Saudi Arabia raises the cost of holding idle land

Saudi Arabia now charges owners of idle urban land up to 10% of its value every year. The old flat 2.5% fee is gone. The new tiered regime was gazetted on 12 May 2025 and applies once an owner holds 5,000 sqm of undeveloped land in a city.

In Riyadh the rate depends on the zone: 10%, 7.5%, 5% or 2.5%. Land outside the zones is exempt, but it still counts toward the threshold (MOMAH, 8 Jun 2026). The first bills went out on 1 January 2026, to more than 60,000 Riyadh landowners (AGBI citing MOMAH, 2 Jan 2026).

Key figures at a glance

How the law has changed

The original law dates from Royal Decree No. M/4 of 24 November 2015, with Council of Ministers Decision No. 377 of 13 June 2016. It charged a flat 2.5% a year on undeveloped urban land zoned residential or mixed-use (Mondaq).

Cabinet approved a rewrite on 29 April 2025 (Addleshaw Goddard). The Official Gazette published Royal Decree No. M/244 and Resolution No. 758 on 12 May 2025, and renamed it the White Land and Vacant Properties Fees Law (King & Spalding). The Implementing Regulations of 24 August 2025 set the top rate at 10% of land value a year (MOMAH).

The new name reflects a second charge, on empty buildings. A property left unused for six months of the year can be billed up to 5% of its value, with six months to pay (Saudi Gazette citing MOMAH, 15 May 2026). The Council of Ministers can raise that rate to 10% (King & Spalding).

Riyadh's five zones

Zone one, where the government most wants building, pays 10% of land value a year. Zone two pays 7.5%, zone three 5% and zone four 2.5%. Land outside the zones pays nothing, but its area still counts toward the owner's citywide total (MOMAH, 8 Jun 2026). That stops owners from splitting holdings across a zone boundary to stay under the line.

At 10% a year, a speculative owner cannot simply wait. Over a decade the fees add up to the full value of the plot.

Al-Narjis and Al-Aard hold the largest stock of serviced but empty land in Riyadh, at 2.3 million sqm and over 1.6 million sqm. Together that is enough for over 13,500 homes (MOMAH, 8 Jun 2026).

Who pays, and when

The fee applies from 5,000 sqm. The test is the total area one owner holds in the city, not any single plot (MOMAH). Owners have 60 days from notice to appeal, and the committee must rule within 60 days. Payment is due within one calendar year of the invoice (MOMAH, 8 Jun 2026).

A second phase started in Riyadh in December 2025. By June 2026 more than 25 million sqm had been registered under it, 16 million sqm of that in 21 residential neighbourhoods (MOMAH).

Phase two also covers Makkah, Jeddah and the Dammam metropolitan area. On 8 June 2026 MOMAH reminded owners they had five days left to register. Those who do not register face a penalty of up to 100% of the fee, on top of the fee itself (MOMAH, 8 Jun 2026). The 2016 law had no penalty of that kind.

What a landbank now costs to hold

Omran estimate (illustrative). Take a 20,000 sqm Riyadh holding at SAR 2,000 per sqm. That is just above the Ministry of Justice national average of SAR 1,965 per sqm in H1 2026 (Arab News citing MOJ), and central Riyadh land trades well above it, so real bills will be higher. The land is worth 20,000 x 2,000 = SAR 40 million. The annual fee is SAR 4.0m in zone one, SAR 3.0m in zone two, SAR 2.0m in zone three and SAR 1.0m in zone four, and zero outside the zones. Under the old 2.5% law the same land cost SAR 1.0m a year anywhere in the city. Held for five years in zone one, it now loses half its value in fees.

How the market reacted

Land sales fell sharply in the first quarter of invoicing. Transactions dropped 55% year on year to 21,320 in Q1 2026, according to Real Estate General Authority data. Their total value fell 65% to SAR 20.71 billion. Villa deals were down 44% and apartments 38% (AGBI citing REGA data, Jul 2026).

Omran estimate (average value per land deal). REGA publishes volumes and values, not a land price index. SAR 20.71bn divided by 21,320 deals gives roughly SAR 971,000 per transaction in Q1 2026. Working back from the published declines, the Q1 2025 average was near SAR 1.25 million, so the average deal shrank about 22%. This reflects what changed hands as much as price. It cannot tell cheaper land apart from smaller plots.

Some read this as the tax freezing the market. We think most of the lost volume was speculative resale, which is what the law targets. Building permits support that view: they rose 28% year on year to 7,350 in April 2026 (AGBI, government-sourced, Jul 2026). MOMAH says roughly 71 million sqm of white land in the Riyadh region has entered development or trading, 29 million sqm of it completed, and fee revenue is funding 27 urban projects (Amlak citing MOMAH, 17 Jun 2026).

The fee works alongside the five-year Riyadh rent freeze, in force since 25 September 2025 (King & Spalding). Landlords can no longer count on rent growth while they wait, and landowners now pay to wait. Both push toward new supply, in a residential market where prices were already softening.

What official data does not show yet

Three numbers come up often in this debate but are not in the official record. We have not borrowed them from broker surveys.

• A land price index. REGA publishes transaction counts and values. No government body publishes a Riyadh land price series, so our value-per-deal estimate above is the closest substitute.
• A national invoice count. MOMAH has given Riyadh's January 2026 figure of 60,000+ but no total across the phase-two cities.
• Total fee revenue. Revenue figures for phase one could not be traced to a primary source, so we treat the total as unpublished.

Omran keeps the zone maps, invoice rules and district registration releases in one dated, sourced table. Request the white-land rate and rollout table if your underwriting depends on which zone a plot sits in.

FAQ

What is the white land tax rate in Saudi Arabia? Up to 10% of land value a year since the Implementing Regulations of 24 August 2025. Riyadh's published schedule is 10%, 7.5%, 5% and 2.5% across four priority zones, with outside land exempt but still counted (MOMAH).

What is the minimum land size before the fee applies? 5,000 sqm, measured as the aggregate of all land one owner holds in the city, not per parcel (MOMAH).

Can foreigners own land that would be subject to the fee? Foreign ownership is opening under a separate 2026 framework with its own zones and conditions; any owner whose qualifying white land crosses the 5,000 sqm city threshold falls under the fee regime. See foreign property ownership in Saudi Arabia for the mechanics.

Sources

• Mondaq, original White Land Tax Law (Royal Decree M/4): link
• Addleshaw Goddard, Cabinet approval of amendments: link
• King & Spalding, gazette publication, rename, rate structure: link
• MOMAH, Implementing Regulations (24 Aug 2025): link
• MOMAH, Riyadh five-tier schedule and invoicing mechanics: link
• MOMAH, Al-Narjis and Al-Aard totals, phase-two registered areas: link
• MOMAH, phase-two registration reminder and 100% penalty: link
• Saudi Gazette citing MOMAH, vacant-property fee regulations: link
• AGBI citing MOMAH, 60,000+ Riyadh landowners billed: link
• AGBI citing REGA, Q1 2026 land slump and April 2026 permits: link
• Amlak citing MOMAH, 71 million sqm into development or trading: link
• Arab News citing Ministry of Justice, SAR 1,965/sqm average: link
• King & Spalding, Riyadh rent controls: link