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Agriculture: New regulations on acquisition of real estate by foreigners

Legal changes set new requirements that affect and complicate purchase of real estate by foreigners.

As of 1 July 2017, new regulations are in force affecting the purchase of agricultural land. Some old provisions were deleted, such as requirements for companies to earn a certain proportion of their revenues from agriculture and for their general managers to meet specific agricultural qualifications.

In turn, new provisions have been adopted that will affect both individuals and legal persons planning to buy real estate for agricultural purposes. These provisions make acquisition more difficult.

Real estate designated for agricultural use may now only – apart from Latvian citizens – be bought by individuals with an ID from an EU member state, a state of the European Economic Zone or Switzerland.

In the case of individuals who are not Latvian citizens, acquisition is only valid on presentation of proof of sufficient knowledge of the Latvian language equivalent to level B2 (Common European Framework of Reference for Languages).

In the case of legal entities, the actual economic beneficiaries must be disclosed. Moreover, the (majority of) shareholders / owners as well as all individuals with powers of representation (such as general managers) also need to present knowledge of Latvian in line with level B2.

In addition, individuals or legal entities may not own more than 2 000 ha of agricultural land. Moreover, the municipality concerned may even further restrict the extent of ownership in terms of hectares.

These requirements affect practical aspects of acquiring real estate as follows: in the course of the transaction, the buyer has to apply for consent from the municipality. First, the application has to contain a description of the envisaged usage of the land. Second, proof of language knowledge must be presented. The municipality may also summon the buyer to present the envisaged usage. Consent to finally acquire agricultural land will be given in writing. Only with such consent will the purchase contract become valid.

Source: Law dated 31 May 2017 amending the land privatization law, No. OP. 2017/106.5