Translated using ChatGPT service.
On Friday, July 5, in the presence of the Minister of Economics, Viktors Valainis, the construction of two low-rent housing projects in Valmiera was ceremoniously launched with the support of the financial institution ALTUM. The total project cost is €12.1 million, of which ALTUM is providing a loan of €11.61 million for both buildings. Up to 30% of the project's eligible costs can be recovered as state support after the project's completion.
The low-rent housing program in Latvia is being implemented for the first time, taking inspiration from successful projects in other European countries, including the Netherlands, Germany, Austria, Poland, and others, which have been successfully executed for over 100 years. The program aims to increase housing availability in the regions for families who cannot afford market-rate rents.
Latvia faces an acute housing availability issue that significantly impacts economic development and national prosperity. The greatest shortage of housing is in regions with growing and competitive employment opportunities. Increasing the supply of quality and energy-efficient rental spaces at affordable prices is also crucial for addressing this problem. The insufficient supply hinders businesses from securing the necessary workforce and specialists, so the program addresses another significant obstacle to regional economic development. “We are very pleased that the first project is being realized in Valmiera, which has already proven to be a successful model for such an approach in Latvia. Several years ago, two low-rent buildings were put into operation under the municipality's program in Valmiera, and they are in high demand due to their location and quality,” emphasizes Minister of Economics Viktors Valainis.
ALTUM Chairman Reinis Bērziņš commented: "Currently, four projects with 314 apartments in various municipalities have been approved, with a total project value exceeding €34 million, including €26.76 million in ALTUM funding. Municipalities show great interest in the support program, so we continue to provide consultations on financing low-rent housing projects. It's important to remind that other state and European sustainability support instruments are available from ALTUM, including loans for building energy efficiency and renovation with capital discounts to renew outdated and energy-inefficient buildings, as well as renovation loans for multi-apartment building residents who lack sufficient savings to renovate their homes or surroundings.”
The first two buildings in Valmiera, implemented under the program, will be nearly zero-energy, five-story buildings with 120 apartments, totaling 7,189.7 square meters of living space, of which 87% or 6,266 square meters is usable area. The average apartment size is 52 square meters, with a rent of slightly more than €5 per square meter. All apartments will have completed interior finishes. The project is being developed by SIA “Valmieras namsaimnieks” and constructed by SIA “MONUM,” with completion expected by March 31, 2026.
“We are promoting economic growth in the Valmiera region by developing industrial areas, which increases the demand for comfortable and energy-efficient rental housing. The lack of living space makes it difficult for businesses to attract the necessary workforce. Currently, with high construction costs, the state support program is evaluated as a good solution to offer new project apartments at an affordable rent, suitable for the region's average salary,” notes Valmiera municipality council chairman Jānis Baiks.
SIA “Valmieras namsaimnieks” Chairman Andris Kabraks stated: “Four years ago, 'Valmieras namsaimnieks' completed two rental houses with 150 apartments, which were quickly filled with tenants, clearly demonstrating the high demand for such housing in Valmiera. We immediately started seeking opportunities to build similar houses by attracting the necessary funds. We are delighted that state and EU funds have come to our aid! We highly appreciate the cooperation with ALTUM and the Ministry of Economics, which allows us to implement low-rent housing construction projects, thereby addressing the housing shortage in the regions, especially in Valmiera.”
According to Cabinet of Ministers regulations, residents whose incomes do not exceed a certain threshold depending on the household size can apply for low-rent apartments. For example, to qualify for a two-room apartment, the total gross income must not exceed €2,437. The rent must not be higher than €6.39 per square meter, subject to annual indexation.
To ensure the program can continue successfully after the available funding is exhausted, it is planned that, similar to other countries, 50% of the income will be paid into a rental housing fund from which new homes will be built. This provision is included in the Cabinet regulations, assuming that the remaining income is directed towards home renovation and reasonable profit for the rental house owner. Loans are granted for 30 years with a fixed interest rate of 0.69%. After the project's completion, up to 30% of the loan principal, funded by the Recovery Fund, will be forgiven.
About ALTUM:
The Development Financial Institution ALTUM is a state-owned company in Latvia that provides support to specific target groups through financial instruments (loans, guarantees, investments in venture capital funds, etc.) within certain programs, supplemented with non-financial support (consultations, mentoring), as well as other state-delegated functions. In June 2017, ALTUM received a long-term credit rating of Baa1 from the international credit rating agency Moody's, confirming ALTUM's stable financial position. On October 24, 2017, ALTUM bonds were listed on the regulated market – the Nasdaq Riga Baltic Bond List. ALTUM received the Nasdaq Baltic Awards 2019 in the category "Stock Exchange Event of the Year in Latvia."