On March 17, the Latvian government gave final approval to the Housing Rental Law, which better balances the interests of landlords and tenants.
What is the importance of these innovations? According to experts, this will provide an incentive for the creation of professional "income-generating properties" and attract more investments into the residential rental segment.
The previous law hindered investments because it provided very weak protection for landlords' interests, that is, property owners.
The new law not only regulates the procedure for concluding and terminating rental agreements, but also provides for a simplified procedure for evicting tenants from rented premises.
Let us consider the main innovations.
Abolition of indefinite-term rental. The maximum rental period is 10 years, after which the contract may be renewed. From now on, the maximum duration of a contract is 10 years, with the possibility of extension by mutual agreement of the parties.
Solution to the problem of "Soviet rental agreements." In many historic buildings in Riga, tenants, or their successors, live under agreements concluded during the Soviet era. Such buildings are in very poor condition. It is almost impossible to evict such tenants, and consequently it is not expedient to reconstruct the building.
Over the next 3 years, the state plans to allocate 7 million euros to compensate residents of denationalized buildings.
Rent increase procedure is stipulated. The new law establishes that a landlord may increase rent only if the rental agreement provides for the principles and procedure for increasing it-for example, indexation to annual inflation, planned building maintenance expenses, or periodic increases.
Simplified termination of the contract at the landlord's initiative. Previously, the law provided for disputes to be considered in court. Now conflicting situations can be resolved through an undisputed procedure-a tenant will be obliged to vacate the property if the rental period has expired and no agreement has been reached on a new contract, or if arrears have accumulated.
Free registration of rental agreements in the land register. "It should be clarified (commentary by a KOM-INVEST lawyer) that registration of a rental agreement in the land register is protection of the tenant's interests.
When property is sold, if the rental agreement is registered, then the new owner (even if it is a creditor) must comply with the concluded agreement.
From the landlord's perspective, in some cases you can obtain real estate tax discounts if an official rental agreement registered in the land register is concluded. However, the registration of such an agreement is a paid procedure. These are notary fees and a land register fee. Together, approximately 100 euros. Then-upon cancellation, approximately 50-70 euros more."
In the new law, all procedures are shortened and simplified. Documents can be submitted to the Land Register in electronic form, using an electronic signature, and completely free of charge.
However, notary service costs and government fee payments remain.
New rights and obligations for family members of a tenant. Family members of a tenant will no longer be jointly liable for the proper performance of the contract. In the event of the death of the sole leaseholder, his family members may, within the prescribed periods, request the conclusion of a new rental agreement without changing the previous conditions.
Overall, the Ministry of Economics expects that the law will give landlords a sense of security, and developers will build properties specifically for rental.
The law still must be signed and proclaimed by the president. It will enter into force on May 1 of this year.
Our company "KOM-INVEST" also has a positive assessment of the innovations and hopes that the rental market will become more orderly.
If you wish to purchase any good real estate object, and individual attention is important to you, if you want to communicate with a realtor and lawyer in your native language, then contact our company KOM-INVEST! We will be happy to select a suitable property, answer all questions, draw attention to significant details, arrange the transaction, arrange your residence permit, and manage your real estate.
Do you have questions? We await your email or call!
Phone number: +371 29774775
Email: info@kominvest.com