August 7, 2020
The information was prepared by Andris Vitenburgs, Press Secretary of the Minister of Justice.
On Friday, August 7, during a meeting with representatives of the real estate industry from the environment of appraisers, developers and investors, J. Bordāns explained the need to reform the real estate tax policy so that the planned cadastral values would not hinder business development and further promote it due to the actual release of housing. REN payments.
Currently, the Ministry of Justice has submitted a draft law on real estate tax to the government, as a result of which 95% of housing would have a 0 EUR REN payment. Representatives of the industry emphasized that Riga is lagging behind in the construction of new apartments among the capitals of the Baltic States and that opportunities should be sought to promote the construction of new housing with the help of REN.
The participants of the conversation agreed that the work on the improvement of the new cadastral values still needs to be continued – the necessary adjustments will be made, but they must not become a threat to the growing REN bills. The Minister of Justice reaffirmed that he would not allow the new cadastral values to enter into force until the government had agreed on a change in REN policy. The industry welcomed the efforts to streamline the R & D & I system as a whole.
J.Bordāns: “We use the need to update obsolete cadastral values, which hinder the attraction of investments, in order to finally arrange the right to the inviolability of housing specified in the Satversme of the Republic of Latvia. Cadastral values are frozen only until a new RET policy is developed that protects housing and does not increase the tax burden on entrepreneurs and farmers.
Efforts to increase budget revenues by covertly raising real estate taxes must be stopped. This is unfair and economically short-sighted. I am also pleased with the active involvement of the public so that the real situation in the real estate sector can be heard in the corridors of the government. Both the action of white flags and any other loud expression of public opinion will only strengthen democratic decision-making in the country. “
Representatives of the real estate industry called on the parties forming the government to support the development of such a real estate policy that would allow reviving the real estate market and making Latvia attractive for attracting foreign investment. Representatives of the real estate industry welcomed the ongoing work on the modernization of the SLS
and the development of up-to-date GOKs that are separable from existing R & D rates. J.Bordāns and the participants of the meeting believe that the REN policy needs to be reviewed if we want to achieve the growth of the real estate sector and more and more people could afford new and modern housing.
“The announcement of the new cadastral values without changes in real estate tax rates has already caused damage to the Latvian investment environment. Our fees and taxes were no longer competitive compared to Lithuania and Estonia. New homes, offices, hotels, factories and logistics centers are now threatened with at least a threefold increase in real estate tax payments from 2022. That is why we have launched a peaceful protest action #white flags, within the framework of which white flags have already been hoisted at more than 50 buildings in Riga. With this campaign, we call for a “freeze” of the new cadastral values, as well as prevent a jump in the real payment of real estate tax. We appreciate the ongoing conversation with the Minister of Justice and will look for opportunities for dialogue with the government to correct the situation and bring the share of REN payments in investors’ expenses to the level of Lithuania and Estonia, ”says Mārtiņš Vanags, Chairman of the Board of the Real Estate Developers Alliance.
The current solution, without radically changing the system, is to “freeze” cadastral values, as well as changes in regulations, determining that the cadastral value is 85% of the average market level, says Vilis Žuromskis, Chairman of the Board of the Latvian Association of Real Estate Appraisers, certified real estate appraiser. In the future, however, it will not be possible to do without cosmetic repairs alone. In Latvia, as in Estonia, the possibility of taxing only land should be considered.
Vestards Rozenbergs, a member of the board of the Latvian Real Estate Association LANIDA, the owner of Baltic Sotheby’s International Realty, emphasizes that it would be important for the responsible institutions to hear the opinion of the industry before announcing cardinal changes to the Ministry. Otherwise, the signals to citizens, businesses and foreign investors are disruptive and do not promote legitimate expectations. The freezing of cadastral values should not be done to alleviate the problem, but to create a new, efficient REN system that is proportionate to both the solvency of the population and entrepreneurs and allows the calculation of tax amounts in the long run.
Additional information:
Phone: 67036759, e-mail: [email protected]
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