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Saudi Arabia 'approves 2.5pc white land tax'

RIYADH, November 30, 2015

Saudi Arabia's council of ministers has approved a proposal to apply a 2.5 per cent ‘white land tax’ on all undeveloped residential and residential/commercial plots within urban boundaries.

The speed at which the law has been approved emphasises the importance of addressing the current shortage of housing at the highest levels of government, said an industry expert.  

Several key details on the tax are yet to be released as the Ministry of Housing has been tasked with the responsibility to publish detailed regulations within the next six months.

The cabinet, however, has given its nod to the proposal which states that the 2.5 per cent tax will be deposited into an account of the Saudi Arabian Monetary Agency (Sama) which will be later used to fund housing and related infrastructure projects across the kingdom.

The law will come into force six months after the release of the detailed regulations by the Ministry of Housing, said leading property expert JLL.

Commenting on the new law, Jamil Ghaznawi, the national director and country head of JLL Saudi Arabia, said: "We expect to witness a fundamental change in the kingdom’s real estate market once the new fee on undeveloped land takes effect, as the developers will be the main players and land owners will start to seriously consider different partnering options in order to develop their land holdings."

The law, he stated, will stimulate further development to address the severe shortage of middle income housing in Saudi Arabia in a number of ways.

A major outcome of the new law will be that this will force some land owners to bring forward their plans and start development on these plots, while others will seek to sell sites to key developers which inturn will help reduce land values, which have been soaring over the last few years,said the expert.

According to JLL, the lower land values will make development more financially viable and therefore stimulate additional activity.
 
Also the revenues from the tax will allow the government to undertake additional housing projects, it added.-TradeArabia News Service




Tags: Saudi Arabia | property | tax | JLL |

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