Yesterday, the Saeima adopted amendments to the Land Register Law in the second reading, which supported the proposal of the Saeima deputy Gatas Eglītis to make changes in the amount of the state fee for consolidating apartment property in the Land Register. The amendments provide for a task for the government from this year. On July 1, to reduce the amount of the state fee for a natural person from the currently set 2% to 1.5% of the property value, while for a legal person for strengthening the apartment property from 6% to 2% of the property value. These changes will be a significant improvement in the competitiveness of the Latvian real estate market, promoting the investment of legal entities in rental houses and rental apartments in the context of the new rental regulation.
The amounts of state fees set so far for the registration of property rights in the Land Register for a natural or legal person have been disproportionately high and have slowed down the development of the Latvian economy. For comparison, in Estonia the state fee for registration of change of property rights in the Land Register is set in the range from 3 to 2560 euros depending on the transaction amount, while in Lithuania from October 1, 2020 a fixed rate of 17.19 euros is paid for registration of property rights. The 2% and 6% fee rates set so far in Latvia in some cases even exceed 100 times the amount that must be paid for the same procedure in neighboring countries, therefore changes in the sector have long been expected to create a more attractive environment for investors and buyers.
“With the entry into force of the new rent regulation, it is necessary to encourage investments of legal persons, including investment and pension funds, in rental houses and apartments. Until now, a completely disproportionate state fee has been set in Latvia – in the amount of 6% of the purchase amount – for strengthening property rights when purchasing apartment property for legal entities. Reducing the legal entity rate to 2%, which is more proportionate, albeit higher than in neighboring countries, will encourage legal entities to invest in rental houses and apartments. Despite the rate reduction, the increase in economic activity will increase the total fee revenue by about 1.26 million. euros per year. In turn, the reduction of fees for individuals will ensure both the availability of cheaper housing and reduce the risk of fraud. We expect a decrease in the number of cases when the parties to the transaction in the contract fictitiously include a lower transaction amount to reduce the fees payable and thus the amount of personal income tax payable, or when the high fee does not register transactions at all, thus fiscal effect, ”points out Mārtiņš Vanags, Chairman of the Board of the Real Estate Developers Alliance.
By NĪAA
The Real Estate Developers Alliance (NAAA) unites the most important players in the industry in order to achieve sustainable growth of the real estate industry, to represent it together at the state and municipal level, as well as to actualize the role of real estate developers and investors in the Latvian economy.
Real Estate Developers Alliance
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