On Wednesday, in Riga, the heads of 13 Latvian municipalities signed a memorandum of intent on participation in the affordable rental apartment program promoted by the Ministry of Finance Rental housing for Latvian specialistscommitting to provide a plot of land suitable for housing construction, informs the Ministry of Finance.
At least 1000 apartments
The consulting partner of the private-public partnership (PPP) program – Vice President of the European Investment Bank Tomas Estros, with whom the cooperation agreement was signed at the beginning of September, also came to the event. In general, in the first stage of the project, up to 2,266 (not less than 1,000) affordable rental apartments are expected to be built in Latvia by 2030.
Plan Rental housing for Latvian specialists will make it possible to provide modern, energy-efficient and affordable apartments for young professionals and their families in sectors important to the Latvian state and municipalities (teachers, firefighters, policemen, military personnel, state and local government employees, etc.). In the first round of the program, economic calculations will be made for the implementation of the program in the municipalities that signed the protocols of intent today – Daugavpils (120), Rēzekne (60), Kuldīga (50), Liepāja (250), Jelgava (130), Jēkabpilī (130–150), Valmiera (150), Ķekava (48), Olaine (50), Alūksne (48), Cēsis (100), Sigulda (110) and Riga (1000). The program envisages the construction of at least 1,000 but no more than 2,266 rental housing units. It will be possible to determine the exact number of apartments after carrying out financial calculations in 2025. Local governments will have to ensure the allocation of plots of land and the co-financing of rental apartments when they become available, taking into account the solvency of the population and the market situation.
There is a lack of new apartments
“The lack of new energy-efficient apartments in Riga, Pierīga and the regions has been an urgent issue for several decades, so I am pleased with the wide interest of municipalities in participating in the affordable rental apartment program. By combining public funding with private investments, we can more effectively solve the problem of housing affordability and promote our society economic stability. Today, we have taken an important step so that by next summer, the program implementer, State Real Estate, in cooperation with the experts of the European Investment Bank, will carry out the financial calculations of the projects, which will allow us to move towards the selection of a private partner,” emphasizes Finance Minister Arvils Asheradens.
According to the decision of the Cabinet of Ministers, the implementation of the program in Latvia is entrusted to VAS State real estate (VNI). The advisory support of the European Investment Bank (EIB) begins today, which includes conducting the necessary financial and economic calculations and providing consulting services to ensure the quality of program implementation and accelerate the implementation of the affordable housing program. This is the first time that a consulting agreement with the EIB is concluded in Latvia of this size – it will ensure that international institutional investors will also be able to finance the construction of affordable rental apartments. The EIB’s advisory support will bring together an international team from across Europe with knowledge and experience in developing such projects. Within the framework of the EIB consultation program, Latvia is provided free of charge, they are financed by the funds of the European Commission.
“We are pleased to cooperate with Latvia to introduce a new approach to the accelerated and expanded provision of affordable housing. We see that there is a marked lack of investment in the field of affordable and social housing throughout Europe, as well as a huge need for the renovation of the existing housing stock. The EIB is is firmly committed to addressing this underinvestment. It is one of our eight strategic priorities,” says EIB Vice President Thomas Estros.
In cooperation with the EIB, several program implementation models will be evaluated, institutional capacity will be analyzed both at the national and local government levels, a project selection strategy will be developed, a pilot project will be prepared and a public-private partnership contract draft will be prepared.
“The state real estate team is honored for the trust shown in our competence to manage a project of this scale in cooperation with Latvian municipalities. We see a great interest of municipalities, which is confirmed by the protocols of intent signed today. Public and private sector cooperation is a good tool to successfully solve the problem of affordable housing and promote sustainable development of Latvia’s regions, therefore we are determined to use all our competences to represent the interests of the country and ensure the implementation of the program in the highest quality and within the planned deadlines,” says VNĪ board member Andris Vārna.
Poor quality and overcrowding
The project is created according to the “private partner designs, builds, finances, maintains, manages” model, including the public sector accessibility payment in the state and local government budget expenditures from 2030, simultaneously with the accessibility of the house to residents. In addition, the program envisages that at the end of the project, local governments receive ownership of the land and the constructed housing.
In this year’s research, 19 municipalities were interviewed, as well as an analysis of statistical data was carried out, as a result of which an estimate was created for the future demand for affordable rental apartments in each of the municipalities. The study confirms that the challenge of Latvia’s housing policy is the poor quality of housing, overcrowded housing, low market activity, and the additional challenge is the unavailability of mortgage loans for part of society.
At the end of last year, by order of the Minister of Finance, a steering group was established for the creation of such a PPP solution. Its task was to develop a framework of possible solutions for the PPP of low and affordable rental apartments, the proposed PPP structure, implementation conditions and schedule. The management group, evaluating the current situation, identifying 17 municipalities, the problems in the market, the regulatory framework of affordable rental apartments and the experience of other member states, as well as ensuring the compliance of the affordable rental apartment program with the criteria, has developed an affordable rental apartment development program.
The management group consists of commission members representing the Ministry of Finance, the Central Finance and Contracts Agency, the Ministry of Environmental Protection and Regional Development, the Development Finance Institution Altum, the Alliance of Real Estate Developers, VAS State Real Estate, VSIA Latvian State Roads, the Ministry of Economy, as well as the freelance advisor of the Prime Minister on regional issues participates in the group.
2024-10-05 21:03:51