The Baltic Course  

Land for sale in Latvia: citizens vs non-citizens

Latvia has adopted regulations concerning some restrictions for land acquisition by the citizens of the EU and other countries.

Photo: A.F.I.

Under the amendments to the Law on privatization of rural and agricultural land passed recently adopted in Latvia, restrictions are introduced concerning acquisition of land by citizens of the EU member-states and other foreign citizens, as well as by Latvians and aliens.  

From May 1, 2004, to May 1, 2011, the EU citizens will be able to buy agricultural land, pasture and forests in Latvia only if they can prove that they intend to be involved in agricultural activities or have done it already for at least three years. This “agricultural restriction” will be effective for seven years after Latvia’s accession to the EU, i.e. until May 1, 2011, and may be extended for another three years.

The EU citizens, who have not resided in Latvia, citizens and other foreign corporate entities, as well as Latvian aliens, will not be able to buy land and forests. But lawyers can already envisage some ways out of a complicated situation.

At the same time, foreign nationals and corporate entities, Latvian citizens and aliens will be allowed to acquire swampland, land under residential houses and other land in rural areas under special permission’s procedure. The above-mentioned legal and physical persons will have no right to buy land in the border areas, in natural protection areas, the coastal dune zones and nature reservations around inland waterways as well as mineral deposit sites. But the law no longer contains restrictions concerning the inheritance of land. (BC’ comment follows)  


Baltic Course’s View

The Latvian agricultural real-estate market becomes more attractive for Danish farmers – Danish business newspaper B�rsen pointed out in July.

Danish agrarians made such a conclusion a long time ago, but the legal basis for such an interest, which has been created by the new law in April this year on land acquisition to foreigners gave additional strength to the latter’s position and provided a new impetus.

Latvia has become the country of increased interest for investment, especially for Danish farmers. There are several reasons for that; we would like to mention just the main two. First of all, the number of Danish farmers has been continuously decreasing due to production concentration, modern technology and intensified agricultural labor. Second reason lies in the new guarantees for foreign investments provided in the EU candidate states.

Latvia is just an example of such a country where new laws for acquiring agricultural land has been adopted. It has to be acknowledged that there are still quite a few such countries among Eastern European states. For Danish farmers this example if highly important, as farmer still want to be involved, they love “agricultural work and way of life,” and they don’t want to abandon their profession for good. Thank God, here comes new and fantastic alternative!

And one more important detail: Latvian farmers still haven’t so many big farms, and the land here is much cheaper than in Denmark. If in Latvia, the price of a hectare of agricultural land is within the range of 2 – 10.000 crones (approximately 38 – 150 US dollars), then in Denmark, one hectare of arable land costs 1.500 US dollars!!! It is actually obvious that the price of land in Latvia will be growing as the country gets closer to the EU. Nevertheless, as the object of the investment policy, the land remains very attractive to Scandinavian businessmen.

Danish entrepreneurs’ newspaper B�rsen gives an example of a very efficieant approach and quick reaction to this business issue. A Danish company in Jytland near Arhus in Tilst (Landbrugsm�glerne I/S) has already “established contacts” with a Latvian company (Baltidans Sia), which was actually bought by Danes keeping a Latvian director to manage the deals. The latter chooses and finds land plots for sale and offers them to Danish customers. Danish partner, Erling B�ndergaard, has already bought for Danish farmers two 139 and 170 hectares suitable arable land plots for 600 and 800.000 crones, respectively. Another 8 land plots in Latvia of 40 to 700 hectares in size have been already negotiated and presented to interested customers.

Danish farmers have been watching Latvian land market development since the beginning of the 90s, i.e. immediately after the country regained its independence. But recently, since the adoption of the law these activities have expanded greatly. Thus, a forthcoming contract for purchase and development of a large pig-breeding complex in Latvia has been just discussed. And according to Danish farmers’ association opinion the perspectives are quite optimistic, “B�rsen” assumed.