Saudi Arabia approves off-plan property sales under new rules

Real estate developers will now be permitted to sell off-plan units in Saudi Arabia under new rules approved by the kingdom’s ministry of commerce and industry.

Strict measures, however, will be enforced for such transactions, the ministry said in a statement.

Down payments cannot exceed 20 percent of the unit’s value, and must be made by check or bank transfer into escrow accounts, which can be accessed and monitored by authorities.

Developers will be required to pay buyers five percent of the value, in the event that the delivery of the property is delayed for 12-months or more.

In addition, developers must guarantee structural and insulation on building units sold for at least ten years from the delivery date. Electrical and mechanical works should have guarantee of a least one year.

The Saudi government has imposed strict controls on the promotion and sale of off-plan properties in recent years.  In 2009, the kingdom had introduced a ban on such activities for developments that are only in the planning stage.