Crown Prince Mohammed bin Salman approved new Landlord-Tenant Regulations for the city’s rental market, kicking off a five-year period where the capital’s rents will be fixed to combat rising commercial and residential rents in Riyadh. “Unacceptable” real estate prices are driving the push to reform the market, the Crown Prince acknowledged in his annual address earlier this month.

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A five-year freeze: Annual increases on all new and existing residential and commercial lease contracts in the capital’s urban area have been suspended for five years starting Thursday, 25 September, according to the new regs. Landlords will be barred from raising agreed rents during this period, with REGA able to extend the measure to other cities subject to higher approval.

There are exceptions: Landlords can contest the mandated fixed rental value when a property has undergone major renovations that alter its value or if the last lease ended before 2024. Meanwhile, rents for previously leased vacant properties will be fixed at the value of the last contract, while rates for residential and commercial units that have never been leased will be set through mutual agreement between landlord and tenant.

Rental contracts Kingdom-wide will now be renewed automatically, unless either party provides at least 60 days’ notice of non-renewal. For properties in Riyadh, a landlord can only refuse renewal and require a tenant to vacate in three cases: a tenant’s failure to pay, certified structural defects that endanger safety, or the landlord’s need for the property for personal use or for a first-degree relative.

Going fully digital: All rental contracts must now be recorded on the Ejar electronic platform. While landlords are required to register contracts, tenants also have the right to do so. Once a contract is submitted, the other party has 60 days to raise objections with REGA. If none are filed, the contract is considered valid.

Penalties, appeals, and whistleblower incentives: Violators of these regulations will face fines of up to 12 months’ rent, be required to correct the violation, and compensate the affected party. Those fined can appeal the decision within 30 days. A reward of up to 20% of the collected fine will be given to those who report violations that lead to a confirmed penalty.

STATE OF THE MARKET-

The regulation is seen as “a welcome move” to help bridge the gulf between affordability and current market rates, Faisal Durrani of Knight Frank told Bloomberg. Apartment rents jumped 15% in the first half of the year, and commercial leases have risen around 20% annually, placing the Kingdom “quite close to the peak of the rental cycle,” CBRE’s Matthew Green told Bloomberg.

Real estate companies are optimistic: The decision will not harm developers or hinder investment, Manasat Real Estate Company’s CEO Khalid Al-Mobaid told Al Arabiya. The measures will encourage construction, increase supply, and offset the impact of past rent hikes that raised living and labor costs, especially since initial rents for new properties are set by agreement and exempt from the freeze, he added.

Rent has consistently been the culprit behind the Kingdom’s inflation: The Kingdom’s annua linflation reached 1.7% in 2024, fueled by an 8.8% rise in housing, utilities, and fuels, including a 10.6% jump in home rentals. Rents in the capital have surged 30-40% in the past two to three years, with northern districts seeing 50–60% jumps, thanks to some 250k Saudis migrating to the capital and rising expat inflows, Knight Frank’s Faisal Durrani told the Financial Times.

Housing supply is coming in, with 20k new homes expected this year, 60k more by 2027, and 600k sqm of commercial space coming in 2026, Green told Bloomberg. In Riyadh, housing supply stands at roughly 2.2 mn units, with 5.6k delivered in the first half of 2025 and nearly 19k more expected by year-end, JLL said in its 2Q report.

** We sat down with Coldwell Banker Saudi Arabia CEO Youssef Khattar to unpack Saudi’s wider real estate reform push. Edited excerpts are in today’s news well below.

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