On April 18, the Seimas conceptually supported amendments providing that residents’ payments for the use of land that does not belong to them will gradually increase from 2025 for that part of apartment owners for whom a higher cadastral value will be established.
We are talking, in particular, about apartment buildings that are located on the land of other owners. It is planned to increase payments in favor of the “land barons” by 30% per year until 2028.
At the same time, according to the amendments to the Cadastre Law, the relaxations of the fiscal cadastre do not apply to their situation. The Seimas approved the “cadastral amendments” in the second reading.
In Latvia, there are over one hundred thousand owners of privatized apartments who are forced to pay rent for the land under their houses, which significantly increases their housing bills.
Almost every third house in Riga at least partially stands on someone else’s land. For apartment owners in such buildings across the country, this means forced rent, which in different years amounted to up to 6% of the cadastral value.
They are going to keep the 4% ceiling
The authors of the amendments to the law “On the time of entry into force and the procedure for applying the restored Civil Law of the Republic of Latvia of 1937, parts “Inheritance Law” and “Property Law” emphasize: they offer a compromise solution.
Namely: the decision on payments for the use of someone else’s land under separate ownership provides for a gradual increase in payments by 30% per year, so that residents do not have to experience a sharp increase in costs due to the increased cadastral value.
As is known, the cadastral value of land in some cases will increase by 2–4 times from 2025 (for example, in Riga and Jurmala). Payments by land tenants in favor of landowners will increase accordingly, since rent is calculated based on the cadastral value.
According to the amendments to the law, it is planned to establish that if the right to legal use of land extends to the owners of a residential building and the cadastral value of the land in use as of January 1, 2025 exceeds its previous value, then the corresponding payment “for legal land use” from January 1, 2025 to On December 31, 2028, the payment for the previous year will be increased ANNUALLY by 30% until the corresponding amount is reached from the current cadastral value.
Simultaneously with the specific bill, it is proposed to maintain the current level of land use fees in the amount of 4% of the cadastral value of the land.
The annotation to the bill also explains that some comprehensive solution has yet to be made that does not create a disproportionate burden on the owners of buildings on someone else’s land. And the legal commission of the Sejm hopes that it will be possible to resolve the issue of ending the forced separation of property within a reasonable period even before this time.
Chairman of the Legal Commission of the Sejm Andrei Yudin admits that there is no universal solution to the problem of forced shared ownership, and new amendments, like previously established regulations, can be challenged by one of the parties in the Constitutional Court (CC).
Let us recall in this regard: landowners have previously challenged both the “ceiling” of 4% and the “ceiling” of 3% in the Constitutional Court and invariably won the courts.
“Taxes with two cadastres”
On April 18, the Seimas voted in the second reading for amendments to the Law on the State Real Estate Cadastre (hereinafter referred to as the Law).
After a long period of freezing, the cadastral value of real estate will be “updated”, that is, sharply increased.
However, there will be a transition period during which two cadastral values will be in effect simultaneously – fiscal and universal.
To mitigate tax payments that may become unaffordable, an attempt is made to mitigate the situation in the following way:
* amendments to the Law provide that the State Land Service (SLS) from January 1, 2025 – temporarily – in the Cadastral Information System for each cadastral object will calculate and register two current cadastral values - the fiscal cadastral value and the universal cadastral value;
* such a system should be in effect until the new cadastral value base comes into force, which the government must approve before June 15, 2027, and will most likely be applied only from 2029;
* before this, it is the fiscal cadastral value that is planned to be used to calculate taxes, state duties and other payments to the state or local government budget, EXCEPT for calculating fees for the “legal use” of land (that is, in case of separate ownership of real estate);
* the calculation of the fiscal (tax) cadastral value in the State Civil Land Survey will be carried out in accordance with the cadastral value base in force in 2024 and the regulations governing cadastral valuation applied on December 31, 2024.
That is, taxes during the transition period will be calculated in the old way, according to the cadastre still in force in 2024;
* the transitional rules also provide that in 2024 the Cabinet of Ministers will approve the basis for calculating the universal cadastral value, which will not exceed 80% of the average level of real estate prices as of July 1, 2022, and information on real estate market transactions from 1 January 2012 to July 1, 2022.
Anda Smiltena, Deputy Secretary of State of the Ministry of Justice:
“80% is provided because sometimes property is overvalued. Since the cadastral value is the value from which both real estate tax and other payments are calculated, in order to protect individuals from the fact that property is overvalued and people must overpay, a coefficient of 0.8 is applied, thereby ensuring fairness in relation to private face legal consequences.”
In order for the new regulation to come into force, the Seimas must still adopt it in its final reading.
About the terms of redemption at the old price
Now the Law on ending the forced division of property in privatized apartment buildings gives apartment owners the right to buy the land attached to the house at cadastral value. For now at the old price.
The draft amendments to the Law on the State Cadastre stipulate that persons who this year, before December 31, buy the land under the house, do so at the cadastral values of 2019, as specified in the Law on the termination of forced division of property in privatized apartment buildings.
But from January 1, 2025, when universal cadastral values come into force, land will have to be purchased at the universal cadastral value or at the current cadastral value, the state portal lvportals.lv indicates.
Until December 31, 2024, the Civil Construction Service must store on its website the cadastral value prices for alienation within the framework of the Law on the termination of forced division of property in privatized apartment buildings.
#payments #land #barons #increase #Riga
2024-05-04 02:17:38