About reverse land lease

Altum, as the manager of the Latvian Land Fund, has been offering farmers the opportunity to sell agricultural land to the fund with lease and repurchase rights to the seller since November last year. The aim of the service is to provide farms with the financial support necessary for their development and to ensure the stabilization of their financial situation in cases where it is not possible to obtain a loan from commercial banks.

Within five months, the Land Fund has sold reverse leases 32 properties 560 ha area. Farmers have already been issued with new support EUR 1.7 million.

In terms of transactions, the most active regions so far have been Jelgava, Dobele, Rundāle, Jēkabpils, Ventspils, Saldus and Limbaži.

Currently, reverse lease transaction activity is increasing as farms need working capital for spring work.

In reverse lease transactions, the Land Fund acquires the property at a price that corresponds to the average market price of the property at the time of sale minus 10%. The annual rental price of the property is 5% of the purchase price, the rental fee is divided into four equal payments. The lease with repurchase term is five years, while the farm can repurchase the property at a price that is the market value of the property at the time the property is sold to the Land Fund. Thus, the farm already knows the price at which it will be able to repurchase its property at the time of the reverse lease transaction, and this price will not be affected by fluctuations in real estate market prices.

Source: Altum