Land purchase with entitlement to of rent and buyback by the last owner is a service established for farmers, who are in need to stabilize cash flow and develop economic activities.
Essence of the service
- Farmer sells his agricultural land to the Land Fund of Latvia [Latvijas zemes fonds] together with the sales contract concluding contract on rent and buyback of the property.
- Farmer becomes a tenant, continues to use the land for agricultural production with entitlement to buy the land back after 5 years.
Conditions of the service
The process of purchase and evaluation of the property is implemented in line with the conditions of purchase of properties and the procedure for registration of properties of the Land Fund of Latvia.
- The Land Fund of Latvia shall evaluate the previous business experience and the objectives of the transaction.
- The contract of rent and buyback of the property shall be concluded together with the sales contract of the property.
- The maturity of the contract of rent and buyback is 5 years, and it defines both rent par year and the price of buyback of the property.
- The applicable rent per year shall not be less than the average price of comparable properties at the particular parish or townland, including in the rent the sum of the real estate annual tax, cost of the financing of the sales transaction, administrative costs to monitor compliance with the conditions of the contract.
- Yearly rent shall be split up to four equal payments and should be paid once a quarter.
- Real estate tax shall be paid by the owner – administrator of the Land Fund of Latvia.
Price of the service
- The Land Fund of Latvia purchases the property for the price that corresponds to the average market price of the property at the moment of purchase and applies price reduction of 10% to cover the risks and costs related to the buyback transaction.
- The rent shall be set at 5% the price of purchase per year.
- The buyback price is set as the price of the property at the moment of purchase not exceeding the average market price at the particular parish for property purchase transactions during the last two years (10% price reduction is not applied).
- Lump sum transaction evaluation commission shall be applied to the reverse rent transaction in accordance with the Price-list of services related to the Land Fund property purchase transactions with entitlement to rent and buyback
Regulatory enactments regulating the revere rent services provided by Land Fund are following: Law On Privatisation of the Land in Rural Areas, Cabinet Regulation No. 748 of 02.12.2014 Regulations for Transactions Involving Agricultural Land