Executive Regulations for Vacant Property Fees

According to the recent amendments issued by Royal Decree No. (M/244) dated 7/11/1446 AH, which includes expanding the scope of the White Land Fees System to include "Vacant Properties" and adopting the Executive Regulations for Vacant Property Fees, aiming to impose an annual fee on vacant properties at a percentage of the fair rent and not exceeding (5%) of the building's value, whether the property is owned by one or more natural or legal persons (with the exception of state-owned properties), and the Obligated Person (the owner or whoever is in the capacity of the owner, such as the beneficiary) bears the responsibility for paying fees and fines.

Conditions required to subject the vacant property to fees

To apply the fee to the building, the following conditions must be met during the reference year:

• The building must be located within the geographical scope specified by a decision of the Minister.
• The building must be fixed and ready for occupancy or have obtained an occupancy certificate.
• The building use must be within the uses included in the ministerial decision.
• The number of vacant properties owned by the obligated person within the scope of application must not be less than the specified minimum threshold.
• Not achieving the minimum consumption of approved utilities and services (consumption rate).

Cases of stopping the application of fees on the property

The application of the fee stops in the following cases:

• The absence of any condition of the fee application requirements mentioned above.
• The presence of a statutory or recognized impediment that prevents the occupancy of the building without cause from the obligated person.
• Transfer of ownership of the building to others through sale under a statutory document.
• Issuance of an occupancy certificate for the building during the relevant reference year.
• If the vacancy is due to compelling reasons, and the building was registered as a primary address for the obligated person.

How is the geographical scope subject to vacant property fees determined?

The geographical scope is subject to the application of the fee when any of the following criteria are met in it after the Ministry's evaluation for a period of not less than 12 months:

• High rate of vacant properties in the geographical scope.
• High housing costs relative to annual household income.
• High property prices compared to the consumer price index.
• High vacancy rate for those who own more than one property within the same scope.

Disclosure

Owners of buildings subject to the fee are committed to disclosing the status of their buildings and providing documents and data related to them at least once during the reference year.

Note (Concept of Vacant Property)

Buildings located within the urban scope are considered vacant and unutilized if they are not utilized for a continuous or intermittent period of 6 months during the relevant reference year.

Clarification (Concept of Fair Rent)

The estimated financial consideration that the tenant usually pays as rent for a property similar to the property subject to the fee in its nature, location, and specifications, and that rent is determined by specialized technical committees.

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