Minister of Municipalities and Housing Majid Al-Hogail confirmed that the decision to impose fees on vacant units comes within the efforts to regulate the real estate sector and achieve balance between supply and demand, explaining that the new policy aims to raise the efficiency of utilizing unused units and enhance market stability.Speaking at the government press conference on Wednesday, Al-Haqeel explained that the recently approved regulation within the “Real Estate Balance” program granted a specialized ministerial committee the authority to set controls and criteria for the application of fees, according to detailed studies that take into account the conditions of the real estate market in various regions and cities of the Kingdom.
Haqeel explained that the new policy aims to make efficient use of unused units and enhance market stability.
He pointed out that the application of fees will not take place immediately, but will be subject to a gradual and studied mechanism linked to specific indicators, including the rise in rental prices or the lack of housing supply in some areas, after a year of monitoring these indicators.
The Minister of Municipalities and Housing indicated that the committee will determine the type of properties that will be covered by the fees, whether residential units or offices and shops, in addition to determining the duration of vacancy that requires the imposition of fees.
Minister of Municipalities and Housing indicated that the committee will determine the type of properties to be covered by the fees, whether they are residential units or offices and commercial shops, in addition to determining the duration of vacancy that necessitates the imposition of the fees.
Haqeel stressed that the aim of the policy is not to impose penalties on investors or property owners, but to stimulate the operation of unused units and increase the real estate supply, thus contributing to providing more options for citizens and the commercial sector and stabilizing the market.
He concluded his statements by stressing that the Kingdom is working to develop a more flexible and efficient real estate system, capable of dealing with economic changes and market challenges, to support the sustainability of growth in the real estate sector.
Minister of Municipalities and Housing
Earlier today, the Ministry of Municipalities and Housing announced the adoption of the executive regulations for the annual fees on vacant properties, in line with the directives of His Highness the Crown Prince - may God protect him - to achieve balance in the real estate market, a regulatory step that aims to motivate real estate owners to pump their units into the market.
Earlier today, the Ministry of Municipalities and Housing announced the adoption of the executive regulations of the annual fees on vacant properties.
Owner Obligations and Application Criteria The new regulation obliges landlords to continuously disclose and update the data of their properties on a regular basis.
Vacancy Controls and Evaluation Mechanisms Expected impact on the real estate scene These fees are expected to lead to a radical shift in the behavior of landlords.
Highlights of the Executive Regulations on Vacant Property Fees 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 that are not used 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 that are not used 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.
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.
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.
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 a variety of housing options at fair prices.
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.
