Vacant property tax regulations near enforcement

The Kingdom’s vacant property tax regime is entering its implementation phase, after the Municipalities and Housing Ministry adopted the executive regulations outlining how the new fees will be applied, calculated, and enforced.

What counts as “vacant”? A property will be classified as vacant if it remains unused for six consecutive or non-consecutive months during the reference year. The regulations include exemptions for circumstances beyond the owner’s control and provide mechanisms for objections.

How will the fees be calculated? Annual fees will be capped at 5% of the property’s value and assessed based on fair rental value, taking into account prevailing market rents for comparable properties. Owners will have up to six months from invoice issuance to pay.

All that’s left is where they will be applied: The ministry plans to target specific geographic zones based on where vacancy rates are high, housing costs are spiking, and supply and demand dynamics. While we don’t have the exact map yet, those locations and their specific fee structures are expected to be announced soon.

This is all under the “white land tax” umbrella: Last year, the government amended the white land tax law, broadening its scope to include idle ready-for-use properties — a category that previously flew under the radar — and raising the rate on idle lands up to 10%.

Why it matters: The fees increase the holding cost of idle properties, incentivize owners to lease or sell vacant units, and add supply to the market. The fees, along with a flurry of real estate reforms, were introduced to curb real estate prices and boost supply in the market to address rising costs and support higher home ownership levels.

The market is already cooling: Following the rollout of the white land tax on vacant land and Riyadh’s five-year rent freeze, the Real Estate Price Index recorded its first annual decline in five years, falling 0.7% y-o-y in 4Q 2025 and cooling a further 1.6% y-o-y in 1Q 2026, with the residential sector accounting for the bulk of the downturn.