Saudi Arabia’s new property rules: What foreign buyers need to know

Dubai: Saudi Arabia has approved a wide-ranging regulatory framework governing property ownership by non-Saudis, introducing stricter disclosure rules, mandatory digital procedures and penalties of up to SR10 million for violations.

The executive regulations for the Law of Real Estate Ownership by Non-Saudis set out the procedures through which foreign individuals, companies and non-profit entities may own property or acquire real estate rights in the kingdom. 

The Real Estate General Authority says the updated law is intended to regulate non-Saudi ownership within defined criteria and geographical zones, while supporting investment appeal and real estate market efficiency under Saudi Vision 2030.

At the centre of the new framework is a unified electronic portal, operated by the Real Estate General Authority and linked to the national Real Estate Registry.

The platform will serve as the main route for submitting ownership applications, acquiring real estate rights and completing transactions involving non-Saudi individuals, foreign companies and Saudi companies with foreign shareholders.

Under the regulations, non-resident foreign individuals must obtain a Ministry of Interior-approved digital identity before purchasing property or acquiring any real estate right. They must also open a Saudi bank account in their own name and register a Saudi mobile number linked to their digital identity.

The requirements are designed to ensure that buyers can be verified and that property transactions are connected to official records and regulated payment channels.

Foreign companies will be subject to a separate set of obligations. They must register with the Ministry of Investment, disclose their direct and indirect beneficial owners, appoint a legal representative holding an approved Saudi identity and open a company bank account in the kingdom.

Once these requirements are completed, the Ministry of Investment will issue a registration number. Companies must also notify the ministry within 15 days if ownership of 5 per cent or more changes, whether through a single transaction or several transactions. 

The same rule applies if governance arrangements in the company’s country of incorporation allow another party to influence company decisions or limit its independence.

Foreign non-profit organisations will also be brought under the new disclosure framework. They must register with the National Centre for Non-Profit Sector Development, disclose individuals exercising direct or indirect control, appoint an authorised representative with an approved Saudi identity and maintain a Saudi bank account.

The regulations require such entities to report significant structural changes, or changes affecting decision-making control, within 15 days.

The framework also introduces rules covering foreign family ownership. A foreign spouse and non-Saudi children will be treated as dependants when a residential property is acquired, preventing each member of the same family from separately owning another home. Exceptions apply if the marriage ends, or when a son or daughter reaches the age of 25.

The regulations include specific provisions for Saudi companies with foreign shareholders. Non-listed Saudi companies with foreign ownership may acquire property outside designated foreign ownership zones, excluding Mecca and Medina, after obtaining approval from the Ministry of Investment, provided the property is used for business operations or employee housing.

Within approved ownership zones, including Mecca and Medina, such companies may acquire property without ministry approval, subject to the conditions set out in the law.

The law also preserves the religious sensitivity of the two holy cities. Earlier published provisions of the law state that ownership in Mecca and Medina is restricted to Muslim individuals, while companies and investment vehicles are subject to specific controls.

The regulations impose a 2 per cent fee on transactions involving real estate rights acquired by non-Saudis in Riyadh, Jeddah, Mecca and Medina. 

Ten categories of transactions are exempt, including inheritance divisions, final court judgments, expropriation for public use, donations to endowments and government entities, certain diplomatic and international organisation transactions under reciprocity arrangements, and some transfers to wholly owned companies or investment funds.

All financial transactions linked to property purchases or disposals must be completed through electronic payment systems approved under Saudi Central Bank regulations before title deeds are transferred through the Real Estate Registry. 

Legal notifications will also be considered valid if sent through communication channels registered on the electronic portal or by text message to officially registered Saudi mobile numbers.

Enforcement powers have been strengthened under the new regulations. Inspectors appointed by the Real Estate General Authority will be authorised to investigate and document violations. Before penalties are imposed, violators must be given between 10 and 180 days to rectify their status, depending on the nature of the breach.

Foreign buyers who submit false or misleading information to obtain property ownership rights may be fined up to 5 per cent of the value of the property right, capped at SR10 million. 

Other violations, including failure to disclose ownership changes, obstructing inspectors or failing to correct breaches within the required timeframe, may result in warnings or fines that vary according to the value of the property and the seriousness of the violation.

The regulations are expected to be followed by a detailed procedural guide from the Real Estate General Authority, setting out how the new rules will be applied in practice.