Executive regs for vacant property fees explained

Saudi Arabia’s Official Gazette published the executive regulations governing vacant property fees, following their recent approval by the Ministry of Municipalities and Housing. The minister will issue any additional instructions required to implement the regulations.

The 18-article regulations defines vacant properties as buildings located within urban boundaries that remain unused for extended periods without acceptable reasons, where the lack of utilization affects the availability of adequate supply in the real estate market.

Under the regulations, owners of buildings designated as subject to the fee must submit documents and disclosures related to their properties in line with ministry announcements.

The regulations set criteria for determining geographic zones within cities that will be subject to the fee, including high vacancy rates, elevated housing costs relative to household income, property price increases compared with consumer inflation, and concentration of vacant properties owned by the same owner.

The minister will determine the geographic areas subject to the levy in each city, including the annual fee rate, applicable property uses and the minimum number of vacant properties owned by a single person that would trigger the fee.

The annual vacant property fee will be based on a percentage of estimated rental value, capped at 5% of the building’s value.

The ministry will conduct annual reviews of property availability, occupancy levels, transaction activity, rental values and monopolistic practices in cities or designated zones to determine whether the fee should apply.

Buildings within urban areas will be considered vacant if they remain unused for six cumulative or consecutive months during the reference year. The period may be amended by ministerial decision following approval from the ministerial committee.

To qualify for the fee, a property must be located within a designated zone, be ready for occupancy or hold an occupancy certificate, fall under approved usage categories, meet the minimum ownership threshold, and fail to meet minimum utility and service consumption levels specified by the ministry.

The minister may also unify annual fee billing dates for each city separately.

The ministry will coordinate with relevant authorities to implement the provisions of the law and regulations.