When the global financial crisis really got a grip in 2008, the property markets of the Baltic states were hit as hard as any of the West’s powerhouse economies. In the years leading up to the peak of the market in 2007, Latvia, Lithuania and Estonia were pitched as promising investment destinations; former Russian states, they were promoted as promising new countries set to benefit from being in the EU and consequent foreign investment, as well as imminent membership of the Eurozone (only Estonia has currently joined the euro).

The temptation to invest in buy-to-let residential property in one of the booming capital cities of the Baltics was understandably high but, unfortunately, a number of foreign investors, as well as local homebuyers, have been caught out. Between 2007 and 2010 prices in Latvia, for example, fell by more than two thirds. Today property in Riga is typically valued at half its 2007 value.

The knock-on effect for investors who bought on easy credit is that for many of them, the rent they receive from a buy-to-let property today no longer covers their mortgage repayments against the property. Typically, the rent one investor receives from an apartment in Riga they bought in July 2007 for €280,000 euros now only covers around half of the monthly mortgage repayment.
 
However, if you’re looking for an affordable lifestyle destination somewhere rustic and off the beaten track from your typical expat destination, one British agent who splits his time between Spain and Latvia believes the latter could be your perfect option.

Michael McLaughlin of www.southerncomfit.com told OGC: “The term ‘undiscovered gem’ tends to be a cliché but it applies to Latvia. It has four seasons and more sports and pastimes than one can shake a stick at. From bob-sleighing to skiing, chair-lifts, horse riding, rafting, canoeing or forest wanderings.”

Roughly the size of Ireland and with a population of less than 2 million, Latvia is a land of endless forests, rolling wheat plains, log cabins and inns, while its capital, Riga, is known as the Pearl of the Baltic.

Adds McLaughlin: “Property costs, when set against those in the rest of Europe, are breathtakingly low. As a rule of the thumb work on half the price you would pay in Spain or a fraction of the cost of similar properties in the Home Counties of England.”

Purchasing a property through an estate agent in Latvia is bureaucracy free; painless and quick. Typically completion can be effected within eight days. All conveyance costs fees are included in the price. Property purchase VAT is set at 22 percent but is variable and property tax is 1.5% of the cadastral value.

Concludes McLaughlin: “Resale apartments can be purchased for 50% less than a comparable property in Spain but for a modern penthouse with scenic views work on 100,000 Lat (£123K). Perhaps better value for money, a smallholding in a leafy lane could be yours from 50,000 or a palatial country lane villa set in exquisite gardens for less than the price of UK city apartment.”