Saudi Arabia has enacted a significant reform of its real estate taxation policy by increasing the White Land Tax from 2.5 percent to 10 percent annually on undeveloped land. This change also introduces a new tax on vacant properties that remain unused without justification, aiming to stimulate land development and address the rising housing demand in urban areas like Riyadh.

The reforms, which were approved during a Cabinet meeting, are designed to broaden the tax base. Previously, the White Land Tax was limited to residential and commercial plots, but the new framework will now encompass all undeveloped land that is deemed suitable for construction.

In addition, the application of the tax has been unified; holdings of 5 000 square meters or more, whether owned individually or combined, within specified urban zones will now face the annual levy. Minister of Municipal and Rural Affairs and Housing, Majed Al Hogail, indicated that these reforms are part of a broader initiative to increase homeownership in Saudi Arabia to 66 percent by the end of 2024. He also mentioned new housing initiatives in collaboration with private developers, with prices ranging from 250 000 to 1.2 million Saudi riyals.

The government plans to release detailed regulations for the revised White Land Tax within 90 days, while guidelines for the newly established vacant property tax are expected to be available within a year. Al Hogail emphasized the sharp rise in property prices in Riyadh, noting that Crown Prince Mohammed bin Salman has issued “clear and firm directives” to align real estate values with economic growth targets across various sectors, including industrial, agricultural, and commercial development.