Saudi Arabia has officially unveiled its new law regulating real estate ownership by non-nationals, following recent Cabinet approval. The comprehensive charter takes effect 180 days from publication and marks a major overhaul in the Kingdom’s approach to foreign property ownership.
New Law Builds On Previous Property Ownership Law
The new system grants individuals, companies and non-profit entities the right to own property or obtain other rights over real estate within designated geographic zones. Accordingly, permissions will include usufruct (beneficial use), leasehold and other real estate interests. However, privilege will be subject to a range of controls and restrictions based on location, property type and usage. Moreover, the law preserves all existing real estate rights that were legally established for non-Saudis prior to the new regulation taking effect. Importantly, ownership remains prohibited in certain regions, notably in Makkah and Madinah, except under conditions for individual Muslim owners. Additionally, foreign individuals legally residing in Saudi Arabia may own one residential property outside restricted areas, strictly for personal housing purposes.
Real Estate General Authority To Administer New Regulation
The regulation also includes provisions for corporate ownership. Non-listed companies with foreign shareholders, investment funds and licensed special-purpose entities will be permitted to acquire real estate throughout the Kingdom including in Makkah and Madinah. However, this is on understanding that the ownership supports operational needs or employee housing. Listed companies and investment vehicles may also acquire property in line with Saudi financial market regulations. Diplomatic missions and international organisations can also own premises for official use and residence of representatives, subject to Ministry approval. The law encompasses registration requirements as well as a real estate transfer fee for transactions. It also outlines a penalty framework for any violations of upto SAR 10 million (USD 2.67 million). Importantly, a committee under the Real Estate General Authority will be formed to investigate violations of compliance and impose penalties.
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