In a move aimed at balancing the public interest and the rights of individuals, the Public Authority for State Properties revealed details of the Real Estate Expropriation and Temporary Seizure System approved by the Council of Ministers this week, which includes important updates in compensation mechanisms and determining the market value of properties, ensuring speedy payment of dues and fair compensation for those affected.

Fair compensation by an additional percentage

<The Authority explained that expropriation means the transfer of the property from its owner to the project owner in exchange for compensation equivalent to the market value plus 20% as additional compensation for damages resulting from the expropriation procedures. In some cases, the compensation can be in kind (e.g. an alternative piece of land).

<Temporary seizure means utilizing the property for a public benefit for a specific period of time without transferring ownership, with the owner receiving the same rent plus 20% as an annual compensation, in addition to compensation for any damages, with the property being returned after the end of its purpose. The seizure period is limited to 3 years, which can be extended for the same period with the agreement of the concerned parties.

Definition of public interest

The Commission has defined public interest as anything that achieves a public benefit or prevents an overall harm, and includes:

• Roads, transportation and transit projects.
• Urban planning, construction of mosques, hospitals, schools and gardens.
• Development of the facilities of the Two Holy Mosques and Hajj and Umrah rituals.
• Energy, water, electricity, gas, petroleum and sewage projects.
• Drilling, exploration and mining.
• Environmental, wildlife and heritage protection.
• Security projects and military installations.
• Any business determined by the Council of Ministers to be in the public interest.

Valuation and compensation mechanism

• The amount of compensation is determined based on the market value or like-for-like, plus the 20% rate.
• Compensation includes damages resulting from expropriation or seizure.
• Three certified appraisers independently evaluate the property, and their reports are reviewed by a specialized committee to ensure the accuracy of the valuation.
• Compensation is disbursed according to clear timelines, not exceeding 90 days from the completion of the documents.

Tax exemptions

Some of the most prominent incentives recognized by the system:

• Exempting those affected from real estate transaction tax when purchasing a replacement property, for a period of five years, up to the amount of compensation.
• Exemption from white land fees if the compensation is an alternative land.
For its part, the Authority emphasized that these amendments come to control procedures, achieve transparency, and accelerate the payment of compensation to ensure justice for owners, while at the same time allowing the implementation of development and service projects that serve the public interest of the community.

To view the Real Estate Expropriation and Temporary Seizure System. Click here