Taking counsel

  • 2005-07-13
  • By Andis Bubnovs [ LOZE, GRUNTE & CERS ]
Who is entitled to acquire land in Latvia?

Since Latvia joined the European Union, real estate market activity has increased considerably and interest of foreign persons in land properties in Latvia is steadily growing. However, not everyone can buy land in Latvia. Generally speaking, restrictions can be grouped as to the location of land and citizenship of persons applying for land. Restrictions with respect to land in towns and cities and rural areas are different:

Title to land in cities and towns of Latvia can be acquired by:

a company incorporated in Latvia or any other state of the EU where at least 51 percent of the share capital is owned by citizens of Latvia or EU, the State of Latvia or municipality

a company incorporated in Latvia or any other EU state, where at least 51 percent of the share capital is owned by individuals or legal entities from the countries with which the Republic of Latvia has executed bilateral or multilateral international agreements regarding furtherance and protection of investments. In this case the date of approval of such agreement by Parliament is of importance, as agreements approved after Dec. 31, 1996 need to specify identical rights of individuals and legal entities to land estate in the particular country. No such requirement is applicable to agreements approved before the said date public limited companies incorporated in Latvia or another EU country whose stock is quoted on the stock exchange

other individuals and legal entities may acquire title to land in a city or town of Latvia except the following lands: land in the border zone of the state, in the protection zone of coastal dunes of the Baltic Sea and the Gulf of Riga, in protection zones around public bodies of water and water courses (except if it is to be built in line with the master plan of the city), agricultural land and forest land. These persons need to obtain consent from the local municipality to acquire title to land.

Title to rural land in Latvia can be acquired by:

a company incorporated in Latvia where at least 51 percent of the share capital is owned by citizens of Latvia, the state of Latvia or municipalitya company incorporated in Latvia where at least 51 percent of the share capital is owned by individuals or legal entities from the countries with which the Republic of Latvia has executed bilateral or multilateral international agreements regarding furtherance and protection of investments applicable in the manner prescribed above public limited companies incorporated in Latvia whose stock is quoted on the Stock Exchange.

Starting from May 1, 2004, when Latvia became a full-fledged EU member state, a transition period until May 1, 2011 has been set forth during which citizens and legal entities from other EU member states may also acquire title to land in rural areas:

EU citizens, if they fulfil the following cumulative requirement: they intend to engage in business activity in Latvia as a self-employed farmer, have been living in Latvia for at least a term of three years without interruption, have been engaged in farming in the Republic of Latvia for at least a term of three years without interruption other EU citizens and legal entities incorporated in EU countries, unless the purpose of use of such land is farming or forestry.

EU citizens and legal entities incorporated in the EU need to take into consideration the aforementioned protection area restrictions, and they need to obtain consent from the local municipality to acquire title to land. After the expiry of this transition period, EU citizens and companies registered in EU member states will be entitled to acquire title to rural land with the same provisions as citizens of Latvia and companies incorporated in Latvia.

In conclusion, it should be noted that the basis of laws regulating acquisition, management and development of land estate is undergoing constant improvement in line with the current market requirements aimed at essential risk reduction and making land property in Latvia attractive for both local and foreign investors.

Andis Bubnovs is lawyer

at the law firm Loze, Grunte & Cers