PROJECTS: Land tax overhaul, rent freeze mark Saudi Arabia’s biggest real estate reset in years

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SA KaderSaudi Arabia’s real estate sector is entering a new regulatory phase after the government overhauled the White Land Tax (WLT) regime and imposed a five-year rental freeze in Riyadh.Together, these two measures aim to cool speculation, stabilise prices and accelerate housing development in line with Vision 2030.Approved by Royal Decree No. (M/244) in April 2025 and published in the official gazette in May, the revised White Land and Vacant Property Tax Law expands the tax scope, introduces progressive rates of up to 10 percent, and strengthens enforcement against land hoarding.The rent freeze, announced in September 2025, complements the new framework by capping increases across residential and commercial leases in the Saudi capital city, which has been facing affordability pressures in the face of rapid growth.Revamped land taxThe updated WLT replaces the earlier flat rate - previously set at 2.5 percent - with a tiered structure reaching up to 10 percent of land value, depending on development priority, location and market conditions. The law also extends to vacant buildings in urban areas while retaining the 5,000-square metre (sqm) threshold for applicability.Malek Al Rifai, partner, King & Spalding told Zawya Projects that the introduction of a dynamic and more granular WLT fundamentally raises the compliance threshold for developers and landowners.“The new regime links fee assessments not only to land size and location but also to market conditions, inflationary indicators and development activity,” he explained. “This means stakeholders will need robust internal reporting, valuation governance and documentary evidence to justify their positions before the authorities.”Al Rifai also noted that the Saudi Ministry of Municipal and Rural Affairs and Housing will have greater discretion in the enforcement of valuation criteria and in determining what constitutes an ‘underutilised’ or ‘vacant’ real estate asset.“Developers will therefore need to pre-emptively align their compliance posture with the new executive regulations, as reactive compliance will no longer be sufficient,” he added.Al Rifai said the revised law effectively transforms the WLT from a static tax into an anti-speculation policy tool.“The law allows fees to escalate where inflation, constrained supply or land hoarding are deemed to distort the housing market,” he said.Expanding sc...

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