Regulations Regarding the State Assistance in Purchase or Construction of Residential Space

Issued pursuant to
Section 27.¹, Paragraph one of the Law on Assistance in Solving Apartment Matters,
and Section 12, Paragraph four of the Development Finance Institution Law

1. This Regulation prescribes the procedures by which the State shall provide assistance by partly covering outstanding debt commitments of a debtor with regard to the loan taken out for the purchase or construction of residential space, as well as the institution which administers provision of assistance and criteria for the provision of the State assistance in purchase or construction of residential space.

2. The assistance referred to in Paragraph 1 of this Regulation shall be provided and administered by the Joint Stock Company (akciju sabiedrība) Development Finance Institution Altum (hereinafter - the guarantor) by providing a guarantee within the meaning of the Development Finance Institution Law.

3. A borrower has the right to receive a guarantee, and the guarantor shall examine a guarantee application in the following cases:

3.1. if a mortgage loan (hereinafter - the loan) is provided by a credit institution registered in Latvia, a credit institution registered in a Member State, a branch thereof, or a branch of foreign credit institution which has entered into a cooperation agreement with the guarantor (hereinafter - the cooperation agreement) and has the right to provide loans in Latvia (hereinafter - the lender);

3.2. the lender has certified in writing that the loan will be granted to;

3.2.1. a person, who lives with and in whose care is at least one child, and an amount of the transaction does not exceed EUR 200 000;

3.2.2. a person, who has acquired secondary vocational or higher education and is not older than 35 years of age.

4. The following documents shall be attached to the guarantee application in the case referred to in Sub-paragraph 3.2.1 of this Regulation:

4.1. the document which contains information on the declared or registered address of the place of residence of the borrower in Latvia;

4.2. the copy of a personal identification document issued in Latvia to the borrower - a citizen or non-citizen of Latvia, a person who has been granted with the status of stateless person in Latvia, a citizen of a Member State of the European Union, the European Economic Area or the Swiss Confederation, except for the case referred to in Sub-paragraph 4.3 of this Regulation;

4.3. the copy of a personal identification document issued in Latvia to the child of the borrower - a citizen or non-citizen of Latvia, a person who has been granted with the status of stateless person in Latvia, a citizen of a Member State of the European Union, the European Economic Area or the Swiss Confederation, or the copy of another document which certifies the legal status of the child in Latvia if:

4.3.1. the borrower is not a citizen or non-citizen of Latvia, a person who has been granted with the status of stateless person in Latvia, a citizen of a Member State of the European Union, the European Economic Area or the Swiss Confederation;

4.3.2. it does not arise from the documents referred to in Sub-paragraphs 4.4, 4.5 and 4.6 of this Regulation that the child is a citizen or non-citizen of Latvia, a person who has been granted with the status of stateless person in Latvia, a citizen of a Member State of the European Union, the European Economic Area or the Swiss Confederation;

4.4. the copy of birth certificate of one child or the copy of another document which certifies the legal status of the child in Latvia if the person applies for the guarantee in accordance with Sub-paragraph 6.1 of this Regulation;

4.5. the copies of birth certificates of two children or copies of other documents which certify the legal status of the children in Latvia if the person applies for the guarantee in accordance with Sub-paragraph 6.2 of this Regulation;

4.6. the copies of birth certificates of at least three children or copies of other documents which certify the legal status of the children in Latvia if the person applies for the guarantee in accordance with Sub-paragraph 6.3 of this Regulation.

5. The following documents shall be attached to the guarantee application in the case referred to in Sub-paragraph 3.2.2 of this Regulation:

5.1. the document which contains information regarding the declared or registered address of the place of residence of the borrower;

5.2. the copy of a personal identification document;

5.3. one of the following documents:

5.3.1. if the education has been acquired in the Republic of Latvia - the copy of the State-recognised document certifying education;

5.3.2. if the education has been acquired abroad - the statement (copy) of the educational document to be issued in Latvia or the academic degree to be granted in Latvia to which the educational document issued or the academic degree granted abroad corresponds or may be equalised.

6. In the case referred to in Sub-paragraph 3.2.1 of this Regulation the amount of the guarantee shall be as follows:

6.1. 10 % of the loan amount but not more than EUR 10 000 - to the person who lives with and in whose care is at least one child;

6.2. 15 % of the loan amount but not more than EUR 15 000 - to the person who lives with and in whose care are two children;

6.3. 20 % of the loan amount but not more than EUR 20 000 - to the person who lives with and in whose care are at least three children.

7. In the case referred to in Sub-paragraph 3.2.2 of this Regulation amount of the guarantee shall be up to 20 % of the loan amount but not more than EUR 50 000.

8. The guarantor shall, within five working days after receipt of the guarantee application and all necessary documents referred to in Paragraphs 4 and 5 of this Regulation, examine the guarantee application and the documents attached thereto, and take a decision to provide the guarantee or to refuse to provide the guarantee.

9. The guarantor shall, within two working days after taking the decision referred to in Paragraph 8 of this Regulation, send a copy of the decision to the lender.

10. The guarantor shall take a decision to refuse to provide the guarantee if:

10.1. the documents referred to in Paragraph 4 or 5 of this Regulation have not been submitted to the guarantor;

10.2. the lender has provided the loan for repayment of another loan;

10.3. the borrower has received the State assistance in the form of the guarantee for the purchase or construction of residential space before;

10.4. the borrower has been granted the loan for the purpose other than purchase and construction of residential space.

11. The guarantor shall apply the following guarantee fee:

11.1. in the case referred to in Sub-paragraph 3.2.1 of this Regulation a single fee for the examination of the guarantee application amounting to 2.5 % of the granted amount of guarantee;

11.2. in the case referred to in Sub-paragraph 3.2.2 of this Regulation:

11.2.1. a single fee for the examination of the guarantee application amounting to 4.8 % of the granted amount of guarantee;

11.2.2. an annual fee amounting to 4.8 % of the remaining amount of guarantee which may be split into several payments and paid prior to each subsequent period in conformity with the provisions of the cooperation agreement.

12. The borrower or the lender shall pay the guarantee fee referred to in Paragraph 11 of this Regulation to the guarantor. A single fee shall be determined for the change of guarantee conditions amounting to 1 % of the remaining amount of guarantee.

13. If after taking the decision to provide the guarantee referred to in Paragraph 8 of this Regulation the guarantor has not received the guarantee fee referred to in Sub-paragraphs 11.1 and 11.2.1 of this Regulation, the guarantee shall not be provided.

14. The guarantee shall become invalid if:

14.1. the lender assigns the right of claim arising from the loan to any third party without prior consent of the guarantor in writing;

14.2. the loan has been repaid;

14.3. the loan has not been used for the purchase or construction of residential space;

14.4. the guarantor has not received the fee referred to in Sub-paragraph 11.2.2 of this Regulation;

14.5. the ownership rights to the security of the loan have been corroborated on behalf of a third party other than the borrower.

15. In conformity with this Regulation the borrower has the right to receive a single guarantee for the purchase or construction of residential space.

16. The guarantee shall be provided for a time period not exceeding 10 years.

17. Amount of the guarantee shall be determined in whole per cents from the loan amount.

18. The guarantee shall cover the outstanding principal amount of the loan. The guarantee shall not be provided for covering loan interest, default interest, contractual penalty or other payments.

19. The guarantee shall decrease in proportion to the repaid principal amount of the loan.

20. The maximum amount of the guarantee shall be recorded on the day of setting in of the case of the guarantee.

21. The payable amount of the guarantee shall be paid by taking into account income from realisation of the security of the loan, as well as other received payments which are to be diverted for extinguishing the loan.

22. The guarantor shall also disburse the amount referred to in Paragraph 21 of this Regulation if the borrower has selected an offer of the lender which envisages that the immovable property, for the purchase of which the loan has been taken out, serves as a sufficient security, so that commitments to the lender may be extinguished in full amount.

23. The guarantor shall, on a quarterly basis but not later than 45 days following the end of the prior quarter, submit a report to the Ministry of Economics on the provided guarantees.

24. Cabinet Regulation No. 443 of 5 August 2014, Regulations Regarding the State Assistance in Purchase or Construction of Residential Space (Latvijas Vēstnesis, 2014, No. 155; 2016, No. 129; 2017, No. 175), is repealed.

25. The borrower who at the moment of the submission of the guarantee application meets the conditions referred to in Sub-paragraphs 3.2.1 and 3.2.2 of this Regulation and has submitted the guarantee application after 1 January 2018 has the right to receive the guarantee in accordance with this Regulation.

26. This Regulation shall come into force on 1 March 2018.

Prime Minister, Acting for the Minister for Health Māris Kučinskis

Deputy Prime Minister, Minister for Economics Arvils Ašeradens

Translation © 2018 Valsts valodas centrs (State Language Centre)