the lowest ever,
starting at 3.8%
Liquidity is fuelled by growing mortgage loans. Outstanding mortgage
loans in Latvia total only 4.6% of annual GDP. Compared to the EU
average of 48% of GDP, mortgage lending has a long way to grow. It is
estimated that over 650 million EUR of increased lending will come to
the Latvian housing market over the next four years.
Per capita living area in Latvia is 23m2, half the EU average
Yields and taxes
The average residential investment yield is 6-8%
There is no capital gains tax on properties that have been privately
owned for more than a year. If owned for less than a year the capital
gains tax is 25%.
Income tax on collected rent is 25%
The advantages owning real
estate in Latvia
- Constant price growth tendency
- No limitations on real estate purchases
- Trouble-free visa approval
- Competitive credit offers from local banks
Property purchase and Mortgage
For the last two decades real estate
market prices in Latvia have been constantly growing. Since 1998 the
prices raised by 300% on average, land prices - by 150-250%, commercial
property prices - by 70-120%. The legislation of Latvia provides foreign
investors an opportunity to purchase or rent real estate property with
virtually no limitations. All real estate is entered in the central land
register - the Land Book, protecting ownership rights for the property
and land. Latvian banks offer competitive mortgage rates for foreigners
willing to finance their real estate purchases in Latvia.
There are no restrictions upon EU
citizens to buy a property in Latvia including land for residential
building. There are only restrictions when buying an agricultural or
forest land – only Latvian citizen can buy it or a company if at least
51% of its shares are owned by Latvian citizen. The mortgage payment
can’t exceed 40% of your monthly income and Latvian banks are ready to
give a loan up to 90% of the property value, interest rate can be as low
as 3.5% per year and the term of the loan up to 40 years.
Reccommanded banks:
Hansa Banka,
AB.LV,
Nord
LB,
Parex
banka,
Krajbanka,
Unibanka,
Latvijas
Banka a
Hipoteku banka
Terms
It usually takes 1-2 months to go from starting a deal to
securing the purchaser's property right.
Legalization expenses
During the legalization process the purchaser bears the
following expenses:
- The cost of the purchased object
- The cost of real estate value estimation (depends
on the object, starting with Euro 100)
- The State duty (registering in the Land Book -
2% deal value interest)
- Land registration fees: no more
than Eur 100
- Notary expenses (depends on the documents,
starting with Euro 250)
- Insurance: 250Eur depending on
the type and size of the property
- Bank fees: 50Eur + 1% of the
mortgage amount for arranging the loan (this can be added on to the
mortgage)
- In total it should not exceed
1000 - 1500Eur for completion costs.
Taxes
- Individual investors can declare rent as ordinary income and are
taxed accordingly at the standard rate of 25%. Loan interest and
improvements are both tax deductible.
- There is no capital gains tax if the property is owned for more
than one year.
Vit Klima
|
604 568 553 |
