One project ready to go in Latvia's affordable rental housing program

In order to promote housing accessibility in regions, the Ministry of Economics has developed a low-rent housing construction program. One project has been accepted so far and eleven more are still in preparation, Latvian Radio reported October 9.

The program aims to build new, energy-efficient buildings where apartments will be able to be rented out at lower prices than in the market. 42.9 million euros have been allocated to the construction and 30% of the project's costs would be financed by an Altum loan. Due to the increase in construction costs, the number of apartments originally planned will not be able to be built.

A new nine-story rental apartment house in Rīga has just been commissioned by a housing development company in northern Europe, Bonava Latvija. Mareks Kļaviņš, chairman of the company's board of directors, said the rental home had 96 small two- and three-room apartments with an area of 38 to 65 square meters. On the ground floor, tenants have access to storage rooms.

“This is the first project in Riga that is already being built as a rental house, and we are seeing the future for this segment because people will want to be more flexible and change these dwellings depending on their situation of life. We change jobs, we realize that we no longer want housing in the Pļavnieki district, we need housing in Imanta. The flexibility in rental housing is much, much bigger and that's the plus that people appreciate,“ Kļaviņš said.

The rent in the house built by Bonava Latvija will be between 490 and 800 euros per month plus utilities. Thanks to the low-rent housing construction program, there will be significantly cheaper rental apartments available in the regions as the rental price will not be allowed to exceed €6 per square meter.

Nearly €43 million from the European Recovery Fund is dedicated to the construction of residential rental houses in municipalities outside Rīga and the vicinity. It would be a small but crucial step in the market for affordable rental apartments, but due to high inflation the program has undergone revisions, Mārtiņš Auders, director of the Housing Policy Department of the Ministry of Economics, said.

Fewer apartments could be built than previously planned because of the increase in construction costs - 467 in place of the previously planned 700. The apartments will be rented out to households with certain monthly incomes.

"These are people who are not eligible for municipal assistance in dealing with housing issues, their income is not enough to take a loan themselves or afford to rent housing in a new project. These apartments may be rented out to households with certain incomes. For a one-room apartment, it is almost EUR 1,300 for a household per month, then for a two-room apartment – EUR 2,238, while for a three-room and more-room apartment – EUR 3,426,” Auders told Latvian Radio.

Currently, one project with 116 apartments has been approved in the low-rent housing program, and another 11 projects are being prepared. It is planned that the first low-rent housing in the region could be put into service by the end of 2025.

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