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The Ministry of Economics has compiled the results of the first half-year supervision of real estate transaction intermediaries (brokers) for this year, concluding that the majority of brokers who are registered in the real estate transaction intermediary register comply in good faith with the obligations set out in the regulatory framework - they have insured their civil protection, and have raised their qualifications within the specified deadlines, thereby demonstrating their professionalism and honest attitude towards clients, other industry merchants, and the state.
As of July 1st of this year, 775 intermediaries were registered in the real estate transaction intermediary register; of these, 120 new intermediaries were registered from January 1st to July 1st. Between January 1st and July 1st, 70 intermediaries were excluded from the register, including: • 40 were excluded based on their own submissions; • 2 brokers have ceased their real estate transaction intermediary business; • 2 brokers have been liquidated; • 26 brokers were excluded because they did not raise their qualifications.
To re-register in the real estate transaction intermediary register, an intermediary must submit an application, an insurance policy, and documents on qualification upgrading measures to the Ministry of Economics, and also pay a registration fee.
The Ministry of Economics reminds that for the provision of illegal services (i.e., without registration in the real estate transaction intermediary register) the State Revenue Service can impose an administrative penalty – a warning or a fine - up to 500 EUR for individuals, and up to 8000 EUR for legal entities.
LANĪDA advocates for a well-organized industry that operates on a legal basis and highly professional company activities, ensuring secure transactions and ethical communication culture for clients. We care about fair competition, transparent transactions, and taxes paid to the state budget. The intermediary register data shows that the association's cooperation with the legislator and the Ministry of Economics has finally yielded tangible results in organizing the industry. With the new amendments to the Real Estate Transaction Intermediary Law, a new phase has begun to limit the activities of illegal brokers, which will allow the imposition of penalties on those operators who have so far ignored legislative requirements. I can promise - this is just the beginning. The real estate transaction sector must come out of the "shadow zone", brokers must become a respected profession, and transaction participants must become reliable partners, not opponents," emphasizes the chairman of the Latvian Real Estate Transaction Association (LANĪDA), Aigars Šmits.
As we previously informed, this year, with the amendments to the Real Estate Transaction Intermediary Operation Law, the requirements for the activity of real estate transaction intermediaries in Latvia have been strengthened, ensuring more effective supervision of their professional activity, promoting a stable, safe, and reliable brokerage service, and also reducing the shadow economy in the sector.
With the amendments to the law, an additional mechanism has been introduced to limit the activities of those real estate transaction intermediaries who have not raised their qualifications during the calendar year. The law includes a provision that if a real estate transaction intermediary has not met the qualification upgrading requirements, they will have the opportunity to be reinstated in the register after being excluded, provided they meet the requirements related to the qualification upgrading measure.
The law has also been supplemented with a provision that obliges the real estate transaction intermediary to undertake a qualification upgrading measure if the exclusion from the real estate transaction intermediary register was based on the intermediary's own application, stating that the qualification measure must be taken if the real estate transaction intermediary wishes to re-register in the real estate transaction intermediary register.
We remind you that the existing provisions of the law stipulated that real estate transaction intermediaries must be included in the real estate transaction intermediary register and participate annually in qualification upgrading events. If a real estate transaction intermediary had not raised their qualification, the existing regulation stipulated the exclusion of the real estate transaction intermediary from the real estate transaction intermediary register. At the same time, the regulation did not include a requirement to raise qualifications if the real estate transaction intermediary wants to re-register. Consequently, a situation had arisen where many real estate transaction intermediaries deliberately did not comply with the law's requirement to attend qualification upgrading events.
As is known, on August 1, 2020, the Real Estate Transaction Intermediary Operation Law came into force, which regulates the legal basis of the professional activity of real estate transaction intermediaries and ensures the supervision of their professional activity to prevent the legalization of criminally obtained funds, financing of terrorism and proliferation, and promotes a stable, safe, and reliable brokerage service. The law provides that a real estate transaction intermediary must insure their professional activity's civil liability. The Cabinet of Ministers' Regulations No. 602 of September 29, 2020, “Rules for the Civil Liability Insurance of the Professional Activity of a Real Estate Transaction Intermediary” determine the minimum liability limit per year and the mandatory risks that a real estate transaction intermediary must insure. At the same time, the law provides that from July 1, 2021, only persons included in the Real Estate Transaction Intermediary Register are allowed to provide brokerage services. The register is publicly available on the website of the Ministry of Economics.