Highlights of Real Estate Expropriation for Public Benefit Law

Riyadh city

The Law of Expropriation of Real Estate for Public Benefit and Temporary Taking of Property, approved today, Aug. 26, by the Cabinet, is part of the regulatory and legislative reforms underway in the Kingdom under Saudi Vision 2030, said Minister of Finance and Chairman of the State Properties General Authority (SPGA), Mohammed Al-Jadaan.

The law aims to unify and streamline procedures for expropriation and temporary seizure of real estate, enhance transparency, serve the public interest, and ensure fair compensation for property owners and project stakeholders.

The law protects the rights of property owners and project entities in all its provisions. It requires valuation of expropriated properties by certified appraisers accredited by the Saudi Authority for Accredited Valuers (TAQEEM), based on fair market value, with an additional 20% added as compensation for expropriation, said Governor of SPGA, Abdulrehman Al-Harkan.

For temporary seizure, compensation will consist of a fair rental value plus an additional 20%, he added.

Al-Harkan noted that the law also provides tax incentives. Owners whose properties are expropriated will be exempt from the real estate transaction tax for five years, equivalent to, or less than, the tax value of the compensation amount, when purchasing replacement properties.

This exemption begins from the date the compensation is received. In addition, owners will be exempt from white land fees if compensation is granted in the form of alternative land.

The governor added that the law centralizes oversight and governance of expropriation and temporary seizure processes. Requests for expropriation or temporary seizure will be submitted to a committee within SPGA, with participation from relevant government representatives.

The law also requires necessary funding to be secured before any action is taken and mandates that the state first utilize existing government-owned properties to meet public project needs before proceeding with expropriation.