In compliance with the directives of the wise leadership, and in response to the challenges witnessed by the rental market, a number of statutory provisions have been approved that aim to rebalance the real estate market. According to Ejar, these provisions seek to build a clear and sustainable contractual relationship that preserves the rights of all parties and enhances the stability of citizens and residents.
Highlights of the new procedures
1. Your financial stability in Riyadh
Your rent is fixed for 5 years: The annual increase in the rental value for properties located within the urban area of Riyadh has been suspended. For 5 years, this includes existing and new contracts.
Clear provisions for real estate units: To ensure price fairness, the rental value of vacant properties within the urban area of Riyadh has been fixed according to the last rent registered for it in “Ejar”.
2.
2. Your contract documented in Ejar. Your official guarantee 3.
3. Contractual Stability Automatic renewal and its controls 4.
4. Request to raise or lower the rental value upon renewal What is this service?
What is this new service?
It is an electronic tool that allows the landlord to submit an official request to the tenant to raise or lower the rent value for the next contractual period. How do you ensure the rights of both parties?
How does it guarantee the rights of both parties?
1. The lessor submits his request through Ejar 90 days before the expiration of the contract.
2. A notice is sent to the tenant, who has the full right to accept or reject the request. 5.
5. Balanced mechanisms to preserve the lessor's rights Right to object: The lessor has the right to object to the rental value set for his vacant property in Riyadh in specific cases, such as if the property underwent substantial structural or structural renovations that affected its total rental value or if the last lease contract for the property was before 2024. 6.
6. Compliance with the Provisions Each city has its own specificity. Find out what applies in your city
1. Does the decision include residential and commercial contracts?
Answer: Yes, to ensure the positive impact of the regulations on the entire sector, it applies to all residential and commercial leases. 2.
2. Do the changes apply to all durations of residential and commercial contracts?
Answer: In order to enhance the flexibility of short-term rental transactions, the new statutory provisions apply to contracts longer than three months, except for the price limit, which applies to all contracts. 3.
3. Is it possible to increase the rental value in Riyadh?
Answer: To achieve the goal of stabilizing the market in the capital, the regulatory provisions stipulate that the lessor may not increase the rental value for residential and commercial contracts located within the specified urban area of Riyadh, for a period of five years from the date of entry into force of the provisions. 4.
4. Can the rest of the Kingdom's cities increase the rental value?
Answer: The origin of the rental relationship is the stability of the agreed value. In other cities in the Kingdom (outside Riyadh), the regulations have provided a mechanism to request an adjustment of the rental value upon renewal, but it is not automatic. It is required to submit a request through the platform and obtain the explicit consent of the tenant, ensuring that any change is consensual and achieves a balance that preserves the rights of both the tenant and the lessor. 5.
5. How will the automatic renewal mechanism for new contracts be applied after the decision?
Answer: The automatic renewal option will be mainly activated in new contracts to enhance their stability. The tenant has the right to cancel it at any time (60 days before the end of the contract), while the lessor's right to cancel is subject to specific requirements in Riyadh, and without requirements in other cities (with adherence to the notice period). 7.
7. What are the possible requirements for canceling the automatic renewal by the lessor?
Answer: To promote contractual stability, automatic renewal has become the basic rule for contracts in the Kingdom. Generally, either party can opt out of renewal by giving 60 days" notice to the other party. However, to further protect and balance the capital, a lessor's right to request non-renewal in Riyadh City has been restricted to specific cases: Tenant default, structural issues with the property, or the landlord's desire for personal use by the tenant or a first-degree relative. 8.
8. Who is authorized to submit a request to reduce or increase the rental value?
Answer: The regulations allow the lessor to notify the tenant of a request to modify the rental value 90 days before the end of the contract, and then the tenant has the right to accept or reject the request. 9.
9. How long does it take to accept or reject a request to reduce or increase the rental value?
Answer: To ensure that both parties are given sufficient opportunity, the application period is open from the date it is submitted until 60 days before the expiration date of the contract. 10.
10. What are the consequences for the tenant if he rejects the request to increase or decrease the rental value?
Answer: The regulations aim to achieve contractual stability through the automatic renewal feature. Since this renewal depends on the consent of both parties, if the landlord makes a request to adjust the rental value and the tenant explicitly rejects it, the basis for automatic renewal no longer exists, and the contract ends at the end of its term unless the parties reach a new agreement. 11: The regulations aim to stabilize the contract through automatic renewal.
11. What is the consequence for the tenant if he does not accept or reject the request to increase or decrease the rental value?
Answer: If a request to modify the rental value is submitted and the tenant does not accept or reject the request before entering the notice period (60 days before the end of the contract), this is considered a rejection of the request. As a result, the automatic renewal of the contract is canceled and the contract expires at the end of its term. 12.
12. When a request to reduce or increase the rental value is accepted, when is it reflected in the contract?
Answer: In order to stabilize the financial obligations during the term of the contract, any adjustment in the rental value agreed upon between the parties does not apply to the current active contract, but is reflected in the new contract version upon renewal. 13.
13. What happens if the renewal fee is not paid by the lessor? 14.
14. In what cases can the lessor object to the price limit?
Answer: To ensure fairness in determining the rental value, the regulations allow the lessor the right to object to the price limit in two specific cases: The first is if the property has undergone substantial renovation works that affected its value, and the second is if the date of the last registered lease contract for the property is before 2024." Response: The regulations allow the lessor to object to the price limit in two specific cases.
15. What is the consequence for the tenant if he refuses to raise the rental value offered by the lessor, and are there other options for the tenant to stay in the property at the same price?" 16.
16. If I have a lease documented before 2023 at a lower value than the current market value, can the rent cap be raised?
Answer: Yes, if the last lease for the property was concluded before 2024, the lessor has the right to object to the Public Authority for Real Estate on the set rent value (the date of conclusion of the contract must be before 1-1-2024) 17
17. What is the maximum rent if the property is registered in a lease with no currently active contract?" 18. If the property is new and has not been registered in Ejar before, how is the maximum rent determined?
Answer: The total rental value of a property that has not been previously rented is calculated according to what is agreed upon between the lessor and the tenant, and this value is fixed as a maximum in Riyadh city. 19.
19. If the lessor refuses to document the contract in an Ijar platform, what can the tenant do?
Answer: The landlord must register the contract, and if he fails to do so, the tenant has the right to request that the contract be registered in the network. The tenant can also file a report with the Public Authority for Real Estate.
20. Are all leases automatically renewed?
Answer: Yes, all residential and commercial contracts with a duration of more than 3 months and concluded after the issuance of the decision are automatically renewed unless one party notifies the other of not wanting to renew 60 days before the end of the contract. 21.
21. If the tenant wishes to cancel the renewal of the contract, what is the mechanism?
Answer: The origin of the rental relationship is clarity and stability, so the new regulations guaranteed the tenant his right to non-renewal without any requirements; provided that he applies for non-renewal (60 days before the end of the contract). 22.
22. What is the mechanism for canceling contracts, whether by mutual consent or through a court ruling?
Answer: The mechanism for canceling contracts has not changed, and it will be according to the mechanism currently followed in the platform. 23.
23. If a contract is created after the launch of the relationship regulation decision and the contract term is set at 10 years and the increasing rent icon is activated every year according to the agreement of the parties, what is the procedure?
Answer: In Riyadh city, the unit price will be fixed based on the first agreed value for 5 years from the date of application of the decision, and the increased rent will be calculated only after the expiration of this period. 24.
24. If Ejar platform fees are paid by the brokerage office, is the indebtedness applied to the real estate broker or the lessor?
Answer: The indebtedness for the platform fees is applied to the lessor. 25.
25. What are the basic documents required when submitting any objection, regardless of its type?
Answer: The basic document required for an objection is a certified real estate appraiser's report. If the objection is for renovations, a building renovation license or a license to add or modify a building component is required.
26. Is the report of a private real estate office acceptable, or is it required to be from the Accredited Valuers Association?
Answer: The appraisal report must be issued by an appraiser accredited by the Saudi Commission for Accredited Appraisers. Answer.
27. If the ownership of the property is transferred to a new person (sale or gift), does the previous upper limit continue or is it reassessed?
Answer: The previous upper limit registered for the unit continues, and is not affected by the transfer of ownership. Answer.
28. In Jeddah (or any city outside Riyadh), why isn't the cap stabilization applied like Riyadh, and when can it be extended to the rest of the regions?
Answer: The application of the regulatory provisions in Riyadh came as a first stage, based on the study of the real estate market indicators in the city and the need to apply measures aimed at promoting balance. As for the inclusion of other cities, the regulatory provisions allowed the possibility of expanding the application in the future by a decision of the Board of Directors of the General Real Estate Authority after the approval of the Council of Economic and Development Affairs, based on the determinants and indicators that are continuously monitored. 29.
29. I agreed with the tenant on an increase in the rent and the regulations were issued, do we put the value of the agreed rent in the contract and the property in Riyadh city?
Answer: After the new regulatory controls for the rental market have been launched, it is forbidden to increase the rental value on all cases in Riyadh city, and the upper limit registered by law must be adhered to. 30.
30. The lessor put that the property is outside Riyadh city to evade the controls, what are the procedures for that?
Answer: There is governance over real estate addresses according to the ownership documents. If this happens, the lessor bears the legal consequences of acknowledging the validity of the property data. 31.
31. My landlord is charging me additional fees such as parking fees, cleaning fees, and landlord association fees. What is the procedure for this?
Importance of notarization: The registration of all rental contracts (residential and commercial) in “Ejar” is the official reference that preserves the rights of the parties to the relationship, as stipulated by the Council of Ministers Resolution No. (292) dated 16/5/1438H, which states that an unregistered rental contract shall not be considered a valid contract producing its administrative and judicial effects.
Automatic renewal in all cities of the Kingdom: The lease contract is considered automatically renewed, unless one of the parties notifies the other of their unwillingness to renew at least (60) days before the end of the contract.
Non-renewal Controls in Riyadh: The lessor is not allowed to request non-renewal of the contract if the tenant wishes to do so, except in exclusive and specific cases, including:
<Failure of the tenant to pay the rent.
- Structural issues in the property that affect the safety of the occupants.
- The landlord's desire for a personal residence for himself or a first-degree relative.
As a qualitative addition aimed at increasing clarity in the contractual relationship, the “Request to Modify the Rental Value” service has been introduced, which moves the negotiation process when renewing the contract to an organized and reliable electronic framework.
3.
3. If the tenant agrees: the contract is automatically renewed at the new agreed value.
4.
4. If the tenant refuses: the automatic renewal of the contract is canceled, and this is considered a notice of unwillingness to renew.
4.
<Important note for Riyadh City: In compliance with the suspension of the annual increase, this new service in Riyadh City is limited to enable the lessor to submit a request to “reduce” the rental value only.Frequently Asked Questions About the New Rental Relationship Regulations
6.
6. Is the tenant allowed to cancel the automatic renewal?
Answer: Yes, in order to achieve balance in the contractual relationship, the tenant has the right to cancel the automatic renewal without any requirements, provided that it is done before entering the notice period (60 days before the end of the contract).
Answer: To ensure the continuity of the contractual relationship and preserve the tenant's rights, the contract will continue and renew automatically even if the fees are not paid by the lessor, as they are recorded as a debt on the lessor to ensure that the tenant is not affected.
Answer: Outside of Riyadh, if the tenant refuses the increase, the contract is not automatically renewed and the possibility of staying in the property depends on reaching a new agreement between the two parties. In Riyadh, the lessor may not request an increase at all during the five-year term of the regulations, nor may he refrain from renewing except in the cases specified by law.
Answer: If the vacant property - in Riyadh city - has been previously rented, its total rental value should not exceed the value of the last registered lease.
Answer: Any agreed upon additional charges (such as parking or cleaning) are recognized within the contract as a fixed value for the services. Owners" association fees are not recognized in the rental contract, but are determined by the association manager in the Malak platform.
