New real estate regulations to correct rental violations and rent increases in Saudi Arabia

In a significant regulatory step aimed at restoring balance to the Saudi real estate market, the General Authority for Real Estate has adopted a set of new regulations designed to rectify violations of the provisions governing the landlord-tenant relationship. These decisions come at a time of major transformations in the real estate sector, primarily targeting increased compliance with regulations, enhanced protection of the rights of all parties, and ensuring the stability of the rental market, which is a cornerstone of social and economic stability.

Organizational context and importance of the Ejar platform

These moves are part of the broader framework of Saudi Vision 2030, which prioritizes regulating and enhancing the efficiency of the real estate sector. The electronic rental services platform "Ejar" plays a pivotal role in this system, transforming the market from traditional paper-based transactions to electronically documented contracts that guarantee rights and have the force of an enforceable instrument. The market, particularly in major cities like Riyadh, faces challenges related to high demand relative to supply, prompting legislative intervention to regulate practices that could compromise fair transactions, such as unjustified price gouging or refusal to register contracts.

Details of the four violations and corrective mechanisms

The new regulations identified four main types of violations that require immediate correction, with a particular focus on the capital, Riyadh, given the unique nature of its current real estate situation:

• Rent increase: The regulations require the landlord who has increased the total value of the rent, or who has increased the value of the rent of the vacant property in Riyadh compared to the value of the last registered lease for the same unit, to correct the value to comply with the regulations and prevailing prices, within a period determined by the competent committee.
• Refusal to register in “Ejar”: The Authority stressed the obligation of any landlord who has not documented his contract in the electronic network to take the initiative immediately to complete the registration, in order to ensure legal coverage for the relationship.
• Refusal to renew contracts in Riyadh: The decisions included landlords in the city of Riyadh who refused to renew contracts and forced tenants to vacate without legal justification, as they became obligated to renew the contract as long as the tenant wished to do so, in order to protect the stability of families.
• Violation of general provisions: Any other violations that conflict with the executive regulations of the Real Estate Brokerage System or the Rental System.

Regulatory procedures and expected impact

The General Authority for Real Estate affirmed its commitment to enforcing these regulations, noting that failure to rectify a violation within a maximum period of ten days entitles the Authority to intervene directly, which may include adjusting the rent or automatically renewing the contract in accordance with the regulations. In complex cases, such as renting the property to a third party acting in good faith, the dispute will be referred to the competent court.

These controls are expected to help curb unjustified rent increases, especially in Riyadh, and enhance confidence in the Saudi real estate market as a safe and regulated investment environment, reducing litigation and providing a more stable residential environment for citizens and residents.