The Ministry of Municipalities and Housing announced the adoption of the executive regulations of the annual fees on vacant properties, in line with the directives of His Highness the Crown Prince - may Allah protect him - to achieve balance in the real estate market, a regulatory step that aims to motivate property owners to pump their units into the market.
Regulations of the annual fees on vacant properties.
Owner Obligations and Application Criteria
The new regulation obliges owners to continuously disclose and update their property data periodically, which enhances market transparency and raises the quality of data available for oversight. The draft has set precise conditions for subjecting the property to the fee, most notably its location within the targeted application area, being technically occupiable, and not achieving the minimum consumption of basic services (such as electricity and water) during the vacancy period.
Vacancy Controls and Evaluation Mechanisms
The regulation resolved the controversy over the mechanism for calculating the vacancy period, as a continuous or separate 6-month period during the reference year. This adoption comes after the end of 3 weeks after the Ministry of Municipalities and Housing presented the draft regulation through the ”Explore" platform, which stipulated the formation of specialized technical committees to estimate the fee based on "like for like" and according to current market standards, without relying on the purchase price recorded in the deed.
Expected impact on the real estate scene
These fees are expected to lead to a radical shift in the behavior of landlords; linking the fees to the market and rental value will contribute to reducing price inflation and achieving fairness in valuation. Experts also expect that this regulation will complement what the "white land" fees started, by turning closed units into available supply, which will contribute to lowering prices, raising the level of competition, and enabling citizens to obtain various housing options at fair prices.
These fees are expected to lead to a radical shift in the behavior of landlords; linking fees to market and rental value will contribute to reducing price inflation and achieving fair valuation.
Highlights of the Executive Regulations on Vacant Property Fees
The percentage of the fee is up to (5%) of the value of the building The executive regulations set the annual fee on vacant properties at a percentage of the similar rent, not exceeding 5% of the value of the building.
The executive regulations set the annual fee on vacant properties at a percentage of the rent of the same, not exceeding 5% of the value of the building.
Vacant properties are buildings located within the urban area, which are unused for a long time without an acceptable justification, which affects the provision of sufficient supply in the real estate market. Vacant properties are buildings located within the urban area, which are unused for a long time without an acceptable justification.
Vacancy duration applies to occupiable buildings within the applicable geographical zones, once they have been vacant for 6 months during the reference year, whether continuous or intermittent.
Scope of application The fees within a specific geographical area of the city are determined by a decision of the Minister, based on indicators including vacancy rates, real estate prices, housing costs, supply and demand.
