Saudi Arabia unveils new property ownership rules for foreigners

RIYADH: Saudi Arabia has introduced a comprehensive regulatory framework governing property ownership by non-Saudis, setting out new requirements for foreign individuals, companies and non-profit entities while creating a unified digital platform for all real estate transactions.

According to the Saudi Gazette, the executive regulations for the Foreign Ownership of Real Estate Law establish standardized procedures for foreign ownership of property and real estate rights in the Kingdom. The regulations also strengthen disclosure requirements, introduce electronic transaction mechanisms and impose penalties of up to SR10 million for violations.

The new rules complement the recently approved geographical zones where non-Saudis are permitted to own property and are aimed at enhancing transparency, improving market governance and attracting foreign investment.

Requirements for Foreign Individuals

Under the new regulations, non-Saudi individuals must meet the following requirements before purchasing property or acquiring real estate rights in the Kingdom:

Obtain a Ministry of Interior-approved digital identity.

Open a Saudi bank account in their own name.

Register a Saudi mobile number linked to their digital identity.

The measures are intended to verify buyers’ identities and ensure that all financial and legal transactions are linked to officially authenticated records.

Rules for Foreign Companies

Foreign companies seeking to own real estate in Saudi Arabia must:

Register with the Ministry of Investment.

Fully disclose their direct and indirect beneficial owners.

Appoint a legal representative holding an approved Saudi identity.

Open a corporate bank account in Saudi Arabia.

The Ministry of Investment will issue a registration number once all requirements have been fulfilled.

Companies must also notify the ministry within 15 days if ownership of 5% or more changes, whether through a single transaction or multiple transactions, or if governance arrangements in the country of incorporation allow another party to exercise significant influence over the company’s decisions.

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Family Ownership Restrictions

The regulations also limit multiple residential property purchases within a single foreign family.

A foreign spouse and non-Saudi children will be treated as dependents for the purpose of acquiring a residential property and cannot separately own another residence unless the marriage ends or the child reaches 25 years of age.

Saudi Companies with Foreign Shareholders

Saudi companies that are not listed on the stock exchange but have foreign shareholders may own property outside the designated foreign ownership zones, excluding Makkah and Madinah, after obtaining approval from the Ministry of Investment, provided the property is used for business operations or employee accommodation.

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

Transaction Fees and Exemptions

The regulations impose a 2% transaction fee on real estate rights acquired by non-Saudis in Riyadh, Jeddah, Makkah and Madinah.

However, the fee will not apply to several categories of transactions, including:

Inheritance settlements.

Final court judgments.

Land acquired through expropriation for public use.

Donations to government entities and charitable endowments.

Property returned to its previous owner within 180 days, subject to specified conditions.

Division of jointly owned property without increasing ownership shares.

Transactions involving diplomatic missions and international organisations under reciprocal arrangements.

Transfers of property to wholly owned companies or investment funds.

Sales of real estate units developed on foreign-owned land, subject to project completion and prescribed sale deadlines.