New regulations for the White Land Tax Law’s fees have been posted on Istitlaa by the Municipalities and Housing Ministry, where they will be up for feedback until 25 July. The draft regulations (pdf) aim to discourage land hoarding and boost property supply.

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Fee structure and application: The proposed regulations set a 2.5% base fee of the value of undeveloped urban plots exceeding 5k sqm, to which a progressive annual increase rate and a variable rate are added, with overall fees capped at 10%. The variable rate allows for flexibility, as it will be adjusted based on market conditions to ensure fair application.

The valuation of idle lands and their fees will be handled by a specialized appraisal committee, which will be formed by the Housing Minister and will include licensed appraisers from the Saudi Authority for Accredited Valuers (Taqeem). The committee will take into account economic indicators, such as the gap between housing supply and demand, real estate inflation, shortage of developed lands, and monopolization of undeveloped lands.

Incentivizing development: To encourage owners to either develop their properties or sell them to those who will, the fee ceases upon a property’s completion. Landowners can also receive a refund for fees paid if they complete development within the same payment period. The rules also allow for the fee to be suspended if obstacles prevent construction, and also leaves room for the Housing Ministry to grant time extensions.

What’s next? The new regulations are expected to be issued within a month, with a 90-day period granted for application after publication in the Official Gazette, Tariq Al Shuhayeb, adviser to the Housing Minister, told Al Arabiya on Thursday.

REMEMBER- The cabinet approved amendments to the White Land Tax Law in late April, increasing the annual fee on undeveloped land from a fixed 2.5% to a maximum of 10% of the property’s value. The changes also imposed a new tax on vacant, ready-for-use properties based on comparable annual rent, capped at 5% of the property’s market value.

We’ve had a battery of reforms pushed recently to stimulate the real estate market. Last week, the cabinet greenlit a new law enabling non-Saudis to own real estate property in the Kingdom. Other changes include allowing foreign investment in Makkah- and Madinah-based real estate companies, lifting development restrictions on 81.5 sq km of land in northern Riyadh, in addition to planning the release of 10k-40k affordable residential plots per year over the next five years.

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