New law for foreigners to buy property in Saudi Arabia

As part of the ‘Vision 2030’ plan, Saudi Arabia has approved a new housing policy for non-residents and expatriates as part of its ‘Vision 2030’ plan to make the housing market more efficient and attract foreign investment. The new policy provides for strict information disclosure, mandatory digital processes and fines of up to 10 million Saudi riyals for violations of the law.

All real estate transactions between non-resident foreigners, foreign institutions and Saudi companies with foreign partners will now be conducted through a unified electronic portal under the supervision of the Real Estate General Authority.

Under the new rule, if a non-resident foreign citizen wants to buy property in Saudi Arabia, he must first obtain a digital ID or identification number approved by the country’s Ministry of Interior. In addition, the buyer must open a Saudi bank account in his name and register a local mobile number associated with the digital ID. This rule has been made mandatory to ensure transparency of transactions and verify the correct identity of the buyer.

The rules have been made more specific in the case of foreign companies. These companies must be registered with the country's Ministry of Investment and disclose information about their direct and indirect beneficial owners. They must also appoint a legal representative with an approved identity card in Saudi Arabia and operate a local bank account.

The ministry must be notified within 15 days of any change in ownership of 5 percent or more or any major change in the board of directors. Similar strict rules and information disclosure obligations have been imposed on non-resident or foreign non-profit organizations.

According to the new rules on family ownership, if a foreign citizen buys residential property in Saudi Arabia, his foreign wife and children will be considered dependents. As a result, members of the same family will not be able to own another home separately. However, this rule will be relaxed in the event of divorce or if the children have reached the age of 25.

In addition, Saudi companies with foreign participation that are not listed on the stock market will be able to buy property for business or residence of officials and employees outside certain zones except Mecca and Medina, but this will require permission from the Ministry of Investment.

Strict restrictions on foreign ownership in the holy cities of Mecca and Medina have been imposed, citing religious sentiments. Only Muslim citizens will be allowed to buy property in the two holy cities. The new rules impose a 2 percent fee on housing transactions by foreigners in Riyadh, Jeddah, Mecca and Medina, but exempt 10 cases, including inherited property, court judgments, acquisitions in the public interest and donations to waqfs or government agencies.

The Real Estate General Authority is taking strict measures to ensure the implementation of the new housing law. If a foreign buyer tries to take ownership of a property by providing fraudulent or false information, he can be fined 5 percent of the property value or a maximum of 10 million riyals.

In addition, warnings or financial fines will be issued for crimes such as concealing information or obstructing inspectors. However, violators will be given 10 to 180 days to correct their mistakes before any action is taken. The final document or title deed will be handed over only after all financial transactions are completed electronically through the Saudi Central Bank's approved channels.

Source: Gulf News.