backOn 25 September 2025, Saudi Arabia adopted the Regulatory Provisions for the Rental Relationship (the “Rental Provisions”) via Royal Decree and a Council of Ministers resolution, effective immediately on the same date. The Saudi Press Agency announced the measures, and the Official Gazette (Umm Al-Qura) published the text of the Rental Provisions. The authorizing Royal Decree and Council of Ministers resolution are expected to be published in a later issue.
The Rental Provisions are a significant addition to the framework governing residential and commercial leasing, introduced to address rental price increases (initially focused on Riyadh) and to operationalize broader market reforms. This Client Alert summarizes the key changes now in force.
Rent Controls in Riyadh
Five-year freeze
Rental prices for residential and commercial properties within Riyadh’s urban area are fixed for five (5) years from 25 September 2025. The applicable rent is the amount in effect on that date and remains binding for the full freeze period. The freeze applies to both new and existing leases.
Escalation clauses
According to guidance from the Real Estate General Authority (“REGA”), escalation clauses in lease contracts already in place as of 25 September 2025 remain valid and enforceable. For contracts entered on or after that date, escalation may not be applied during the five-year freeze, even if the term exceeds five years; increases may resume only after the freeze ends.
Sub-leases
Sub-lease rent may not exceed the rent under the corresponding head lease, whether the sub-lease is new or existing.
Geographic scope
The freeze currently applies only in Riyadh’s urban area. REGA’s Board of Directors may extend the measures to all or parts of other cities or governorates, subject to approval by the Council of Economic and Development Affairs.
Rent determination rules
Rent will be determined and frozen for five years according to the property’s current or prior leasing status, as follows:
- Properties under lease as of 25 September 2025: Rent fixed at the current level for five (5) years.
- Previously leased but currently vacant properties: Rent fixed at the total value of the last Ejar-platform contract for five (5) years.
- Properties not previously leased: Rent agreed by the landlord and tenant and frozen for five (5) years
Objections by lessors (not applicable to existing contracts)
A lessor may challenge the controlled rent if:
- the property has undergone substantial construction or structural restoration that affects its rental value;
- the most recent lease for the property was concluded before 2024; or
- REGA’s Board of Directors recognizes another qualifying case.
REGA will issue procedures and criteria for filing and assessing such objections.
Automatic Lease Renewal (Kingdom-wide)
Principle
Lease contracts throughout the Kingdom now renew automatically unless either party notifies the other of its intent not to renew at least sixty (60) days before the lease expiry date.
Exceptions
Exceptions apply to:
- fixed-term contracts with ninety (90) days or less remaining as of 25 September 2025; and
- contracts the parties agree to terminate after the contractual notice period for non-renewal has lapsed. REGA may increase the notice period in model contracts proportionate to contract duration and type.
Riyadh-specific renewal constraint
Where the tenant wishes to renew, the landlord may not refuse renewal or require the tenant to vacate except in the following cases:
- tenant default in paying rent;
- structural defects affecting safety, supported by a competent authority’s technical report;
- the landlord’s intention to use a residential property personally or for a first-degree relative; or
- other cases determined by REGA’s Board of Directors under applicable standards.
Mandatory Registration on the Ejar Platform
The lessor must register any lease not already recorded on the Ejar platform; the tenant also has the right to initiate registration. Either party may object to the registered contract data by notifying REGA within sixty (60) days of the registration notice. If no objection is submitted within that period, the contract data is deemed accurate and binding. This marks a shift from voluntary administrative recording to a legally enforceable registration regime with clear timelines.
Interaction with Other Laws
Unless the Rental Provisions provide otherwise, the Civil Transactions Law (Royal Decree No. M/191 dated 29/11/1444 AH; 18/06/2023 AD) applies. The Council of Ministers may amend the Rental Provisions based on recommendations from the Council of Economic and Development Affairs informed by REGA’s reports.
Violations, Fines, and Appeals
Penalties
Violations may result in a fine of up to twelve (12) months’ rent for the relevant property, together with an obligation to cure the violation and compensation to the affected party. REGA’s Board of Directors will issue a schedule of violations and corresponding fines calibrated to severity and circumstances.
Enforcement
Committees established under Article 20 of the Real Estate Brokerage Law (Royal Decree No. M/130 dated 30/11/1443 AH; 29/06/2022 AD) will consider violations, impose fines, and issue decisions. A party found in violation may appeal to the competent judicial authority within thirty (30) days of notification.
Whistleblower incentives
Up to twenty percent (20%) of the collected fine may be awarded to an eligible reporter whose information leads to a final decision establishing a violation (excluding persons charged with enforcement). REGA’s Board will set eligibility rules and allocation mechanisms for multiple reporters.
Observations
The Rental Provisions signal a shift from market guidance to active intervention, using a time‑bound rent freeze in Riyadh alongside procedural levers (auto‑renewal, mandatory Ejar registration, and an objections channel) to stabilize pricing and data quality.
In the near term, we expect:
- recalibration of underwriting and valuation assumptions for Riyadh assets;
- pressure on sub‑lease and turnover‑rent models; and
- heightened importance of contract hygiene (notice periods, escalation mechanics, and data consistency on Ejar).
In the medium term, REGA’s monitoring madate, paired with the Council of Ministers’ ability to amend the regime, creates an adaptive policy loop that may extend controls beyond Riyadh or refine exemptions as market data accrues.
Market participants that build playbooks now (portfolio mapping, scenario modeling post‑freeze, and governance around objections and renewals) will be better positioned to preserve yield, manage compliance risk, and respond quickly to policy iterations.