Questions are mounting regarding the mechanisms for implementing the system of expropriation of real estate for the public interest and the temporary seizure of real estate, following the Cabinet’s approval of the decision and its publication in the Official Gazette. The new system comprises 39 articles governing the process of expropriation and temporary seizure of real estate.
What is the amount of compensation for expropriation for public benefit in the Kingdom?
The system provides the owner with multiple options for compensation, in order to strike a balance between development and the protection of private rights. The system stipulates that the owner be compensated for the market value of the property plus 20%, as well as compensation for damages that may be incurred by the owner, such as rental costs.
Compensation mechanisms are not limited to providing a monetary sum to the owner; there are other options, such as receiving a replacement property or shares in the project subject to expropriation. To ensure transparency and that everyone receives their full rights, it was decided to publish expropriation decisions in official newspapers and allow for objections to them.
Compensation under the Real Estate Expropriation for Public Interest System
According to the system, those whose property is expropriated are exempt from real estate transaction taxes incurred when purchasing a replacement property for the expropriated property, and are also exempt from vacant land fees if their compensation consists of a replacement plot of land.
If a person receives compensation in the form of a replacement plot of land, it must be located at the site where the property was expropriated, or at any other location offering benefits comparable to those of the expropriated site.
Compensation is not limited to property owners alone; it is also made available to business owners and affected small enterprises, which underscores the Kingdom’s commitment to transparency.
Benefits of Implementing the Real Estate Expropriation System
The implementation of the real estate expropriation system for the public interest is part of the Kingdom’s efforts to support the investment environment and strengthen the confidence of local and foreign investors in the real estate market, especially as it is a competitive market attracting global investor attention as a promising market.
Cases in Which Property Is Expropriated and Temporarily Seized
The law specifies the cases in which ownership is revoked and temporary seizure is imposed, namely when implementing projects related to the development of facilities at the Two Holy Mosques and Hajj and Umrah requirements, or road and transportation projects in all forms—whether land, sea, or air—or energy sector projects, such as electricity and water networks and sanitation systems.
Effective Date of the Expropriation Regulation in the Kingdom
Expropriation and temporary seizure of property are scheduled to take effect 120 days after the regulation is published in the official gazette “Umm al-Qura.”
