KINGDOM OF SAUDI ARABIA
Buying property in Riyadh, Jeddah
Buying Property in Saudi Arabia as a Foreigner:
Key Points
Foreigners can buy property in Saudi Arabia under specific conditions, with restrictions mainly focused on ensuring that foreign ownership aligns with national interests. Below are the critical details to understand if you are considering purchasing property in Saudi Arabia as a foreigner:
Who Can Buy Property in Saudi Arabia?
1 Eligibility:
◦ Iqama (Resident Permit): Foreigners must have a valid Saudi Iqama (residence permit) to buy property. This means non-resident foreigners are generally excluded unless they become long-term residents.
◦ Exclusions: Ownership is not permitted in the holy cities of Makkah and Madinah, although foreigners may hold usufruct rights (the right to use and benefit from a property) for 99 years in these areas.
2 Restrictions on Land Ownership:
◦ Foreigners cannot buy land. Ownership is limited to existing apartments or houses.
◦ Foreigners cannot own property in protected areas near borders, military installations, or sensitive locations.
◦ Property size is capped at 3,000 square meters.
◦ Each foreigner is only allowed to own one property for residential purposes.
Types of Property and Use
• Residential Use: Properties purchased by foreigners must be used for residential purposes. Using a property for commercial purposes requires additional permits from the relevant authorities.
• Long-term Leaseholds: Foreigners who are not residents may consider long-term lease agreements as an alternative to direct ownership. Long-term leaseholds are a viable option, especially for those seeking to live or do business in Saudi Arabia without buying a property outright.
Options for Non-Residents
Foreigners who are not long-term residents but wish to invest in property can consider the following:
• Joint Ventures with Saudi Nationals or Companies: Foreigners can form joint ventures with Saudi nationals or corporations to purchase properties. This is commonly used by businesses or those looking for an investment opportunity.
• Long-term Leases: Long-term leasing allows foreigners to reside or conduct business in Saudi Arabia without buying property.
Documents Required for Property Purchase
If you meet the criteria to buy property as a foreigner in Saudi Arabia, you must provide several documents:
1 A letter outlining the type, size, and location of the property.
2 A copy of your current and initial passport (the one you used when you first entered Saudi Arabia).
3 A copy of your and your spouse’s residence permits (if applicable).
4 A letter from your employer confirming your income and conduct.
5 A copy of the building permit (if applicable).
6 A survey report detailing the property's boundaries and legal status.
7 A recent bank statement (no older than six months).
8 A building map showing the size of the property and its surrounding area.
9 A written declaration stating the property is for residential purposes.
These documents must be submitted to the General Real Estate Authority for approval before proceeding with the transaction.
Real Estate Transaction Costs
1 Real Estate Transfer Tax: 5% of the property price.
2 Zakat (Wealth Tax): 2.5% of the property value.
3 Rental Income Tax: 5% of the gross rental income for foreigners renting out their properties.
These taxes and fees are important to consider when budgeting for property acquisition in Saudi Arabia.
General Advice
• Location Considerations: Foreigners often choose cities like Jeddah for property purchases due to fewer restrictions compared to Makkah and Madinah.
• Legal Assistance: Given the restrictions and complexity of property laws in Saudi Arabia, it is advisable to seek legal counsel or assistance from specialists to ensure compliance with local regulations.
By meeting the specific conditions and preparing the required documentation, foreigners with residency in Saudi Arabia can successfully purchase residential property.
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