Saudi Real Estate Regulations

Non-Saudi nationals and GCC citizens can own real estate in Saudi Arabia, subject to certain conditions:

• Non-Saudis can own property for personal residence or investment, but must obtain a license from the Ministry of Municipal and Rural Affairs
• Foreign ownership is restricted in Mecca and Medina (holy cities)
• GCC citizens have the same ownership rights as Saudi nationals
• Corporate ownership by foreign entities is permitted under the Saudi Arabian General Investment Authority (SAGIA) license
• Maximum ownership area may be limited by zoning regulations

The Sakani program (part of Saudi Vision 2030) aims to increase home ownership among Saudi citizens:

• Targets 70% home ownership rate among Saudi citizens by 2030
• Provides subsidized mortgages through the Real Estate Development Fund (REDF)
• Offers ready-built villas and apartments at subsidized prices
• Supports self-construction through land grants and loans
• Monthly financial support for rental assistance (Dharah program)

The Real Estate Transaction Tax (also known as Ejarat or White Land Tax):

• 5% tax on the sale value of real estate transactions (reduced from 10% for first home purchases)
• White Land Tax: 2.5% annual tax on undeveloped land in designated urban areas
• VAT on commercial real estate rentals: 15%
• Zakat and income tax may apply to commercial real estate investors

The Saudi Central Bank (SAMA) regulates mortgage lending:

• Maximum loan-to-value (LTV) ratio: 85% for first homes (residential), 70% for second homes
• Maximum debt burden ratio: 30% of gross monthly income for mortgage payments
• Minimum down payment: 15% for first home, 30% for subsequent properties
• Mortgage terms up to 25 years for residential properties
• Islamic financing (Murabaha, Ijara) is the standard form of mortgage

The Ejar electronic rental system is mandatory for all residential and commercial rentals:

• All rental contracts must be registered on the Ejar platform
• Standardized lease agreements with clear terms and conditions
• Rental disputes resolved through the Rental Disputes Committees
• Maximum annual rent increase: 5-10% depending on the district category
• Electronic payment and contract management

The Ministry of Justice provides several digital services:

• REST (Real Estate Services Platform): digitizes all real estate transactions
• Risan: platform for real estate brokers and agents licensing
• Electronic title deeds (Aqari): digital property ownership records
• Real estate dispute resolution through specialized courts

Key real estate reforms under Saudi Vision 2030:

• Introduction of premium residency (Iqama) for foreign investors, enabling property ownership
• Development of special economic zones and entertainment cities
• Expansion of the hospitality and tourism sectors driving commercial real estate demand
• Public Investment Fund (PIF) backed mega-projects in Jeddah, including the Red Sea Project
• Jeddah Central Project: major urban development on the waterfront
• Liberalization of property laws to attract foreign investment