Latvia: EIB and Latvian government to collaborate on affordable rental housing

• EIB’s Advisory Services to help drive implementation of policies to ease housing squeeze in Latvia
• First phase of project aims to construct up to 2,260 affordable rental apartments across country

The European Investment Bank (EIB), the Latvian Ministry of Finance and the Latvian State Real Estate Company (SRE) have joined forces to expand affordable housing in Latvia. The EIB’s Advisory Services will assist the Latvian government in devising a blueprint for the sector, including in the areas of financing, procurement and pilot project development suitable for EIB funding. This initiative is funded by the InvestEU Advisory Hub.

Latvia faces a serious shortage of affordable and sustainable housing. Latvia has one of the smallest social housing stocks among countries in the Organisation for Economic Cooperation and Development – less than 2% of the total housing stock compared with about 7% in other OECD nations. The key challenges in Latvian housing policy are poor quality, overcrowding, low market activity and limited mortgage access for some residents, according to a study conducted earlier this year in municipalities in Latvia.

“We are pleased to be partnering with Latvia to pioneer a new approach to accelerate and scale-up the implementation of affordable housing,” said EIB Vice-President Thomas Östros. “We recognise that there is a massive investment gap in affordable and social housing across Europe as well as a huge need for renovation of the existing housing stock. The EIB is strongly committed to addressing the investment gap. This is one of our eight strategic priorities.”  

In a parallel move today in the capital Riga, a broad range of Latvian municipalities signed collaboration agreements with the State Real Estate Company (SRE) to develop affordable and energy-efficient housing for young professionals and their families in sectors important to the state and local governments. These include teachers, medics, firefighters, police officers, military personnel, state and municipal employees. The first phase of the project – with the advisory support by the EIB - aims to construct up to 2,260 apartments, with a minimum target of 1000, in places such as Daugavpils, Jelgava, Jēkabpils, Liepāja, Rēzekne, Valmiera, Kuldīga, Ķekava, Olaine, Alūksne, Cēsis, Sigulda and Riga by 2030.  

"The development of public-private partnership projects is a high priority for the growth of Latvia's investment portfolio,” said Latvian Minister of Finance Arvils Ašeradens.  “The EIB Group, as a strategic partner, plays a crucial role in both public and private investments in Latvia. This is the first time such a large-scale consultancy agreement with the European Investment Bank has been signed in Latvia, ensuring that international institutional investors can also finance the construction of affordable rental housing.”

Minister Ašeradens added: “I highly value the EIB's interest and contribution to the development of the program and believe that collaboration with the bank's highly qualified and experienced experts will equip the public sector with new skills for the successful implementation of similar projects in the future. I look forward to continue close cooperation in supporting both municipalities and the state through the decision-making process next summer, so we can move forward with the selection of the private partner."

Social and affordable housing is a priority for the EIB. The bank has established a Housing Task Force to tackle housing challenges across Europe, engaging a diverse range of stakeholders from policy to implementation. Additionally, the EIB is collaborating with the European Commission to develop a new Housing Investment Platform that integrates upstream advisory and downstream financing, creating a “one-stop-shop” for affordable housing. Over the past five years, the EIB has lent approximately €9.4 billion to social and affordable housing, averaging over €1.3 billion per year.

Background information

About the EIB and EIB Advisory Services

The European Investment Bank is the long-term lending institution of the European Union (EU). It finances sound investment contributing to EU policy goals.

The EIB offers a large range of advisory services that embrace all stages of the project cycle to make investment projects happen within and beyond the European Union. Advisory activities constitute the third pillar of the lending, blending and advising strategy pursued by the EIB Group. Through its advisory function, the EIB Group supports the European Commission, EU countries and public authorities, private companies and financial partners in pursuit of overarching EU goals – to accelerate the green and digital transition and to tackle social and economic inequalities on the continent.

EIB Advisory has a proven track record in Latvia, having provided support for the Ķekava Bypass public-private partnership, which was successfully financed by the EIB. This landmark project not only benefited Latvia but also served as a model for implementation in the wider Baltic region.

About InvestEU

The InvestEU programme provides the European Union with crucial long-term funding by leveraging substantial private and public funds in support of a sustainable recovery. It brings together under one roof the multitude of EU financial instruments currently available to support investment in the European Union, making funding for investment projects in Europe simpler, more efficient and more flexible. The programme consists of three components: the InvestEU Fund, the InvestEU Advisory Hub and the InvestEU Portal.

The InvestEU Advisory Hub, through advisory support offered to project developers, improves the quality of investment projects and their alignment with the EU long term policy goals.