In this article, we are going to showcase the regulations of vacant property fees in Saudi Arabia, in addition to its role in achieving the balance between the landlord and tenant and enhancing the prices stability.
What Are Vacant Properties?
First of all, we need to know what the vacant properties are to determine exactly how these fees will be implemented.
Basically, it means the buildings that are located within urban boundaries that remain unused for extended periods without an acceptable justification, where the lack of utilization affects the availability of adequate supply in the real estate market.
In simple terms, while the original “White Land Tax” targeted empty and undeveloped plots of land, these newer regulations expand the scope to target existing, ready-for-use buildings that are being left entirely empty or idle.
What is the Vacant Property Tax in Saudi Arabia?
It is known as the estimated value or percentage that is calculated for renting a property similar to the vacant property subject to the fees, in terms of location, area, usage and structural condition within the same urban boundary, during the same period, which is known as fair market rent.
Regulations of the Vacant Property Tax in Saudi Arabia
This value is not imposed as actual rent on the tenant, but is rather used as a basis for calculating the annual fee on the vacant property, in accordance with the idle lands and vacant properties. The following are the most important regulations:
The Last Approved Rental Value
During renting a previously occupied property, the estimated renting value of the occupied property is calculated according to the last approved rental value in Ejar Platform.
This regulation came to protect tenants from illogical rent increasings in the occupied property without an economic reason
The Determination between Two Parties by Agreement
If the property was not rented before at all, both parties are able to determine the agreed value in the condition of documenting it Ejar Platform, according to what both parties see as compatible with the market.
How to Object about the Estimated Value?
If there are some reasons like complete maintenance, high increase in the property value or the last contract that dated back to a long time, which means before 2024.
Here, the landlord can object by applying to the Real Estate General Authority during an estimated date, with providing the required information and documents like a certified real estate appraisal report and building permits.
Importance of These Regulations in Real Estate Stability
Implementing clear regulations to the vacant properties value and imposing mechanisms for correction and accountability are achieving multiple strategic objectives in Saudi Arabia,
These objectives include achieving the real estate balance between tenant and landlord rights, which leads to reducing conflicts in the market. Additionally, these regulations will prevent unjustified price increases that could burden tenants, especially in high demand cities.
On the other hand, this will enhance competitiveness and transparency by registering contracts and their rental rates on the unified electronic platform. In addition to protecting social stability by ensuring rents remain within reasonable levels.
(FAQ)
Here are the most frequently asked questions about the regulations of vacant property fees in Saudi Arabia:
Is the Rental Value of Vacant Properties affected if the Property remains unused?
Yes, the duration a property remains vacant without use is an influencing factor on its rental value, as it may lead to a reassessment of the property’s rental value based on fair market rent.
Additionally, the property may be subject to regulatory measures, such as imposing an annual fee on vacant properties, if it is proven that leaving it unused was without legitimate justification.
What is the Vacant Property Fee Percentage in Saudi Arabia?
An annual fee is imposed on vacant properties as a percentage of the fair market rent, not exceeding 5% of the property’s value. The Council of Ministers may increase this rate to 10% based on a proposal from the competent ministerial committee.
Ultimately, the vacant property fee in Saudi Arabia is a regulation that serves the real estate market, as plenty of other regulations that you can discover through Bayut Blog.
