The Real Estate Authority detects violations of off-plan sales by 25 developers
As part of its ongoing efforts to regulate the real estate market and enhance transparency, the General Authority for Real Estate the detection of a series of serious violations related to off-plan sales without the necessary licenses. This intensive monitoring campaign covered major cities including Riyadh, Jeddah, and Mecca, where 25 real estate developers were found to have marketed properties and received payments from buyers through illegal means.
Details of violations and legal procedures
The authority clarified that its monitoring teams, through field and electronic surveillance, were able to identify these developers who blatantly violated the provisions of the Off-Plan Real Estate Sales and Leasing System and its implementing regulations. The danger in these practices lies in collecting funds from citizens and investors without the bank guarantees (escrow accounts) that the system mandates to protect buyers' rights and ensure project completion.
The authority confirmed that the necessary legal procedures are being completed against these violators, which may lead to referral to the Public Prosecution to apply the prescribed penalties, stressing that it will not tolerate any practices that threaten the reliability of the sector or harm the integrity of real estate transactions.
The context of real estate regulation and the importance of off-plan sales
This decisive move comes within the context of the major transformation underway in the Saudi Arabian real estate sector as part of Vision 2030. Off-plan sales are among the most important real estate products that have contributed to increasing the supply of properties and enabling citizens to own homes at competitive prices. To ensure the success of this model, the government has enacted strict legislation aimed at preventing the failure of real estate projects—as occurred in previous contracts—and protecting the funds of shareholders and buyers by depositing payments into separate escrow accounts that are only disbursed for the project and upon specific completion milestones.
Economic impact and boosting confidence
These regulatory measures are of paramount importance both domestically and internationally. The Saudi real estate market is one of the most attractive in the region, and addressing violations enhances the confidence of both foreign and domestic investors in the Kingdom's regulatory environment. Effective market governance ensures the sustainability of real estate growth and protects the national economy from the negative repercussions of fraudulent or stalled projects, thus benefiting the overall economy and increasing the real estate sector's contribution to the GDP.
Call for verification and compliance
In closing, the General Authority for Real Estate reiterated its call to all real estate developers to fully comply with regulations and obtain the necessary licenses before commencing any marketing or sales activity. It also issued an awareness message to clients and investors, urging them to verify the legitimacy of projects through the Authority's official channels before making any payments and to immediately report any violations that could harm the integrity of the real estate market.
