Latvian municipalities largely abandon state rental housing program for specialists
Of 14 Latvian municipalities that initially agreed to join a state program for building rental housing to attract specialists, 13 have withdrawn, citing high costs and long-term financial risks. Local governments say private investment may be a more viable path forward.
A state program called “Rental Housing for Latvian Specialists,” designed to help municipalities build new rental housing to attract professionals to the regions, has run into trouble. Of the 14 municipalities that initially expressed willingness to participate, 13 have since withdrawn, according to 360TV Ziņas.
The shortage of suitable housing remains one of the main obstacles to attracting specialists to regional areas. The program offered municipalities support to build new rental units, but local governments say the terms are too costly and risky, prompting one after another to pull out.
Aizkraukle and Kuldīga cases
In Aizkraukle, where new rental housing is urgently needed, the municipality nonetheless decided to withdraw. Deputy council chief Uldis Riekstiņš explained that a planned project of two buildings with 48 apartments would have required municipal co-financing of about 250,000 euros annually over 25 years — a sum that, after that period, would amount to essentially buying one three-room apartment for 130,000 euros, which would then already need renovation. Rent for a three-room apartment, the most in-demand size, would exceed 500 euros a month plus utilities, a price considered too high for the region, with little actual demand at that level.
Kuldīga municipality council chair Inese Astaševska said the 25-year financial commitment would significantly affect the budget, noting that a recently signed contract for designing and building a social housing project shows the same goal can be achieved more cheaply. She also pointed out that private developers have started building apartment buildings in Kuldīga over the past two years.
Criticism of the process
Alūksne municipality also withdrew, deeming construction costs unacceptably high. Council chair Dzintars Adlers said rental prices could be improved if municipalities were allowed greater input into drafting program requirements and if construction in each municipality's territory were split into separate tender lots, which would lower costs somewhat.
Adlers compared the situation to the Rail Baltica project, where an initial agreement was later followed by unexpected costs, obligations and inflation-driven increases.
While the housing shortage in the regions remains a real problem, municipalities believe attracting private investors offers a more effective solution.
