Developer loans via Latvian platforms

A licensed crowdfunding platform stands between you and the developer. What that means for security, rank, platform failure and tax.

Lending to a real-estate developer is normally something banks and funds do. Platforms in the European Union have opened a narrow retail route to it: you lend a small amount to a project, alongside many other investors, through a licensed intermediary. In Latvia this runs under the EU crowdfunding rules and the supervision of the central bank, Latvijas Banka. This guide explains how that route works, what you actually hold, where the risks sit and what to check. It is general information, not financial, legal or tax advice, and money lent this way can be lost in full.

A different product from the German direct loan

If you have read our piece on how a private loan to a German developer works, keep the difference in mind. There the lender signs one loan agreement with one developer and takes a land charge to secure it. On a Latvian platform you normally register with the platform, accept its terms, and your money joins other investors' money in a loan to a project owner that the platform arranges. The platform sits between you and the borrower, and its own health becomes part of your risk. The two products differ in rights, terms and protections, and they cannot be compared like for like. Nothing in this article describes an offer from us.

How the platform route is regulated

Since 10 November 2021 a platform that offers crowdfunding services in the EU needs an authorisation under Regulation (EU) 2020/1503. In Latvia the authorising supervisor is Latvijas Banka. It publishes its authorisation decisions and keeps a register of authorised providers, and ESMA keeps a single EU register that also shows which services each provider may offer and in which countries. Latvijas Banka has announced authorisations for several providers, for example SIA LANDE Platform and SE Capitalia. We name them only as examples that the central bank has made public, not as a recommendation.

What the regulation gives a retail investor:

A key investment information sheet for each offer, in a standard format.
A reflection period before a binding commitment: four days for investors who are not classed as sophisticated.
For non-sophisticated investors, an entry knowledge test and a simulation of whether you could bear the loss of the whole investment.
A cap of EUR 5 million per project owner over 12 months, so these platforms finance small and mid-size projects rather than large developments.

What it does not give you: a promise of repayment, deposit insurance, or any assurance that a particular loan is secured. Whether a loan has security is decided by the offer, not by the regulation.

Check a platform's status in the Latvijas Banka register and the ESMA register yourself before you send money. Authorisations can be returned or withdrawn, as the Estonian case in our guide to lending platforms in Estonia shows.

What you actually hold

Usually a claim against the project owner under a loan agreement, acquired through the platform. Read the terms to see in whose name the claim and the security stand: yours, the platform's or a separate collateral agent's, and what happens to them if the platform stops operating. We could not find one standard structure across Latvian platforms, so ask in writing and keep the answer.

Security is the part that is easiest to misunderstand. In Latvia a mortgage over real estate is created by registering it in the Land Register (Zemesgrāmata), and priority between mortgages follows the order of registration. A change of rank also has to be registered. A guide by local lawyers says there are generally no special restrictions on foreign lenders taking mortgage security. Platforms describe their own loans as secured by first-rank mortgages. The offers we looked at also combined a mortgage with personal sureties from the owners, and some projects used a first-rank mortgage for most of the financing and a second-rank mortgage for the rest. These are the platforms' statements about their loans, not verified facts about any particular loan.

A first-rank mortgage is a right to be paid first from the sale of the property. It is not a promise that the sale will cover the debt, and a second-rank mortgage is paid only from what is left after the first.

Where the risk sits

Developer risk: construction delays, cost overruns, unsold units, a weak refinancing exit. A project loan is repaid from sales or refinancing, so the borrower's problem becomes yours.
Valuation and loan-to-value: a lower loan against the appraised value leaves more room for a price fall, but appraisals are opinions and forced sales usually fetch less than the appraised value.
Enforcement time: recovering from a mortgage means court or auction steps that can take long, and a loan can sit in recovery for years.
Platform risk: if a platform stops operating, someone else has to service and recover the loans. In 2026 an Estonian platform returned its licence and began winding down; we describe it in the Estonian guide.
Illiquidity: you normally cannot withdraw. A secondary market, where one exists, has no guarantee of buyers and may sell at a discount.
Concentration: a few large loans can dominate a small portfolio.
Location: the project may be in another country than the platform's seat, so check where the property is and which law governs the security.
No deposit protection: money lent through a platform is not a bank deposit and is not covered by deposit insurance.

Tax in brief

Latvia's domestic rules, as summarised in PwC and KPMG tax guides, apply no withholding tax to interest paid to non-residents, except to persons in low-tax jurisdictions, where a 20% rate applies. We did not find a clear statement of the position for non-resident individuals, and a tax treaty or the platform's own reporting can change the outcome. The country where you are tax resident will usually tax the interest too, under its own rules. Ask a tax adviser before you invest and keep the platform's tax statements.

What to check before you invest

The platform's authorisation in the Latvijas Banka and ESMA registers, and which services and countries it covers.
Who holds the security, how it is registered and what happens if the platform stops.
The loan's rank, its loan-to-value and the date and method of the valuation.
The borrower: accounts, track record, other debts and any owner sureties.
The exit plan: how the project owner expects to repay and what happens if sales slip.
Fees, what is deducted before repayments reach you, and how late payments and defaults are reported.
Your own tax position and any tax certificates the platform provides.
Whether the amount is money you can afford to lose entirely.

Questions we hear

Is a platform loan safer than a direct loan? Not by default. You gain diversification across many small loans and lose direct control, and you take on the platform as an extra link in the chain.

Does the first-rank mortgage protect my capital? It gives you priority over other creditors on the sale of the property. It does not guarantee that the sale price covers the loan.

Can a non-resident invest? Platforms set their own onboarding rules and country lists. Check the terms and your own country's rules on cross-border investments.

How much should one project be? Whatever you could lose without harm. Spread across projects if you invest at all.

How we help

We do not offer or arrange loans on Latvian platforms. If you are weighing Latvia as a place to buy property, we can help with that side of it, starting from buying property in Latvia as a foreigner. We can also talk through the German project financings we work with and the documents and terms behind them. This is general information only, not financial, legal or tax advice.

Lending to developers through Latvian platforms: how it works and where the risk sits