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On Thursday, June 15, a discussion took place on the future development of the housing accessibility fund, during which OECD representatives presented the recommendations they had prepared for the long-term operation of the housing accessibility fund in Latvia.
Housing accessibility promotes the mobility of residents, economic development, and the overall welfare of the country. Access to quality housing at an affordable price is one of the basic needs of residents. However, the accessibility of quality housing is a significant challenge, especially in the regions of Latvia. Moreover, the volume of private investment in multi-apartment building construction in Latvia is insufficient, and new homes are mainly being built in Riga and its surrounding areas (Pierīga). Therefore, we have identified improving housing accessibility as one of the priorities of the government and the Ministry of Economics.
"Last year, with funding from the Recovery Fund, the long-term Housing Accessibility Fund was established with an amount of 42.9 million euros to promote the construction and accessibility of quality and low-cost housing for households with insufficient incomes in the regions. The initial goal of the fund is to support the construction of approximately 700 new low-rent housing units outside the capital region by the end of 2026. At the same time, it is important for us that the Housing Accessibility Fund operates effectively and is viable in the long term, so it is essential to continue working on its improvement. Therefore, we hope that the OECD recommendations and the research conducted will help us implement best practices in ensuring housing accessibility in Latvia," emphasized Minister of Economics Ilze Indriksone.
Nathalie Berger, the Director of Support for Reforms Implemented by Member States of the European Commission (EC) Directorate-General for Structural Reform Support, opening the discussion, acknowledged that the availability of quality housing at an affordable price is one of the most critical aspects of achieving a series of social goals. The housing market situation across the European Union has become more complicated, with prices in the first quarter rising by 10-25% compared to the same period last year. The EC representative also emphasized that the EC will continue to support Latvia throughout the implementation of the housing construction project, from its inception to its realization.
During the event, Mark Pearson, Deputy Director of the OECD Directorate for Employment, Labor, and Social Affairs, presented the results and recommendations of an OECD study for the long-term operation of the Housing Accessibility Fund in Latvia.
Within the framework of the European Commission's Technical Assistance Instrument, the OECD deeply studied the practices of various countries in the operation of housing accessibility funds in 2022/2023 to prepare recommendations for the development of Latvia's housing financing fund. The OECD used the experience and practices of Austria, Denmark, the Netherlands, and Slovenia, where affordable housing financing models have been successfully established.
The OECD report provides basic information about Latvia's housing market and the need to expand the available housing stock. It also identifies a series of policy measures that Latvia might consider to expand the newly established Housing Accessibility Fund, maximizing its potential to address the country's housing accessibility and quality issues.
The OECD report includes a roadmap of the necessary steps to be taken in the future and 16 recommendations divided into three thematic blocks:
- Institutional structure: Main recommendations include promoting the emergence of non-profit housing associations in Latvia and assigning a more significant role to municipalities in housing fund investment planning. Collaboration with municipalities to ensure physical and social infrastructure in places where affordable housing construction is planned is also emphasized.
- Financing: The OECD recommends attracting pension fund resources for housing construction, creating "Housing Bonds" to attract private investment, among other financial instruments.
- Supervision and management: It is recommended to consolidate all housing support instruments in one place. Also, the future expansion of the housing fund's activities is suggested, where contributions would finance not only the construction of new housing but also provide funding for maintenance expenses. Equally important is analytical work, which aims to develop the structure of collected data for use in planning necessary investments and analyzing the regional situation.
A summary of the OECD study (in English) can be found [here]. The study summary will also be available in Latvian soon.