Translated using ChatGPT service.
With the support of the Development Finance Institution ALTUM, construction of six affordable rental housing projects has begun in various cities across Latvia, creating more than 420 new apartments. Rental housing projects are currently at different stages of planning and construction in Valmiera, Bauska, Jelgava, Tukums, and Ventspils, with a contract being finalized for a 54-apartment rental building in Cēsis.
In total, the program, co-financed by the European Union Recovery Fund, plans to build at least 467 affordable rental homes.
"Rental housing construction has been our priority throughout this year, and it will remain so next year. We see that with accessible criteria, interest from municipalities is growing. We will continue to look for new opportunities to finance rental housing, as this is critically important infrastructure not only for people with low and middle incomes but also for young professionals, for whom housing availability is one of the criteria when choosing their place in the labor market," emphasized Minister of Economics Viktors Valainis.
"We are approaching the program’s goals both in terms of available funding and the number of apartments being built. It is evident that this state support program has catalyzed the long-awaited development of affordable rental housing in the regions. The program's total funding is €42.9 million, and projects amounting to €41 million are already underway, €37 million of which is financed by the Recovery Fund. Together with the Ministry of Economics, we have created very attractive conditions for this program, including a loan interest rate of 0.69% and the opportunity to finance VAT payments. Furthermore, after completing the project, developers can recover up to 30% of eligible costs," said ALTUM Chairman of the Board Reinis Bērziņš.
Projects are already being implemented in several cities. In July, construction began on the first affordable rental building in Valmiera, developed by "Valmieras namsaimnieks" and constructed by SIA "Monum." The €12.1 million project will create 120 apartments. Another contract was signed with SIA "KIK Real Estate Bauska" for the construction of a 60-apartment building in Bauska, also built by SIA "Monum," with total project costs of €6.73 million. Meanwhile, SIA "Tukuma īres nami" is building an affordable rental house in Tukums for €2.14 million, which will include 18 apartments. In Jelgava, a project valued at €13.13 million will construct buildings with 116 apartments. In Ventspils, "Ventspils nekustamie īpašumi" and "Pillar Contractor" are implementing a project to build two buildings with 30 apartments each, costing €6.23 million. In Cēsis, SIA "Lado māja" will develop an affordable rental house project with a total cost of €6.16 million, of which €4.81 million is loan financing.
According to Cabinet regulations, residents whose income does not exceed a specific threshold, depending on the number of people in the household, can qualify for affordable rental apartments. For example, for a two-room apartment, the total gross household income must not exceed €2,437. Meanwhile, the rent must not exceed €6.39 per square meter and can be indexed annually.
To ensure the successful continuation of the program after the available funding is used, as in other countries, 50% of income is expected to be contributed to a rental housing fund, which will be used to build new homes. This amount is stipulated in Cabinet regulations, assuming that the remaining income will be allocated to building maintenance and a reasonable profit for the owner of the rental property. Loans are granted for a 30-year term at a fixed interest rate of 0.69%. After project implementation, the principal amount of loans financed through the Recovery Fund can be reduced by up to 30%.
About ALTUM
The Development Finance Institution ALTUM is a state-owned company in Latvia that provides support to specific target groups through financial instruments (loans, guarantees, venture capital fund investments, etc.) within specific programs, complemented by non-financial support (consultations, mentoring), and implements other functions delegated by the state. In June 2017, ALTUM received a Baa1 long-term credit rating from the international credit rating agency Moody’s, confirming its stable financial position. On October 24, 2017, ALTUM bonds were listed on the regulated market—Nasdaq Riga Baltic Debt Securities List. ALTUM received the Nasdaq Baltic Awards 2019 prize for "Stock Exchange Event of the Year in Latvia."