Saudi Arabia has implemented a 2% real estate disposal fee on property transactions conducted by non-Saudis in four major cities, according to official regulatory updates. The fee applies to foreign owners transferring or selling real estate assets within specific urban centers as part of the Kingdom’s evolving framework for non-Saudi property ownership.
The measure targets foreign investors and residents operating in high-demand urban areas. This fee is distinct from the standard Real Estate Transaction Tax (RETT).
The regulation specifically impacts non-Saudi individuals and entities holding titles in the four designated cities.
Which cities are affected by the 2% foreign real estate fee?
The 2% disposal fee is concentrated in the Kingdom’s primary economic and religious centers. While the specific list of cities is managed under the executive regulations of the Law of Real Estate Ownership for Non-Saudis, the fee is applied to transactions in Riyadh, Jeddah, Makkah, and Madinah.
In Makkah and Madinah, property ownership for non-Saudis has historically been more restricted due to the religious significance of the cities. However, recent shifts in policy have allowed for specific types of ownership, such as investment units in hotel projects. For instance, the Jabal Omar development in Makkah recently offered 400 hotel units for sale to foreign investors following the opening of ownership pathways for non-Saudis, according to reports from Asharq Al-Awsat.
How does the non-Saudi property ownership law work?
The fee is a component of the Executive Regulations of the Law of Real Estate Ownership for Non-Saudis. This legal framework determines who can own land, the type of property they can acquire, and the conditions under which they must hold it. Under the Bureau of Experts at the Council of Ministers, the law establishes that non-Saudis may own real estate for residential or investment purposes, provided they obtain the necessary approvals from the Ministry of Investment or other relevant authorities.
The 2% fee is triggered during the “disposal” phase—meaning when a non-Saudi sells the property or transfers the title to another party. This differs from the initial acquisition phase, where the primary cost is the Real Estate Transaction Tax (RETT) managed by the Zakat, Tax and Customs Authority (ZATCA).
What is the impact on foreign investors and the market?
Comparison of Real Estate Costs for Non-Saudis
| Cost Type | Rate | Applicability |
|---|---|---|
| Real Estate Transaction Tax (RETT) | Varies | Applied to all property transfers |
| Non-Saudi Disposal Fee | 2% | Applied to non-Saudis in 4 major cities |
| Total Potential Transfer Cost | Cumulative | Cumulative for foreign sellers in major cities |
How to comply with Saudi real estate regulations
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