Analytics, Direct Speech, Latvia, Real Estate

The objectives of the housing policy of Latvia include [1]:

- improving the quality and affordability of housing;

- providing a legal base for efficient management of residential buildings;

- assistance in creating a rented housing stock on the territories of local authorities;

- support for energy saving measures in residential buildings.

On the basis of Article 96 of Section VIII of the Constitution of Latvia [2], it is assumed that the strategic goal of its housing policy is to fulfill the right to housing for all categories of citizens. The most vulnerable from this point of view is the low-income category of citizens. This right can be realized by this category of the population by increasing the level of competition in the housing sector, implementing a policy of state support, using state investment and subsidies.

The main principles underlying the housing policy pursued by the state bodies of Latvia are [3]:

- continuity of the administration process;

- selection of optimal management methods;

- preservation and improvement of the residential building environment;

- preventing encroachment into human safety or health, as well as maintaining the quality of a residential building.

To follow these principles and achieve all the tactical and strategic goals, the Law of Latvia "On the Management of Residential Buildings" was adopted in 2009 [4], and later the Law "On Apartment Property" [5]. Further on, in order to improve the process of management of residential buildings, the Department of Housing Policy developed the rules of the Cabinet of Ministers concerning the following issues [6]:

- requirements for sanitary maintenance of a residential building;

- procedure for storing and updating documentation;

- activities to be performed as part of maintenance, current repair, renovation, and reconstruction;

- minimum requirements for energy efficiency of a residential building

Thus, the implementation of the housing strategy can be carried out in the following areas: improving the economic situation, increasing the level of business activity in the construction sector of the economy, as well as the introduction of a number of restrictive measures (such as limiting rent for housing or protecting tenants from eviction). The implementation of the state housing strategy takes place through certain functions, the analysis of which is presented in Table 1.2. The methodological basis for this analysis was developed by the Belorussian scientist M.M. Eremenko [7].

Table 1.2 Housing Policy Functions and Their Implementation in Latvia

Thus, the implementation of the state's functions in housing policy, as well as control over their implementation in Latvia, is carried out by both legislative and executive authorities. Based on the study, it can be concluded that public housing policy issues in Latvia are given close attention with priority to all related issues and trends. The analysis of the socially oriented state housing policy shows that two directions can be distinguished in modern conditions: objective and subjective accessibility of housing for the population [8].

To determine the objective affordability of housing, various financial and economic indicators have been studied, such as the cost of housing, the mortgage lending rate, the real income of the population, etc. To conduct the macroeconomic assessment and comparison of housing affordability, international practice uses such coefficients as the housing affordability coefficient (price-to-income ratio) [9], the share of mortgage payment in the family income (mortgage as percentage of income) [10], the mortgage affordability index (loan affordability index/housing affordability index) [11], gross rental multiplier (price-to-rent ratio) [12] and capitalization rate (gross rental yield) [13].

However, when examining the term "housing affordability", one should study not only the economic possibilities of its free acquisition and maintenance but also subjective categories, namely the level of population activity on the market, expectations of the population, the quality of housing that meets modern standards, as well as the degree of trust in state, municipal and non-state institutions in the field of construction.

Thus, it should be noted that housing affordability is a certain indicator of the economic and social development of society, acting as a catalyst and inhibitor of social tension in society. Therefore, the development of an efficient economic strategy for the development of individual housing construction can be a solution to many modern issues in social and economic development in Latvia.

[1] Em.gov.lv. (2019). Housing. [online] Available at: https://www.em.gov.lv/en/sectoral_policy/housing/ [Accessed 10 Sep. 2019].

[2] Website of the President of Latvia. (1992). Constitution of Latvia. [online] Available at: https://www.president.lv/ru/latviiskaya-respublika/konstituciya-latvii [Accessed 10 Sep. 2019].

[3] Em.gov.lv. (2019). Housing. [online] Available at: https://www.em.gov.lv/en/sectoral_policy/housing/ [Accessed 10 Sep. 2019].

[4] LIKUMI.LV. (2019). Dzīvojamo māju pārvaldīšanas likums. [online] Available at: https://likumi.id/193573-law-on-administration-of-residential-houses [Accessed 10 Sep. 2019].

[5] LIKUMI.LV. (2019). Dzīvokļa īpašuma likums. [online] Available at: https://likumi.id/221382-law- on-residential-properties [Accessed 10 Sep. 2019].

[6] Rīgas namu pārvaldnieks. (2019). Regulatory Basis for the Efficient Management of Residential Buildings. [online] Available at: https://www.rnparvaldnieks.lv/ru/dlja_klientov/normativnie_akti/ [Accessed 10 Sep. 2019].

[7] M. Eremenko (2018). Functions of the State Housing Policy in the Republic of Belarus. Housing Strategies, 5(2), pp.191-210.

[8] L. Leonova and V. Zasukhina (2016). Housing Affordability Criteria. Economic Analysis: Theory and Practice, 12, pp.111-124.

[9] Hermann, A. (2018). Price-to-Income Ratios are Nearing Historic Highs. [online] Joint Center for Housing Studies of Harvard University. Available at: https://www.jchs.harvard.edu/blog/price-to- income-ratios-are-nearing-historic-highs/ [Accessed 11 Sep. 2019].

[10] Goodman, L., Lei, W. and Zhu, J. (2018). Housing Affordability. Local and National Perspectives. [ebook] Urban Institute, p.www.urban.org. Available at: https://www.urban.org/sites/default/files/publication/97496/2018_04_10_housing_affordability_finalizedv2.pdf [Accessed 11 Sep. 2019].

[11] www.nar.realtor. (2019). Housing Affordability Index. [online] Available at: https://www.nar.realtor/research-and-statistics/housing-statistics/housing-affordability- index/methodology [Accessed 11 Sep. 2019].

[12] Chen, J. and Ni, S. (2011). Estimating Estate-Specific Price-to-Rent Ratios in Shanghai and Shenzhen: A Bayesian Approach. [ebook] University of Macau, pp.208 – 239. Available at: https://www.um.edu.mo/fba/irer/papers/past/vol14n2_pdf/04.pdf [Accessed 11 Sep. 2019].

[13] Erpolat Tasabat, S., Aydin, O. and Hepsen, A. (2018). Prediction of residential gross yields by using a deep learning method on large scale data processing framework. Pressacademia, 7(1), pp.125-130.

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