In case you were doubting the draft executive order published by the Ministry of Municipalities and Housing (MOMAH), now the vacant fee charges are confirmed. After the Saudi Ministry announced 5% vacant fee regulation in new regulations, what matters is to know how it affects you. Previously, some landlords ignored the White Land Tax following an executive order. Today, the authority billed 60,000 land owners in Riyadh who must pay their levy on undeveloped land. So, as we step into this new vacant fee regulation, it is important that you pay close attention to the policy transformation.
The success that is currently apparent in Saudi Arabia is the result of continued progressive policies such as rent freeze, White land tax, foreign ownership, and tokenization amongst others.
In this article, let’s look at the Ministry’s announcement of 5% vacant fee charges resulting from the new regulation.
Saudi Ministry Announces 5% Vacant Fee Charges in New Regulations
The Ministry of Municipalities and Housing recently approved executive regulations imposing annual fees of up to 5% on vacant properties. The move aims to increase housing supply, improve market balance, and reduce speculative property holding across major cities.
The decision comes at a time when Saudi Arabia continues to experience rising property prices, especially in Riyadh. Demand for housing has surged due to rapid urban growth, foreign investment reforms, and major Vision 2030 projects. The government now wants to ensure that residential and commercial properties are actively utilized instead of remaining empty for long periods.
What the New Regulations Mean
Under the new rules, owners of vacant buildings may face annual charges of up to 5% of the property’s estimated value. The fee applies to properties that remain unused for six months within a reference year, whether continuously or intermittently.
The Ministry clarified that the regulations will only apply in selected geographic zones. These areas will be identified later through ministerial decisions based on several market indicators. Authorities will examine vacancy rates, supply and demand levels, property prices, and overall housing costs before implementation begins.
This targeted approach suggests that cities with severe housing shortages and high rental inflation, such as Riyadh, may be among the first locations affected.
Why Saudi Arabia Introduced the Fees
The Kingdom has been trying to address rising property costs for years. In many urban areas, developers and investors hold residential units and land without utilizing them. This practice limits supply and pushes prices higher for residents and businesses.
The new vacant property fees are designed to discourage this behavior. Officials believe the regulations will encourage owners to either rent, sell, or develop idle assets instead of leaving them empty.
The policy also supports Saudi Arabia’s broader Vision 2030 objectives. The government wants to improve homeownership rates, create more affordable housing opportunities, and build sustainable urban communities.
According to the Ministry, revenues collected from the fees will be reinvested into housing and urban development projects.
Impact on Investors and Property Owners
The regulations could significantly affect property investors, especially those holding vacant residential towers, apartments, or commercial buildings in high-demand zones.
Owners may now feel pressured to activate unused properties to avoid recurring annual charges. This could increase the number of available units in the market, potentially easing rental pressure in some cities.
For developers, the policy may create a more competitive market environment. Projects that remain incomplete or intentionally unoccupied may become financially costly over time.
However, the Ministry also introduced exemptions for situations beyond an owner’s control. Properties delayed due to legal disputes, administrative issues, or pending occupancy certificates may qualify for relief from the fees.
The regulations further include clear procedures for invoicing, appeals, and payment periods. Owners will reportedly have up to six months to settle imposed fees.
Potential Effects on Saudi Real Estate
Many analysts expect the decision to increase market efficiency in the long term. More available housing stock could stabilize prices and improve affordability for residents.
The move may also strengthen investor confidence by creating a more regulated and transparent real estate environment. Saudi Arabia has already introduced several major reforms, including expanded foreign property ownership rules and revised white land fee systems.
At the same time, some investors may become more cautious about holding speculative assets without immediate development plans.
The regulations could particularly influence Riyadh, where property demand has accelerated rapidly over the past few years. Rising rents and land prices have become major concerns for both residents and businesses.
In sum…
Saudi Arabia’s new 5% vacant property fee regulations mark another major step in transforming the Kingdom’s real estate sector. The government is sending a clear message that idle properties should contribute to housing supply and urban growth rather than remain unused.
While the policy may increase costs for some investors, it could also create a healthier and more balanced market. Increased property utilization, improved affordability, and stronger market transparency are likely to become key priorities as Saudi Arabia continues its ambitious Vision 2030 transformation.