LATVIA – ECONOMY
On 22 November this year, developers will be able to start applying to the ALTUM Development Finance Institution for a new programme of state support for the construction of low-cost rental homes in Latvia’s regions.
With the support of the programme developed by the Ministry of Economic Affairs, by 2026 about 700 new flats are to be built, thereby stimulating business activity and the availability of much-needed low-cost housing in the regions. Affordable, modern housing will be rented to households who are unable to purchase a flat on market terms, and the availability of labour and economic activity in the regions will be stimulated.
At the moment about 15 developers have shown interest in implementing projects in Valmiera, Alūksne, Liepāja, Ventspils, Ogre regarding the conditions of the programme and how to receive support from ALTUM.
The support programme is aimed at building rental houses outside Riga, Jurmala, Baloži, Kekava, Olajne, Marupe, Babite, Salaspils, Stopinini, Garkalne and Tzarnikava.
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It is defined that the rental buildings to be built must be buildings with almost zero energy consumption, the flats must have full interior decoration, built-in kitchen and plumbing, and the average size of the flats must be 52 square metres. Rents in these flats are set at up to EUR 5 per square metre and can be increased every year depending on the level of inflation.
The developer will first direct the income from the rent to repay the loan, and once the loan has been repaid and 50% of the rent collected will be transferred to the Housing Affordability Fund on its own.
One-bedroom rental flats are intended for households whose total net income does not exceed EUR 980 per month, two-bedroom flats for households with a total income of up to EUR 1,635 per month, and three-bedroom flats or more for up to EUR 2,450 per month.
The income criteria will also increase each year in line with the inflation rate.
The total funding for the programme is €42.9 million and the programme is financed by the European Union Recovery Fund. Developers will have access to a loan or parallel loan with a term of up to 30 years and a capital discount for the construction of rental houses.
For loans, the capital discount or partial loan repayment will be up to 25% or 30% of the total eligible project costs, depending on the commissioning period of the rental house. The participation of the sellers themselves will be from 5% of the total eligible project costs. A prerequisite for obtaining the loan and the capital rebate for the developer is the conclusion of a Permit Agreement with the municipality for building and renting the rental houses.
More information about the programme is available on the ALTUM website www.altum.lv
ALTUM will start accepting applications on 22 November at 14:00, submitting applications will take place on the customer service portal mans.altum.lv
