Saudi Arabia Issues Implementing Regulations for White Land Fees and Vacant Properties Fees: What Property Owners and Investors Need to Know

Introduction

Saudi Arabia’s regulatory framework governing idle real estate has entered a new phase. Following the enactment of the White Land and Vacant Properties Fees Law (the “Amended Law”) by Royal Decree No. (M/244) in May 2025, the Ministry of Municipal, Rural Affairs and Housing (the “Ministry”) has issued two sets of implementing regulations addressing undeveloped land and vacant buildings.

The Implementing Regulations for White Land Fees (the “White Land Regulations”) were issued on 28 Safar 1447 AH (22 August 2025), establishing detailed rules for the imposition of fees on undeveloped land. The Implementing Regulations for Vacant Properties Fees (the “Vacant Properties Regulations”) were approved on 26 Dhul Qi’dah 1447 AH (13 May 2026) and published in the Official Gazette (Umm Al-Qura). The White Land Regulations are now substantially complete. The Vacant Properties Regulations have been formally issued, but their practical operation remains contingent on a series of supplementary ministerial decisions, including decisions on application zones, thresholds, and penalties.

Taken together, the two regulations indicate a clear policy direction: to discourage the underutilization of undeveloped land and completed buildings in urban areas. For developers, landowners and institutional investors, the main immediate implication is the need to assess exposure, update compliance processes and monitor the supplementary decisions required to make the vacant properties regime operational.

This alert examines the key provisions of each regulation and their practical implications.

White Land Fees

The White Land Regulations were issued on 28 Safar 1447 AH (22 August 2025) by the Minister of Municipal, Rural Affairs and Housing, implementing the provisions of the Amended Law as they relate to undeveloped land. Under the White Land Regulations, the person liable for the fee is the “Obligor”, defined as the natural or legal person (excluding State-owned properties) in whose name the land ownership document is registered at the time of issuance of the fee invoice, including any successor in title by operation of Sharia or law.

The determination of whether land falls within the urban boundary and its designated use is made exclusively by reference to urban boundary demarcation maps and detailed plans issued by the competent authorities. Informal assessments of land classification have no regulatory standing.

Tiered Fee Rates of Up to 10% Per Annum

White land is classified into five tiers based on the priority of urban development within a given city. The annual fee rate ranges from 2.5% for the lowest priority tier to 10% for the highest priority tier, calculated on the assessed value of the land. Land falling within the fifth tier (outside the priority zones) is not subject to an annual fee; however, it is still counted toward the total white land holdings of the Obligor within the city boundary. This counting rule matters because fifth-tier land may still contribute to the aggregate area calculation relevant to fee-bearing parcels in the same city.

The Ministry may also, following its annual review, suspend the application of the fee in a city or geographical scope, in addition to its power to amend the area subject to the fee. Both outcomes are possible following the annual review of supply, transaction volumes, prices and monopolistic practices.

The land value used as the fee base is adjusted by a coefficient reflecting the availability of public services and utilities connected to the land. This coefficient is determined per service or utility based on its necessity and its impact on land value, and is applied uniformly within each city. The Ministry may periodically revise the coefficient weightings in line with urban development priorities.

Development or Construction Suspends the Fee and Enables Refunds

The fee ceases to apply once the land has been developed or built upon within the statutory payment period. For these purposes, “construction” means the complete erection of structures on the land (excluding fencing) in accordance with building permits, and “development” means the complete implementation of infrastructure in accordance with approved permits and regulatory requirements. Partial completion does not extinguish the fee on the undeveloped remainder.

The fee also ceases where an impediment prevents the Obligor from disposing of the land, or where an obstacle prevents the issuance of the necessary licences and approvals for development or construction, during the statutory payment period, provided in each case that the Obligor has not caused or contributed to the creation of such impediment or obstacle.

An Obligor who completes development or construction after having already paid the fee is entitled to a refund of the amounts paid for those periods. The technical committee also has discretion to grant additional time to complete development, taking into account the size and nature of the land. This gives some operational flexibility for larger projects with longer delivery timelines.

Fee Assessment and the Technical Committee

Land values for the purpose of calculating the fee, and the periods required for development or construction, are determined by a technical committee formed within the Ministry by Ministerial decision. The committee must comprise no fewer than three members with expertise in real estate valuation and land development procedures, including licensed valuers accredited by the Saudi Authority for Accredited Valuers (SAAV). Decisions are made by majority vote. Committee members serve three-year terms, renewable or extendable. The rules, procedures and valuation standards applied by the committee must conform to SAAV-approved standards.

Minimum Threshold of 5,000 Square Metres

The fee applies only where the aggregate area of white land owned by the same Obligor reaches at least 5,000 square metres. Article 7 of the White Land Regulations states that this condition is assessed “within the scope of the city.” Two further conditions must also be satisfied: the land must be physically capable of development or construction, and its designated use must be one of the uses specified in the relevant Ministerial Decision for the applicable city. Land that fails either criterion is not subject to the fee even if the area threshold is met.

The White Land Regulations do not expressly state whether the calculation of total area is performed separately for each city. The phrase “within the scope of the city” may be read as a spatial condition defining where the land must be located, rather than as a rule requiring separate calculation per city. Equally, the broader structure of the regulations, which treats each city by separate announcement and specific geographic zones, may support a city-by-city reading. This should therefore be treated as an interpretive issue rather than a settled point, and stakeholders should monitor further guidance or clarification from the Ministry.

The regulations also contain anti-evasion provisions that empower the Ministry to verify ownership data and investigate whether title has been distributed among related parties, including family members, nominees or affiliated entities, in a manner designed to keep individual holdings below the 5,000 square metre threshold. The Ministry may coordinate with relevant authorities, including real estate, corporate and civil status registries, to verify the accuracy of ownership records and assess whether a pattern of fragmentation exists.

Where the Ministry identifies such a pattern, it may attribute the holdings to the same beneficial owner and apply the fee accordingly. For family offices, multi-entity groups and asset managers holding white land across several vehicles, existing ownership structures should be reviewed to assess whether ostensibly separate holdings could be aggregated and whether that aggregation could trigger fee exposure across the portfolio.

Fee Invoices, Notification and Objection Rights

The Ministry issues fee invoices on specified dates for each parcel subject to the fee. Each invoice must contain at minimum the Obligor’s name and statutory information, the ownership document number, the land location, the legal basis for the fee, the fee rate and amount, the payment deadline, the means of payment, the consequences of non-payment and the Obligor’s right to object, including the applicable objection period.

Notifications are legally effective if served through any of the following channels: the Ministry’s electronic portal, the Obligor’s authenticated mobile number, the Obligor’s authenticated email address, or the Obligor’s national address as registered with the National Information Centre or approved electronic systems. Obligors should ensure their contact data across these channels is current, because valid service through any one channel starts compliance periods running.

The Minister also has power to unify the dates for issuance of annual fee invoices for each city. Where invoice dates are unified, payment periods and development periods may be adjusted accordingly. Investors should therefore monitor city-specific invoice date decisions, as they directly affect compliance timelines.

Sale Before Completion of Development Triggers Immediate Payment

If an Obligor wishes to sell white land before completing its development, the payment deadline is immediately accelerated, and all accrued fees must be settled in full before the transfer of ownership can be completed. Investors should therefore factor accrued fees into the cost and timing of any exit, particularly where the land may have been subject to the fee for several years.

New owners of white land whose acquisition occurs after the initial registration grace period must submit ownership documents and land data to the Ministry within 30 days of transfer of ownership.

Retroactive Assessment of Fees

The Ministry has authority to assess fees retrospectively from the date on which the land first became subject to an application decision in the relevant city. Where a fee invoice is issued for prior years, it takes effect from the date of issuance, and payment is due within 90 days of notification. The collection of retroactive fees does not preclude the imposition of penalties for failure to pay or to submit required documentation, which can materially increase exposure for owners who delay registration or compliance.

Penalties

The Ministry is required to establish a schedule of violations and penalties, to be issued by Ministerial decision following approval by the Ministerial Committee. Until that schedule is published, the specific quantum of penalties for non-compliance remains uncertain. Fees and penalties are collected in accordance with the procedures specified in the State Revenues Law and its executive regulations. The Ministry may engage the private sector for collection purposes.

Vacant Properties Fees

The Vacant Properties Regulations, issued by Ministerial Resolution No. (4700822503/1) dated 26/11/1447 AH, establish the framework for imposing fees on developed but unoccupied buildings. They apply pursuant to Article 13 of the Amended Law and set out the structure for identifying vacancy, calculating fees and enforcing compliance. Their practical operation, however, remains dependent on further ministerial decisions.

Scope of Application and Minimum Ownership Threshold

The fee does not apply to every vacant property. It is triggered only where the number of vacant properties owned by a single person within a designated application zone meets a minimum threshold, to be determined by the Minister according to the type of use. Both the designation of application zones and the minimum vacancy thresholds are the subject of separate supplementary ministerial decisions yet to be issued. Until those decisions are issued, the regime has no operative effect in any city.

The regulations appear designed to permit city-specific implementation, given the structure used under the White Land Regulations and the need for separate designation of application zones and thresholds. Pending those decisions, investors with larger portfolios are more likely to be affected once the regime becomes operative, while smaller owners may remain outside scope unless their vacant holdings exceed the prescribed threshold.

Fee Cap and Financial Impact

The fee is calculated as a percentage of the equivalent rental value of the property. This rental-value-based fee is subject to a maximum cap of 5% of the property’s market value per annum. The 5% of market value operates as a ceiling rather than the primary base, so in markets where rental yields are modest relative to capital values the effective fee may be lower than the cap. Both the equivalent rental value and the market value are determined by a specialised technical committee comprising no fewer than three members, including valuers licensed by the Saudi Authority for Accredited Valuers.

Criteria for Determining Vacancy

The Vacant Properties Regulations employ a multi-criteria system for determining whether a building is vacant. The fee regime applies only to buildings that are fit for occupancy or that hold a valid occupancy certificate. Within that scope, a building is classified as vacant where either of the following criteria is satisfied:

• Temporal criterion: the building has not been utilised for a continuous or cumulative period of six months during the reference year.
• Consumption criterion: the building fails to meet the minimum consumption thresholds for utilities and services allocated to its type of use, such as electricity and water.

Each criterion operates independently: satisfaction of either criterion is sufficient to classify a building as vacant. “Occupancy” is defined as the absence of all vacancy criteria in respect of a building. The precise consumption thresholds have not yet been issued and are to be determined by a subsequent ministerial decision, subject to the approval of the Ministerial Committee.

Effect of Sale on the Fee and the Question of Liability

A transfer of ownership by way of sale supported by an official deed suspends the application of the fee on the relevant property. However, the Vacant Properties Regulations link the payment obligation to the Obligor, being the registered owner, rather than to the property itself, which obliges the Obligor to settle the fee, including in proportion to its share in the case of co-ownership. The Ministry also retains authority to assess fees retrospectively from the date on which the property became subject to an application decision, together with any applicable penalties.

The Vacant Properties Regulations do not expressly address whether accrued fees constitute an encumbrance that attaches to the property and transfers to the buyer, or whether they remain a personal obligation of the former owner. Given the general requirement under Saudi property law for rights in rem to be registered to bind third parties, and absent any express provision designating fee liabilities as registrable encumbrances, one possible interpretation is that unregistered fee liabilities remain personal to the former owner. That issue should, however, be treated as unresolved. Investors acquiring properties within designated application zones should therefore carry out due diligence on potential accrued fees and include express contractual provisions allocating liability for any outstanding amounts. Lenders taking security over such properties should similarly seek appropriate representations from borrowers.

Disclosure Obligations and Penalties

The Obligor is required to disclose the status of its buildings at least once during the reference year and to submit the requisite documentation. New owners are similarly required to submit documentation upon the transfer of ownership. The Ministry may request additional documents, carry out field inspections to verify occupancy status, and coordinate with relevant authorities to validate the accuracy of the data provided. The collection of fees for prior years does not preclude the imposition of penalties arising from failure to pay or to submit required documentation, meaning that delays in compliance may compound the financial burden.

The penalty schedule for the Vacant Properties Regulations has not yet been issued and will require a separate Ministerial decision following Ministerial Committee approval. Until issued, the specific quantum of penalties for non-disclosure or non-payment under this regime remains uncertain.

Current Status of Implementation

Although the Vacant Properties Regulations have been approved and published, their effective application depends on a series of supplementary ministerial decisions. Those decisions are expected to address, among other things, the precise consumption thresholds, the technical criteria for geographic application zones, the list of recognised impediments that suspend the fee, the designation of cities and zones subject to the regime, the minimum number of vacant properties that triggers liability, and the violations and penalties schedule.

At this stage, the immediate risk is therefore preparatory rather than fully operative. Investors should review the status of potentially affected vacant properties, map likely exposure scenarios and monitor the supplementary decisions required before enforcement can begin in any designated city.

Practical Implications

The combined effect of the White Land Regulations and the Vacant Properties Regulations is to extend regulatory pressure across the real estate life cycle, from undeveloped land to completed buildings. The practical implications for owners, developers and investors include the following:

1. The cost of holding idle assets may increase materially. White land may be subject to fees of up to 10% annually, while vacant properties may ultimately be subject to a fee capped at 5% of market value; however, the vacant properties regime remains dependent on supplementary decisions before it becomes operative in any city.
2. Retroactive exposure requires careful due diligence. Both sets of regulations permit retrospective fee assessment from the date a property first became subject to an application decision, so prospective buyers should verify whether any accrued fee liabilities may exist before completing an acquisition.
3. Disclosure and documentation obligations are ongoing. Obligors must disclose the status of their holdings and provide supporting documentation, and non-compliance may lead to further penalties once the relevant schedules are issued.
4. Several issues remain interpretive. These include the aggregation methodology for white land holdings and the treatment of accrued fee liability on a sale of vacant property. Those issues should be monitored closely because they may affect structuring, diligence and drafting positions.
5. Ownership structures merit review. The anti-evasion provisions permit the Ministry to investigate fragmentation of title among related parties, creating possible aggregation risk across family, nominee or affiliated holdings.
6. Sale documentation should address fee allocation expressly. That is particularly important for vacant properties, where the regulations do not yet resolve all questions relating to the allocation of accrued liability as between buyer and seller.
7. Notification compliance is important. Fee invoices and notices served through the prescribed channels are legally effective and may trigger compliance periods even if internal contact information is out of date.
8. Developers retain some flexibility under the White Land Regulations. Refunds may be available on completion, and additional time may be granted for larger projects in appropriate cases.

Conclusion

The White Land Regulations are now substantially operational, subject to the usual need for ongoing city-specific application decisions and enforcement practice. By contrast, although the Vacant Properties Regulations have been issued and published, they do not yet create a fully operative fee regime in any city until the required supplementary ministerial decisions are made.

The immediate focus for investors should therefore be on implementation risk, not only on headline fee levels. Property owners, developers and investors with holdings in Saudi Arabia should audit portfolios, assess where exposure may arise under existing and future application decisions, and put in place processes to monitor further ministerial action, maintain current notification details, and address fee allocation and diligence issues in transaction documents.

Additional Contributors: Abdulrahman Albilal