Saudi Arabia issues executive regulations of State's Property Rental Law

The Umm Al-Qura Official Gazette reported yesterday, Jan. 27, the executive regulations of the State's Property Rental Law, which aim to regulate the state’s rentals through government agencies. They also aim to rationalize the costs of the government’s property rentals.

The regulations include provisions to enhance the principles of governance and establish the principles of transparency and efficiency in the government’s property rentals. They also defined the role of the State Properties General Authority (SPGA) in supervising this type of rentals.

Under the regulations, the renting government entity may, after obtaining SPGA’s approval, lease the real estate to a subcontractor, or waive it to another government agency without the lessor's consent.

This is subject to certain conditions, including the sublease term should not exceed the main contract term. The space to be rented or waived should be in excess of the actual need of the government entity, and in a manner that does not conflict with its future need for the property.

The sublease value should be equal to the main contract value, in proportion to the leased space, if the contract was concluded with another government agency.

The space to be rented should not exceed 25% of the real estate area.

The government agency should abide by the regulations, decisions, instructions and procedures followed for leasing and investing in the state’s real estate.

The government entity should a submit a copy of the contract to the Non-oil Revenues Development Center.