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Saudi Arabia has imposed a five-year freeze on rent increases for both residential and commercial properties within the urban area of Riyadh, following sharp rises in rental and property prices. The new rules require all lease contracts to be registered via the Ejar platform, fix rents for vacant units at their last registered contract value, and include fines of up to 12 months' rent for violations. Certain exceptions allow landlords to appeal under specific conditions. The reforms align with broader efforts under Vision 2030 to stabilise the real estate market and protect tenant rights.
Saudi Arabia has put in place new regulations to halt any increase in rental values for properties residential and commercial within Riyadh's urban boundary for the next five years. The move came in reaction to steep rent hikes in recent times. Advertisement
Crown Prince Mohammed bin Salman ordered the freeze, which was approved by the Cabinet under a royal decree, to protect both tenants and landlords, promote fairness in the rental market, and improve transparency.
Vacant units that were previously leased will now have their rent fixed at the last registered contract value. Units that have never been rented will have rent agreed between landlord and tenant.
All lease agreements must be registered through the Ejar digital platform. Either party (landlord or tenant) may submit contracts; the other party has 60 days to raise objections, failing which the contract is considered legally valid.
Automatic renewal of leases is part of the new rules. Lease contracts nationwide will renew unless one side gives notice at least 60 days before expiry. In Riyadh, landlords cannot refuse renewal except for non-payment of rent, safety-related structural defects confirmed by an official technical report, or the landlord's or immediate family member's need for the property.
There are specific circumstances under which landlords can challenge fixed rent values, such as when significant renovations have increased the property's value, when the last lease contract was signed before 2024, or in other cases approved by the Real Estate General Authority (REGA).
Violations of the rent freeze can bring penalties up to the equivalent of 12 months' rent for the offending unit. Compensation for affected tenants is also possible. Whistleblowers may receive up to 20% of fines collected if their information results in confirmed violations.
REGA will oversee enforcement of the new rules, monitor rent levels, and report periodically on real estate indicators. The freeze could be extended to other cities or regions if deemed necessary by authorities.
These measures occur in the setting of Saudi Arabia's Vision 2030, an economic transformation plan that has driven large infrastructure investment in Riyadh, boosting demand for housing and commercial space. Those pressures had pushed villa rents up about 13.9% and apartment rents by about 6.9% year-on-year in the second quarter. Property sale prices for apartments have risen roughly 82% since 2019, while villa sales have gone up nearly 50%.
Source Reuters
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