backOn 12 May 2025, Saudi Arabia’s Official Gazette published Royal Decree No. (M/244) and Council of Ministers Resolution No. (758), approving wide-ranging amendments to the White Land Fee Law (the “Original Law”). These legislative instruments introduce substantive changes to the law’s scope, methodology of fee assessment, and implementation framework. Notably, the amended regime is now titled the White Land and Vacant Properties Fees Law (the “Amended Law”), reflecting its broader application and policy intent.
Executive Summary
This article outlines four key developments introduced by the Amended Law:
- Redefinition of “White Land”: The scope of the land which is subject to the fee is broadened to include all vacant land capable of development within urban areas, irrespective of zoning classification.
- New Fee on Vacant Properties: A distinct fee is introduced on developed but unoccupied buildings, reflecting a policy focus on activating underutilised assets.
- Variable Fee Rates and Assessment Mechanism: The previous flat 2.5% rate is replaced with a tiered structure, allowing for differentiated rates of up to 10% for white land and up to 5% (or 10%) for vacant properties, based on asset characteristics and market conditions.
- Potential for Aggregation of Land Parcels: The Amended Law’s language hints at the possibility of aggregating multiple land parcels when determining the thresholds of the fees, a development that could materially affect landholding strategies.
The sections that follow examine these changes in detail, assessing their legal significance, expected implementation, and practical implications for developers, landowners, and investors.
A new definition of ‘White Land’
A subtle yet consequential amendment introduced by the Amended Law is the redefinition of “White Land,” which broadens the scope of land subject to the fee and marks a clear shift in regulatory approach.
Old definition
Under the Original Law, “White Land” was defined as: “All vacant land designated for residential or mixed residential-commercial use, located within the boundaries of urban development.”
This definition limited the application of the fee to land specifically zoned for residential or mixed-use purposes. Vacant plots intended for other uses, such as commercial or industrial, were excluded from the scope of application of the fee, regardless of their location or development potential.
New definition
The Amended Law now defines “White Land” as: “All vacant land capable of development and improvement, located within the boundaries of urban development.”
This revised definition introduces two material changes. First, it removes the zoning limitation, allowing the fee to apply to any vacant land within urban boundaries, irrespective of its designated use. Second, it shifts the focus from the land’s zoning classification to its development potential, enabling authorities to assess land based on its physical and legal readiness for development.
Implications
The impact of this change is threefold:
- Wider Zoning Coverage: The fee is no longer confined to residential or mixed-use plots. Vacant land zoned for commercial, industrial, or other purposes may now fall within the scope of application of the fee if it meets the development criteria.
- Functional Assessment Standard: By introducing a “capable of development” test, the Amended Law adopts a more flexible and pragmatic approach. Authorities are empowered to evaluate land based on actual potential, rather than static zoning labels.
- Broader Base for Application of Fee: The revised definition reflects a clear policy intent to curb land underutilisation across all urban categories. By extending the reach of the fee, the government seeks to promote more efficient land use and accelerate development within urban areas.
New Fee on Vacant Properties
In a significant expansion of the regulatory framework, the Amended Law introduces a separate fee on Vacant Properties, marking a departure from the previous regime, which was limited to white land (undeveloped land). This new category reflects a broader policy aim of addressing underutilisation across the real estate value chain (i.e. not only at the landholding level, but also in respect of constructed assets).
Under the Amended Law, Vacant Properties are defined as “Buildings located within the boundaries of urban development, and which are not exploited for a long period without legal justification and the non-use of which or non-exploitation of which affects the adequate supply in the real estate market, as shall be specified in the law and implementing regulations.”
This definition introduces a purpose-driven standard, linking the concept of vacancy not merely to physical disuse, but to its broader market impact (specifically, the extent to which such vacancy constrains real estate supply).
Key Features and Legal Significance
- Location-Based Threshold: Only buildings situated within urban development boundaries fall within scope, aligning with the geographical reach of the broader land fee regime.
- Sustained Non-Use Without Justification: The fee targets long-term vacancy in the absence of a valid legal reason (e.g. ongoing litigation, renovation, or force majeure), thereby excluding temporary or defensible inactivity.
- Market Impact Criterion: The inclusion of a supply-based threshold introduces a policy filter, where the liability for the payment of the fee is linked to the extent to which vacancy distorts the availability of real estate in the market.
- Implementation to Follow in Regulations: The precise duration of non-use, scope of exemptions, and calculation methodology will be detailed in the forthcoming implementing regulations, which are expected to provide clarity on administrative discretion and enforcement thresholds.
Policy and Commercial Implications
This measure is likely to have a deterrent effect on speculative holding of built assets, particularly in high-demand urban areas. By shifting from a passive land fee regime to a use-based framework, the Amended Law encourages timely occupation, leasing, or sale of developed properties.
Developers, investors, and institutional landlords may need to revisit their asset activation strategies (especially for projects intended to be held post-completion) given the risk of future fee exposure for non-exploited inventory. In parallel, the policy signals the government’s broader intention to improve liquidity and turnover in the real estate market by penalising long-term vacancy that undermines market efficiency.
Variable Fee Rates and Revised Calculation Framework
The Amended Law introduces a more flexible and differentiated approach to the calculation of the applicable fee, moving away from the flat 2.5% rate applied uniformly under the Original Law. In its place, the Amended Law establishes variable fee rates, allowing the applicable authority to tailor the fee burden based on the type of asset, its characteristics, and prevailing market conditions.
This marks a strategic shift in the policy framework, from a uniform deterrence model to a more nuanced system that aims to optimise the efficiency of land and property utilisation in urban areas.
Key Features
With respect to White Land (undeveloped land), the fee may now be imposed at rates of up to 10% of the land’s assessed value. The actual rate will be determined by the implementing regulations, which are expected to consider factors such as land size, location, development potential, and duration of inactivity.
With respect to Vacant Properties, a new fee of up to 5% of the property’s equivalent rental value may be levied annually. Notably, the Council of Ministers may, upon recommendation of the Ministerial Committee, increase this rate to 10%. This approach introduces a market-based proxy (rental value) as a means of aligning the fee burden with asset class and income-generating potential.
The table below provides a side-by-side comparison of the fee treatment under the Original Law and the Amended Law:
Legal and Commercial Implications
This tiered structure creates a more elastic and targeted regime, one that can be adjusted in response to evolving market conditions and policy priorities. It also signals a more active role for the implementing authority, who will have discretion to determine applicable rates based on specific regulatory criteria.
For developers, landowners, and institutional investors, this introduces a need for ongoing asset monitoring and valuation planning, particularly in high-value zones or sectors where development or leasing timelines may be prolonged.
Potential for Aggregation of Land Parcels
A subtle but potentially significant development under the Amended Law is the introduction of language that appears to allow for the aggregation of multiple land parcels when determining whether the landowner meets the minimum threshold for the applicability of the fee.
Specifically, the Amended Law provides that:
“The Minister shall issue decisions determining the scope of application of the fee and the area of land subject to it, provided that the area of such land, or the total area of land subject to the fee, as specified in the regulations, shall not be less than 5,000 square metres.”
This formulation suggests that, rather than assessing each parcel of land in isolation, the implementing authority may consider the combined area of multiple parcels held by the same fee payer when evaluating the liability for the payment of the fee. If confirmed in the implementing regulations, this would mark a departure from the previously more rigid parcel-based approach.
Implications
The potential for land parcel aggregation, if confirmed in the implementing regulations, carries several important implications for landowners and developers, particularly in relation to the fee exposure and landholding strategy.
- Broader Fee Net: Owners of multiple smaller plots that individually fall below the threshold may now become subject to the fee if the aggregated area exceeds 5,000 square metres.
- Administrative Discretion: The reference to implementing regulations implies that further guidance will be issued to clarify the conditions under which aggregation will apply, including whether it extends across different locations or is limited to contiguous parcels.
- Strategic Landholding Impact: For investors and developers who deliberately structure landholdings across separate entities or non-contiguous lots, this change may require reassessment of structuring strategies and review of existing portfolios.
While the provision is currently drafted in general terms, its impact could be material once the implementing regulations are issued. Stakeholders should monitor this development closely, as it may affect not only the fee exposure but also acquisition, ownership, and development planning across urban landholdings.
As the implementing regulations take shape and enforcement begins, stakeholders will need to navigate a more sophisticated and dynamic fee regime with implications for landholding structures, development strategies, and asset deployment. Understanding the practical application of the Amended Law—and anticipating how regulatory discretion may be exercised—will be critical. Our team regularly advises on land and property regulation in Saudi Arabia and is well-positioned to support clients in interpreting these changes, assessing exposure, and structuring their portfolios to remain compliant while advancing their commercial objectives.
Implementation Timeline and Anticipated Regulatory Framework
Two separate sets of regulations are expected to be issued to support the implementation of the Amended Law: (i) one governing white land, which shall be issued within 90 days from the publication date of the amendments; and (ii) another concerning vacant real estate, with a longer issuance deadline of up to one year. Given the shorter timeframe, it is anticipated that the provisions relating to white land will come into force sooner than those applicable to vacant properties.
Both regulations are expected to address a range of key issues, including: (i) the procedures and conditions for imposing the relevant fee; (ii) criteria under which liability for the payment of the fee may be lifted; (iii) anti-evasion measures; and (iv) requirements for notifying land or property owners of decisions affecting them. Once enacted, these regulations are likely to result in a more sophisticated and value-based fee regime, replacing the previously uniform rate applied solely to white land under the former law.
Final Observations
As the regulatory framework under the Amended Law continues to take shape, its practical implications will ultimately depend on how the implementing regulations articulate key thresholds, exemptions, and enforcement measures. Stakeholders should proactively assess how the revised fee regime may apply to their landholdings, development timelines, and investment strategies. In this context, well-considered legal analysis will be essential to managing compliance risk, anticipating regulatory developments, and aligning asset management decisions with evolving policy objectives in the Kingdom.