LATVIA Law and Practice Contributed by: Jānis Kārkliņš, Annija Kārkliņa, Ēriks Krēsliņš and Rihards Strads, BERG
Macroeconomic conditions have gradually stabilised. While higher interest rates initially reduced liquidity and slowed pricing, monetary policy easing (ECB deposit rate at 2.00% as of 2026) has eased pres - sure. However, inflation remains present (around 3.4% year-on-year in March 2026), keeping the market disciplined. Financing remains cautious, with yields generally above 7% in regional reporting and strong lender focus on cash-flow stable assets. Market participants have increasingly shifted towards redevelopment, conversion and value-add strate - gies, particularly for outdated office stock. Financing structures have also diversified, including sale-and- leasebacks, club deals, and selective use of private credit alongside traditional bank lending. At the same time, technologies such as PropTech and tokenisa - tion remain in an early stage in Latvia, complementing rather than replacing conventional real estate struc - tures. Overall, the Latvian market today looks more resilient. The key themes are local capital, selective lending, redevelopment, and a preference for assets that can either deliver stable income quickly or be repositioned into stronger uses. Monetary conditions are much less punitive than at the peak of the rate cycle, but are not loose enough to restore the environment seen before 2022 (due to the war in Ukraine), so discipline on leverage, tenant quality and business plans remains central. 1.3 Proposals for Reform In Latvia, no major reforms are transforming the real estate sector at the moment. Instead, several smaller tax and regulatory changes are present – some already in force and others developing. Most of these factors are relevant for investors, owners and developers. One key area is the ongoing reform of the immov - able property tax system. The aim is to make it more predictable and better aligned with how property is actually used. Recent changes (including those from 2026) show a move towards more differentiated rates depending on property type and location, often set at the municipal level. This trend is likely to continue, although a full reform is still gradual and politically sensitive.
Another important change, in force from 1 January 2026, is the principle that “debt follows the property” in apartment transactions. This means that a buyer may become liable for certain unpaid obligations linked to the property, such as utility or management debts. As a result, proper due diligence has become more important. Broader tax changes have also been introduced through the 2025–2026 budget (eg, income tax and other fiscal measures). While not specific to real estate, they affect investment returns, construction costs and overall market activity. Overall, reforms in Latvia are gradual rather than radi - cal. The main developments, such as property tax adjustments, stricter compliance and new transaction rules, are already in force or being introduced step by step, rather than through one major reform. The Civil Law of Latvia essentially distinguishes between two principal forms of property ownership. A person may own property individually, or alternatively property may be held under a regime of co-ownership. In the case of sole ownership, one individual holds the entirety of the property rights. By contrast, under co- ownership, the property is divided into notional shares among multiple owners; for example, two co-owners would each hold an undivided one-half share in the property. 2.2 Laws Applicable to Transfer of Title Overall, Latvian law does not provide fundamentally different transfer regimes based on the type of real estate (such as residential, industrial, office, retail or hotel property). The same core legal regulating acts – mainly the Civil Law and the Land Register Law – apply to all categories of immovable property. However, certain specific laws and regulations may become relevant depending on the use or status of the property. For instance, a property that is rented out or leased may affect the transaction, if the agreement of rent or lease is recorded in the Land Register, since upon transfer of the property the acquirer is bound 2. Sale and Purchase 2.1 Categories of Property Rights
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