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Valmiera hosts a discussion on rental apartment market 

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01.11.2017

On November 1, 2017 Latvian Association of Local and Regional Governments organised a discussion in the Valmiera Culture Centre. The discussion “Is it needed to develop rental apartment market in Latvia?” gathered over 90 participants from Latvian cities and municipalities.

 

During the event panel discussions were held about the current housing policy. The representatives from Valmiera City, Smiltene Municipality and Tukums Municipality shared experience about impact of the housing policy on the attraction of human resources for the local needs.

In the second half of the day participants talked about the risks and opportunities of raising funds. Valmiera City shared experience about building rental apartment houses and the need of municipal interference in the rental market.

Valmiera City is the first municipality in Latvia, which company “Valmieras Namsaimnieks Ltd.” builds rental apartment houses because of insufficient supply in the city. The lack of residence as a problem for the city was also mentioned by local entrepreneurs. The survey of local entrepreneurs, conducted by Valmiera Development Agency in 2017, showed that 48% of entrepreneurs see it as an obstacle for their business development, and 54% told that in order to improve business conditions the municipality needs to attract additional human resources to the city.

The Economic Survey of Latvia 2017 conducted by the OECD (The Organisation for Economic Co-operation and Development) concluded that only small part of inhabitants lives in rental apartments, which lowers the workforce mobility. It is necessary to develop building new rental houses, which would also contribute to attracting new specialists and additional workforce.

Now in Valmiera potential buyers can find around 50 apartment offers from about 7550, which total number of apartments in the city. The rent of an apartment, excluding payments for public utilities, ranges from 120 EUR (single room apartment) to 350 EUR (three room apartment), and the price tends to rise. The purchasing price of an apartment reaches 615 EUR/m2. There are no rental apartments in the market now. Survey “Housing purchasing plans”, conducted by “Swedbank” JSC in 2017, showed following obstacles to purchasing personal residence: disproportionately high price, insufficient funds for initial payment for the loan and insufficient income. The surveys of local property managers show, that 80% are willing to rent an apartment instead of purchasing it.

The law “On Local Governments” states that one of the autonomous functions of municipalities is to aid inhabitants with solving the housing issues. The Development Programme of Valmiera City 2015-2020 has a goal and activities defined regarding development and growth of housing offers in the city.