Lithuania By the end of the 14th century Lithuania was the largest state in Europe. An alliance with Poland in 1386 led the two countries into a union through the person of a common ruler. In 1569, Lithuania and Poland formally united into a single dual state, the Polish-Lithuanian Commonwealth. This entity survived until 1795, when its remnants were partitioned by surrounding countries. Lithuania regained its independence following World War I but was annexed by the USSR in 1940 - an action never recognized by the US and many other countries. On 11 March 1990, Lithuania became the first of the Soviet republics to declare its independence, but Moscow did not recognize this proclamation until September of 1991 (following the abortive coup in Moscow). The last Russian troops withdrew in 1993. Lithuania subsequently restructured its economy for integration into Western European institutions; it joined both NATO and the EU in the spring of 2004.

Lithuania in the EU including links to Lithuanian government sites and Tourist Information.

Lithuania is the southernmost of the three Baltic states – and the largest and most populous of them. The Lithuanian landscape is predominantly flat, with a few low hills in the western uplands and eastern highlands. The highest point is Aukštasis at 294 metres. Lithuania has 758 rivers, more than 2 800 lakes and 99 km of the Baltic Sea coastline, which are mostly devoted to recreation and nature preservation. Forests cover just over 30% of the country.

The capital, Vilnius, is a picturesque city on the banks of the rivers Neris and Vilnia, and the architecture within the old part of the city is some of Eastern Europe’s finest. Vilnius university, founded in 1579, is a renaissance style complex with countless inner courtyards, forming a city within the city.

Property information: The housing stock was rapidly privatized after the re-foundation of the State of Lithuania on March 11, 1990. Today 97.6% of the housing stock is in private ownership. The rental sector is very small - if one excludes the 8% of the population who live in buildings owned by friends, only 3% rent from a private landlord, according to Statistics Lithuania (though the Free Market Institute’s Household Study produces higher figures).

Except for agricultural lands, there are virtually no restrictions in foreign ownership of land in Lithuania.

Purchase procedure: There have been instances of some resale homes being sold without the correct title deeds, but this is not a problem that can not be avoided with the use of an independent solicitor. Be aware that the purchase contract is highly likely to be in the local language, so if your solicitor is not bilingual you will need to arrange for a professional translation.

A sale agreement of any property must be certified by a notary. Failure to notarize an agreement makes it null and void. Transfer of property is documented by an act of transfer-acceptance signed by both seller and buyer. It is worthwhile to note, however, that the registration of the agreement on the Property Register is not a precondition to its validity.

It takes an average of three days to complete the three procedures needed to register a property in Lithuania.

Failure to notarize the sale/purchase agreement makes the transaction null and void by law.

Registration of sale/purchase agreement is not mandatory. However, to protect the interest of both parties, registration with the Property Register is highly recommended. Registration typically takes 14 days, but it can be expedited by paying a surcharge on the normal table of fees which are quite reasonable.

Fees/Costs: Usually, estate agent's fees are typically 1.5% to 3.0% of the purchase price, plus 18% VAT.

Notary fees are 1%. Land registration fees of €100 (£90), valuation fees of €100 (£90), mortgage arrangement fees of one per cent, and relevant insurance costs. A two per cent purchase tax will also need to be paid before the property is registered at the land registry.

 

 

Taxes: New buildings, defined as buildings sold within 24 months of completion or improvement, are subject to 18% VAT.

 

 

Loans/Mortgages: Local mortgages are available at competitive rates, usually from around 3.5 per cent, and finance is available for up to 100 per cent of the purchase price – although 85 to 90 per cent is more common. The mortgage market is a highly competitive one as more locals realise the benefits of such financing options, though global credit restrictions have caused the stream of credit to slow considerably.

The loan issued will depend on your ability to repay the mortgage, as well as the type of property that you are hoping to secure it against, and it will be conditional upon the property being correctly insured. You may find it easier to get a mortgage on a new home but all properties, even if they are new build, will have to pass a bank valuation. However, be aware that terms and conditions change depending on how many properties you own. Local banks are unlikely to lend more than 50 per cent LTV (loan to value) for any successive properties.

Rental Market: Rents can be freely negotiated between the landlord and the tenant. On renewal of a tenancy contract, the tenant has the right to first refusal. If he cannot agree terms with the landlord, he may go to court for arbitration of the amount of rent.

The tenant must pay the rent not later than the 20th calendar day of the following month, unless other periods are provided in the contract.

Deposits; The landlord cannot ask for more than the first month in advance.

A lease for more than one year must be in written form. If the period is not stated in the contract, the contract is deemed to be for an indefinite period.

On expiration the tenant has the priority right to renew for a new term, and for the same duration, except where the previous contract exceeded twelve months. In that case the contract is renewed for twelve months, unless the parties agree otherwise.

The landlord may propose modifying the lease conditions, including the contract term and rent amount, in writing, not later than three months and not earlier than six months before expiry of the contract of lease (or where the lease is for a term shorter than 12 months, not later than one month before the expiry of the lease).

If the tenant disagrees, he must inform the landlord in writing within a month, otherwise he shall be deemed to have agreed, and he shall have the right within a month of receiving notification to apply to the court for the determination of the conditions of the contract of lease through judicial proceedings.

The tenant can dissolve the lease by warning the landlord in writing a month in advance.

The right of occupancy is enjoyed by the lessee’s family members.

The landlord may evict the tenant:

  • If the tenant fails to pay rent or the utilities for at least three months
  • If the tenant or his family or other co-residents destroy or damage the dwelling
  • If they create conditions which make it impossible for persons in the immediate area to lead a normal life

In such cases, the landlord does not have to provide an alternative dwelling.

Financial crisis 2008/09: Lithuania’s house prices continue to fall, with the economy stagnating and the credit markets are freezing.

After enormous price increases from 2003 to 2006, Lithuania’s residential property prices peaked in early 2007, and then stayed flat until the first quarter of 2008. After that, the house price bubble started to deflate.

In Q4 2008, the average price of newly constructed apartments in Central Vilnius with full finish was €2,640 per sq. m., down 22.4% from a year earlier. Given Lithuania’s high inflation, the average price actually dropped 29% in real terms.

The average price of renovated old 1-room apartments in central Vilnius also dropped by 20% y-o-y (a fall of 27% in real terms) to €2,520 per sq. m. in Q4 2008.

The housing deflation was evident all over Lithuania, in Vilnius, prices for flats of old construction plunged by 23%; in Kaunas – by 15%; in Klaipeda – by 24%; in Siauliai – by 13%; and in Panevezys – by 9%, according to reports by ELTA, the Lithuanian News Agency.

The effects of the global financial meltdown, combined with tighter credit conditions and government-imposed anti-inflationary measures led to an economic slowdown and this in turn has pushed house prices down.

Unless the government acts decisively, the housing market stagnation is forecast to last until 2012. 

 

Map of Lithuania
LINKS
Investors
Investors Buy Leads
Investors Sell Leads

Buying in Europe

Andorra
Austria
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
Finland
France
Germany
Gibraltar
Greece
Hungary
Iceland
Ireland
Italy
Latvia
Liechtenstein
Luxembourg
Malta
Netherlands
Norway
Poland
Portugal
Romania
Slovakia
Slovenia
Spain
Sweden
Switzerland
United Kingdom

Buying Worldwide
Australia
Canada
Cape Verde
Morocco
New Zealand
St Kitts and Nevis
Turkey
USA

Vendors, a Quick sale of your property
UK and Ireland
Europe

   

Disclaimer: This guide is for information only and should not be relied upon as definitive. Details have been obtained from various sources and although we have done everything possible to ensure that it is correct, we cannot accept responsibility for it or guarantee its accuracy. This is because processes and laws change frequently, and may also vary dependant upon personal circumstances. You are welcome to use the information provided, but should always obtain confirmation of specific details and get independent specialist and legal advice in the country that the information refers to.

11-11-2009