Municipal properties are one of the largest public resources in Latvia, that is, almost 212 thousand real estate properties worth 4.7 billion euros. The audit of the State Audit Office of Latvia shows that local and regional governments have not compiled complete and up-to-date information on the status, condition, use, costs and development potential of properties in many places. Without such information, it is more difficult for local and regional governments to justify which properties to keep, which to lease, which to develop and which to sell. The best practice examples identified in the audit show that clear property accounting, profiling, use of electronic auctions and transparent revenue allocation are possible.
IN BRIEF
- At the end of 2025, there were almost 212 thousand real estate properties under local or regional government management with a universal cadastral value of 4.7 billion euros, but local and regional governments lack a complete picture of this portfolio.
- More than half, or 57% of the properties under local or regional government management are in their legal tenure, and property rights have not been corroborated in the Land Register for a long time.
- From 1 July 2021 to 10 January 2026, local and regional governments have concluded 14,165 real estate alienation transactions for approximately 180 million euros.
- Some issues must also be addressed at the national level such as single management principles, comparable data, an integrated digital solution for public sector properties, and simpler property rights arrangement and alienation processes are needed.
- Latvia should move towards a clear and integrated land policy that balances the needs and interests of various sectors.
“Municipal property is not just a balance sheet item or a way to supplement the budget. It is a public asset that can be used to develop education, social services, businesses, housing, infrastructure and the territory as a whole. At the same time, property can also serve the needs of civil defence, crisis management and national security in current geopolitical situation. We are not saying that property should not be sold. Property that is unnecessary, expensive to maintain or unsuitable for municipal functions should be leased or expropriated. However, such decisions should be based on an assessment and a long-term vision, not just the need to solve budget problems of a current year. Sustainable management of public property requires both good municipal practice and national-level solutions like single management principles, comparable data and a lower administrative burden,” emphasised Mr Oskars Erdmanis, Council Member of the State Audit Office of Latvia.
Lack of an overview of the property portfolio
The audit has found that data on properties in local and regional governments differ significantly. There are local and regional governments where current data is available for more than 90% of properties, but there are also those where data is available for only a part of the properties or it is fragmentary. Municipal properties are recorded in various ways, from Excel tables to separate specialized systems. Only 15 local and regional governments have complete data on properties that provide municipal functions.
There is no single information system for the management of municipal real estate currently. There is such a solution for state real estate, but it has not been extended to local and regional governments. Therefore, it is not possible to compare the practices of local and regional governments in full, analyse the public property portfolio on a national scale, and make data-based decisions. 34 out of 42 local and regional governments recognize the creation or improvement of a single information system as the most important solution.
An additional obstacle is the fact that 120,481 or 57% of municipal properties are only in their legal tenure and property rights are not corroborated in the Land Register in the name of a local or regional government, which limits the ability to act on them in a timely manner if necessary.
Selling properties should be part of a long-term plan
From 1 July 2021 to 10 January 2026, local and regional governments have concluded 14,165 real estate sales for approximately 180 million euros, including 7,633 land transactions for 115.9 million euros. Property disposal may be justified, as it can reduce maintenance costs and transfer properties to more efficient use. However, the audit has concluded that current budget needs often determine selling in local and regional governments, rather than a prior assessment of what property portfolio the local or regional government needs to safeguard its functions and long-term development. This is also confirmed by the fact that 85% of revenue from transactions proposed by local and regional governments was generated from the most financially valuable, forest properties.
Good practice involves profiling properties regularly by assessing them systematically as per function, use and development potential. In practice, the opposite happens because only three local and regional governments profile their properties according to a single methodology for all types of properties, 17 local and regional governments are in the initial stages of the process while properties are evaluated mainly during the preparation of the current year budget in 13 local and regional governments.
After an in-depth analysis of 106 land transactions in 21 local and regional governments, we have concluded that the justification for expropriation decisions and their connection to long-term development goals is not always traceable. This is also confirmed by a survey of popular councils and non-governmental organizations, in which 56.4% of respondents indicated that the strategic approach of local and regional governments to real estate management was unclear.
Land is a strategic resource
Land properties are crucial in the property portfolio of local and regional governments. Land may be needed for municipal functions, business, infrastructure, investment attraction and territorial development. Therefore, decisions on land sales must be particularly well-founded. There are 11,329 land parcels under municipal administration with a total area of 13,482 ha. The audit has detected that the status of remnant parcels is not always sufficiently justified. In the examined transactions with remnant parcels, only one bidder applied in all cases while the price increased by an average of 31% for agricultural land and 80% for forest land in the examined transactions at open auctions. Therefore, wider competition can bring greater benefits to a local or regional government.
The possibilities of local and regional governments to dispose of part of the land are still limited by the consequences of the land reform. Several thousand lease agreements for unpurchased rural land are still in force with persons who have not used the land redemption rights granted. This limits the ability of local and regional governments to manage these land resources, and the annual rent does not even reach one euro in some cases. The audit has also found cases when properties were sold at a higher price after being purchased from a local or regional government where the total price increase exceeded 170,000 euros. In addition, some of the alienated agricultural lands are not properly managed. In the audited transactions, 47 agricultural land units with an area of 352 ha were unmanaged.
Appeal of the State Audit Office of Latvia #PēcRevīzijas
The State Audit Office of Latvia calls on local and regional governments to improve real estate management by assessing the audit conclusions and their own practices, accumulate more complete information about properties, define the purposes of their use more clearly, base expropriation decisions on an assessment and documented justification, promote competition through electronic auctions, and establish principles for investing expropriation revenues in territorial development and improving property management.
Some issues cannot be resolved only at the municipal level. Local and regional government properties, together with state properties, constitute a significant part of public sector assets, but the real estate management framework established at the state level has not been extended to local and regional governments. Therefore, the State Audit Office of Latvia will address the Prime Minister, the Ministry of Finance, the Ministry of Justice, the Ministry of Smart Administration and Regional Development, and the Ministry of Agriculture by inviting them to assess solutions in four areas in cooperation with local and regional governments, that is, single management principles and indicators, an integrated digital solution for public sector property data, simplification of property rights settlement and expropriation processes, as well as advisory support to local and regional governments.
The management of public land resources should also be assessed separately at the national level. Land is a limited and strategic resource, but issues related to its use are divided currently among several sectoral policies and state institutions. The audit results raise the question, “Does Latvia need a single land policy that would help ensure the sustainable, economic use of public land in favour of public interest?”
Additional reading: audit report summary, infographics
About the State Audit Office of Latvia
The State Audit Office of the Republic of Latvia is an independent, collegial supreme audit institution. The purpose of its activity is to find out whether the actions with the financial means and property of a public entity are legal, correct, useful and in line with public interests, as well as to provide recommendations for the elimination of discovered irregularities. The State Audit Office conducts audits in accordance with International Standards of Supreme Audit Institutions of the International Organisation of Supreme Audit Institutions INTOSAI (ISSAI), whose recognition in Latvia is determined by the Auditor General. Upon discovering deficiencies, the State Audit Office of Latvia provides recommendations for their elimination, but it informs law enforcement authorities about potential infringements of the law.