How Does the New System Categorize White Land Fees Landowners and Investors
The system imposes an annual fee not exceeding 10% of the land’s value on white lands owned by individuals or legal entities (excluding state-owned properties). It also imposes an annual fee on vacant properties based on rental equivalence, capped at 5% of the property’s value.
Additionally, the executive regulations classify properties into different tiers based on urban development priorities in each city. Salamah Law Firm and Legal Consultants explains how these fees impact various owners and investors through this tiered approach.
White Land Fees
- Fee rate: Up to 10% annually of the land’s value.
- Minimum size: Single land plot or total plots owned by the same person subject to fees must be 5,000 sqm or more.
Example:
A white land plot of 5,000 sqm in Riyadh with a value of SAR 1,000 per sqm totals SAR 5 million.
If the applicable fee is 2.5%, then:
SAR 5,000,000 × 2.5% = SAR 125,000 annually.
Vacant Property Fees
- Fee rate: A percentage of rental equivalence (up to 5% of property value).
The Council of Ministers may increase the rate to 10% upon the ministerial committee’s proposal.
Example 1:
An apartment in Jeddah worth SAR 500,000 with an estimated rent of SAR 20,000 annually.
If the fee is 2% of property value:
SAR 500,000 × 2% = SAR 10,000 annually.
Example 2:
If the fee is based on 15% of rental equivalence:
SAR 20,000 × 15% = SAR 3,000 annually.
Since SAR 3,000 is less than 5% of the property value (SAR 25,000), the payable fee is SAR 3,000 annually.
Details such as precise calculation methods, exemptions, evaluation, and vacancy periods are set by the executive regulations of the Ministry of Municipal and Rural Affairs and Housing. For clarity and legal support, Salamah Law Firm represents clients directly before the relevant authorities.
Conditions for Land to Be Subject to Fees
According to Article 7 of the regulations, land must meet the following:
- Undeveloped (white land).
- Suitable for development/construction.
- Located within designated fee zones.
- Minimum size: 5,000 sqm (individual plot or combined holdings).
- Intended use (residential, commercial, industrial, etc.) must be within permitted categories.
Geographic Zones and Fee Tiers
The Minister of Municipalities and Housing issues decisions per city to define:
- Geographic zones.
- Annual fee rates for each tier.
- Permitted land uses.
- Minimum size thresholds.
Categorize White Land Fees:
Tier 1 (highest priority): 10% annually.
- Prime, fully serviced urban areas near major centers.
Example: A 6,000 sqm plot in Riyadh valued at SAR 12 million → annual fee = SAR 1.2 million.
Tier 2 (high priority): 7.5% annually.
- Areas of high importance with ongoing or planned infrastructure.
Example: An 8,000 sqm plot valued at SAR 10 million → annual fee = SAR 750,000.
Tier 3 (medium priority): 5% annually.
- Areas requiring mid-term development with partial services.
Example: A 7,000 sqm plot valued at SAR 7 million → annual fee = SAR 350,000.
Tier 4 (low priority): 2.5% annually.
- Peripheral lands with limited demand or services.
Example: A 10,000 sqm plot valued at SAR 5 million → annual fee = SAR 125,000.
Tier 5 (outside priority areas):
- No annual fee, but such lands count toward the owner’s total holdings (5,000 sqm threshold).
Example:
An owner with 4,000 sqm in Tier 1 and 3,000 sqm in Tier 5 owns a total of 7,000 sqm. The Tier 1 land is subject to fees, while the Tier 5 land is not, but it counts toward the threshold.
Annual Ministry Review
The ministry will annually review the real estate status of each city (availability, transactions, prices, monopolistic practices) to decide whether to continue, adjust, or suspend the application of fees. This means a land’s tier classification may change over time depending on urban development needs.
FAQs
What are the conditions for land to be subject to fees?
- White (undeveloped) land.
- Suitable for development.
- Within designated fee zones.
- 5,000 sqm or more.
- Within the permitted land uses.
How can I know which tier my land belongs to?
Through Salamah Law Firm, which liaises with authorities to determine classification and annual fee rates.
Does the fee apply to lands in Makkah or Madinah?
Yes, if the legal conditions are met and the land is designated by the Ministry of Housing and Municipal Affairs.
Conclusion
Salamah Law Firm and Legal Consultants provides comprehensive legal support to understand the new White Land and Vacant Properties Fees system and its executive regulations. If you wish to submit a formal objection, our team is ready to assist you.
