Financial Services, Latvia, Legislation, Real Estate

Although the legislation will now be reviewed by the Cabinet of Ministers, there are still many objections to the Justice Ministry's proposal, which is why Prime Minister Laimdota Straujuma (Unity) has asked that agreement be reached on the controversial provisions of the legislation.

The Justice Ministry explains that the legislation offers a simple solution to put an end to a problem that has continued for many years. The legislation lays down the procedure according to which apartment buildings and the land parcels they are on will become joint property, that is, apartment owners will be offered to buy the land from the landlord for a fair price, taking into consideration that solving the problem in any other way is nearly impossible.

According to the Justice Ministry, a decision on buying the land under an apartment building will be taken at a joint meeting of tenants in a given apartment building, if more than half of tenants votes for the initiative. In this case, the landlord's willingness or unwillingness to sell the land parcel will be irrelevant.

In three months after that, every apartment owner will have to pay his or her share of the price for the land parcel.

According to the ministry, the state and local governments will provide support by covering the cost of administrative process and determining the precise area of a given land plot. The administrative costs will be covered with money from the state budget and the total amount is estimated at EUR 7 million to EUR 8 million, on provision that 40% of all tenants in apartment buildings located on land parcels that belong to private landlords agree to buy the land plots.

According to the proposal, the current system where apartment buildings are located on land parcels that belong to private landlords could be halted at the beginning of 2020. It is estimated that the financial effect on one apartment owner could be EUR 31.25 a month.

The ministry reminds that, during the land reform, former landlords or their heirs were allowed to restore their property rights to land parcels on which, by the time the independence of Latvia was restored, apartment or other buildings were constructed. According to the State Land Service's data, there are 285,849 buildings located on land parcels that belong to private landlords – 94,254 land plots in total.

Based on the Justice Ministry's data, there are 3,677 apartment buildings, with a total of 110,970 apartments, located on 7,354 land parcels that belong to private landlords. The cadastral value of these land parcels could range from EUR 130 million to EUR 180 million. 30% of all apartment buildings affected by the problem are located in Riga, there are also many such apartment buildings in Jurmala, Daugavpils, Jelgava and Ogre.