Latvia Real Estate 101

Laws and local customs regarding the buying and selling of real estate vary according to country and location. If you’re planning on investing in Latvian real estate, you’ll need to familiarize yourself with Latvian laws and customs. We’ve assembled a few pointers to get you started.

We recommend that you work with a real estate agent. An expert can help you ferret out important information pertaining to a potential property. For instance, when purchasing an apartment, there may be undisclosed loan obligations for past improvements made by the building’s cooperative association. Or planned improvements to an apartment could be restricted if the building is under national heritage protection. In Riga's Old Town, strict laws limit remodeling and construction. Waterfront country properties may be subject to prohibition on construction. As a foreign investor, it is wise to seek the advice of a local expert.

There is no standard commission in Latvia but custom dictates that 5 percent of the purchase price is the maximum. Usually, commissions for the buying and selling agents are included in the property’s sale price but this should always be verified.

In Latvia, there is very little haggling over the asking price. Sellers often get what they ask and the selling price is rarely more than 5 to 7 percent lower than the asking price.

It is a good idea to have a building expert inspect any property, house or apartment you are planning to buy. Old and new homes alike should be looked over. Appearances do not guarantee the good condition of a property. The cost of this inspection rests with the prospective buyer. New homes built by large construction companies in Latvia offer a two-year building guarantee but this constitutes only partial buyer protection.

Notaries perform the function that a closing or escrow company does in the US, assuring that the title is genuine and that the property you are buying is free of any claims. Their fees are paid separately. Make sure you are informed about property taxes, state taxes on the purchase, land book (Zemes Grāmata) registration costs, and notary fees. Any applicable VAT (Value Added Tax – 18%) should be included in the selling price.

As for yearly property taxes, these are 1.5 % of the value assigned by the state to your property. The good news is that this assigned value is always lower than market value.