Rent prices rise in Latvia

Like in other industries, rental prices are rising. Demand for decent rental apartments is higher than supply, Latvian Radio reported on July 13.

Renting or leasing real estate is an economic activity and must be subject to tax. However, there are no statistics and even estimates of how much of the rental market is legal.

According to the State Revenue Service (VID) representative Kristīne Augstkalne-Jaunbērziņa, under 5,000 people have registered economic activity in the rental market. 44,995 persons rent out their real estate by notifying the VID about non-registered economic activity. Meanwhile, the number of legal persons, including individual economic operators whose activities are related to the rental of real estate, is 7,678.

These official data do not allow for any conclusion, since the renters of land and non-residential areas, such as warehouses or shops, are also counted together with the renters of residential areas. There are no estimates of how many rental apartments and houses there are in Latvia at all.

Aigars Šmits, head of the Latvian Real Estate Association, said there are no estimates of how much of the market is legal. Šmits also said the market is currently comprised of individual housing owners and that large construction companies are on hold for the time being due to geopolitical risks and risks to supply of building materials, instability in financial markets, and high inflation.

There is a lack of serious renters, but the demand for apartments grows, partly because of the arriving Ukrainians. according to business representatives. Svetlana Sokolova, board member of the real estate brokerage association, did not want to speak with Latvian Radio but acknowledged in the conversation that brokers were reluctant with Ukrainians because there were too many risks in this segment: how long they would be tenants, whether they would be able to pay, and similar. Meanwhile, Rita Bednarska, head of Rīga homeowners association, has a different opinion. She has rented several flats to Ukrainians, but there are issues with long-term rent.

Aigars Šmits noted that the  situation is least favorable to those who are unable to pay much for an apartment. “The situation in the rental market is quite dramatic – there are some places where a 40-45 square meter apartment, including in the old segment, costs €10 and €11 per square meter plus utilities, without knowing what will happen to heat prices in the winter months. There is simply no offer, there is nothing new,” Šmits said.

 

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