Buying Property in Saudi Arabia as a Foreigner: Legal Guide

What laws and authorities govern real estate in Saudi Arabia?

The main laws governing real estate in Saudi Arabia are the Real Estate Registration Law, the Real Estate Transactions Tax regulations, and various housing, zoning, and investment rules. The key authorities include the Ministry of Justice, the Ministry of Municipal, Rural Affairs and Housing, the Real Estate General Authority, and the Ministry of Investment for foreign ownership.

Understanding who regulates what helps you know where to verify information, submit applications, or resolve disputes.

Core real estate laws and regulations

• Real Estate Registration Law (2022) Defines how property must be registered, how title deeds are issued, and how priority between competing claims is determined.
• Real Estate Transactions Tax (RETT) Royal Decree introducing a 5% tax on most property transfers, replacing VAT for most sales of real estate.
• Municipal and zoning regulations Set land-use rules, building heights, parking requirements, and permitted activities for each plot.
• Off-plan Sales Regulations (Wafi program) Regulate the sale of units that are still under construction, to protect buyers' funds and ensure project completion.
• Tenancy and Ejar regulations Require registration of most leases, define basic landlord and tenant obligations, and establish rental dispute mechanisms.
• Foreign Ownership Rules Limit and condition non-Saudi ownership, especially in strategic and holy areas, and set when a license from the Ministry of Investment (MISA) is required.

Key authorities and platforms

• Ministry of Justice (MoJ)
  • Issues and records title deeds (Sak) through Najiz (najiz.sa).
  • Hosts electronic property transfers and notarization.
  • Oversees courts that handle property and contract disputes.
• Ministry of Municipal, Rural Affairs and Housing (MoMRAH)
  • Controls city planning, zoning, building permits, and land subdivision approvals.
  • Manages the Ejar rental platform and rental dispute committees.
• Real Estate General Authority (REGA)
  • Licenses real estate brokers and marketing platforms.
  • Issues professional standards and regulates brokerage activities.
• Ministry of Investment (MISA)
  • Licenses foreign investors who wish to own real estate for business or development purposes.
  • Approves certain foreign ownership structures and large projects.
• Wafi Committee (under MoMRAH)
  • Authorizes and supervises off-plan (under development) sales.
• Capital Market Authority (CMA)
  • Regulates listed real estate investment funds (REITs) and public offerings of real estate products.

How is real estate ownership structured in Saudi Arabia?

Real estate in Saudi Arabia can be owned freehold, or held through limited rights such as usufruct and musataha. Ownership may belong to individuals, companies, government entities, or funds, and is evidenced by a registered title deed issued by the Ministry of Justice.

Your rights depend on the type of interest you hold and what is recorded on the official title.

Main types of real estate rights

• Freehold ownership (full ownership)
  • Most secure and common form for houses, apartments, and land.
  • Owner has full rights to use, lease, sell, or mortgage, within zoning limits.
• Usufruct right
  • Right to use and benefit from a property owned by another, usually for a fixed term (for example, 20 years).
  • Common in commercial arrangements and certain investment structures.
• Musataha right
  • Long-term right (often 25-50 years) to develop and build on land owned by someone else.
  • Widely used for large-scale commercial and mixed-use projects.
• Joint ownership and condominium structures
  • Apartment buildings and complexes may be divided into units with shared common areas.
  • Owners' associations may manage shared services, service charges, and maintenance.
• Waqf (endowment) property
  • Property dedicated for charitable, religious, or community purposes.
  • Subject to special rules and overseen by the General Authority for Awqaf.

Evidence of ownership

• Title deed (Sak) Issued by the Ministry of Justice and recorded electronically. Always request a copy and verify it on Najiz.
• Municipal records Show permitted land use, building conditions, and any public-right-of-way or expropriation plans.
• Encumbrance records Mortgages, liens, court orders, or usufruct rights should appear in the property record. Absence of a recorded encumbrance is one of the first things buyers should confirm.

How can Saudis and foreigners buy property in Saudi Arabia?

Saudis and GCC nationals can generally buy most types of property in Saudi Arabia, subject to zoning and special-area restrictions. Foreigners can buy property only in specific cases, typically with a license from the Ministry of Investment and with limits in Mecca and Medina.

For both Saudis and non-Saudis, the safest route is a notarized sale through Najiz with full title verification and clear payment terms.

Buying property as a Saudi or GCC national

1. Check zoning and usage Confirm via the local municipality that the land or unit is suitable for your intended use (residential, commercial, industrial).
2. Verify title on Najiz
   • Confirm the seller's name matches the title deed.
   • Check for mortgages, court orders, or subdivision restrictions.
3. Negotiate and sign a preliminary agreement
   • Often a reservation or purchase agreement with a deposit (Arabic "Araboun").
   • Should clearly state price, payment schedule, conditions, and deadlines.
4. Arrange financing (if needed) Secure bank pre-approval and valuation. The bank will also perform due diligence.
5. Complete transfer on Najiz
   • Seller and buyer (or their authorized representatives) log in with Absher.
   • Details of the property and price are entered, RETT is calculated, and payment is arranged.
   • Title is transferred and a new Sak is issued electronically.

Buying property as a foreigner

Foreign ownership rules are evolving and differ by purpose and location.

• Personal residence for non-Saudis
  • Non-Saudi residents may be allowed to own one property for personal housing with approval, subject to regulations and location limits.
  • Ownership near Mecca and Medina remains highly restricted and often prohibited except through specific vehicles (for example, some listed funds).
• Investment or commercial projects
  • Requires a foreign investment license from MISA.
  • May also need separate approvals for large developments, hotels, or industrial facilities.
  • Often structured through a Saudi limited liability company (LLC) or joint stock company.
• GCC nationals and entities Often enjoy more favorable treatment and may be treated similarly to Saudis for many types of property, but practical restrictions and procedures still apply.

Special considerations for off-plan purchases

• Check the project is registered and licensed under the Wafi program.
• Payments should go to an escrow account controlled under Wafi rules, not directly to the developer's general account.
• Review:
  • Construction milestones and delivery date
  • Compensation if delivery is delayed
  • Service charges and owners' association rules

What is the process to register property and transfer title in Saudi Arabia?

Property transfers in Saudi Arabia are usually completed electronically through the Ministry of Justice's Najiz platform, where the sale is recorded and a new title deed is issued. The process involves verifying the property, paying the Real Estate Transaction Tax, and confirming payment between buyer and seller.

Using official channels greatly reduces the risk of disputes and fraud.

Step-by-step sale and transfer process

1. Due diligence
   • Verify title and encumbrances on Najiz.
   • Obtain site plan and zoning information from the municipality.
   • Check any building violations or demolition orders.
2. Agreement and deposit
   • Sign a sale agreement setting out price, property description, completion date, and responsibilities for taxes and fees.
   • Pay a deposit, typically 5-10% of the price, via traceable transfer.
3. Tax and fee calculation
   • Calculate 5% RETT based on the agreed price (unless an exemption applies).
   • Check brokerage fees and any service charges or clearance fees.
4. Electronic transfer on Najiz
   • Seller starts the transfer request on Najiz.
   • Buyer accepts and inputs payment details.
   • System confirms RETT payment and updates ownership records.
5. Issuance of new title deed The system generates a new electronic Sak in the buyer's name. Download and safely store copies and reference numbers.
6. Post-transfer actions
   • Update municipal records for property tax or fees (if applicable).
   • If mortgaged, ensure the bank's security interest is recorded against the property.

Timeline

• Simple residential transactions with clear title can sometimes be completed within a few days once documentation and funds are ready.
• Complex commercial transactions, properties with encumbrances, or foreign ownership structures can take weeks or months, particularly if municipal or investment approvals are needed.

How are real estate taxes and fees calculated in Saudi Arabia?

The main tax on real estate transactions in Saudi Arabia is the 5% Real Estate Transaction Tax (RETT), paid on most property sales. In addition, buyers and sellers should budget for notary fees, brokerage commissions, Ejar registration fees for leases, and bank charges for financing.

Knowing the full cost structure helps you negotiate price correctly and avoid surprises at closing.

Key taxes and charges

Special residential tax/VAT rules

• Saudi citizens purchasing their first residential property may benefit from tax relief or VAT subsidies up to a certain amount, implemented through participating banks and developers.
• Always confirm current thresholds and eligibility with the bank and the Zakat, Tax and Customs Authority (ZATCA) guidance.

What should you know about renting property and Ejar contracts in Saudi Arabia?

Most residential and commercial leases in Saudi Arabia must be registered in the Ejar system, which standardizes lease terms and links them to government services. A valid Ejar contract is often required for utilities, visas, and resolving rental disputes.

Both landlords and tenants benefit when leases are registered and use clear, written terms.

Key rental rules and practices

• Mandatory Ejar registration
  • Landlords and agents must register residential and commercial leases through Ejar.
  • Unregistered leases can cause problems with electricity, water, and government procedures.
• Standardized lease terms Ejar contracts use a standard format that includes rent amount, payment schedule, duration, renewal terms, maintenance responsibilities, and eviction grounds.
• Payment structure
  • Rent can be paid monthly, quarterly, or annually, usually by bank transfer or SADAD.
  • Post-dated cheques are less common as systems have digitized, but may still appear in some arrangements.
• Security deposits Often equivalent to 1-2 months' rent, held by the landlord or agent. Ejar allows documentation of the deposit to reduce disputes.

Landlord vs tenant responsibilities

Rental disputes

• Disputes are typically handled by designated rental dispute committees linked to MoMRAH and the Ministry of Justice.
• Ejar records provide strong evidence of agreed terms, rent amounts, and payment history.
• Common disputes involve unpaid rent, delayed eviction, maintenance failures, and deposit returns.

How do mortgages and real estate financing work in Saudi Arabia?

Real estate in Saudi Arabia is typically financed through Sharia-compliant products such as Murabaha, Ijara, or Musharaka offered by banks and finance companies. These loans are regulated by the Saudi Central Bank and secured by a registered mortgage over the property.

Your financing choice affects total cost, flexibility, and how quickly a bank will approve your purchase.

Common types of real estate financing

• Murabaha (cost-plus sale) The bank buys the property and sells it to you at a marked-up price, payable over time in fixed installments.
• Ijara (lease-to-own) The bank owns the property and leases it to you, with a promise to transfer ownership after finishing payments.
• Musharaka (partnership) You and the bank jointly own the property, and you gradually buy out the bank's share.

Typical financing process

1. Pre-approval Provide income documents, credit history, and existing liabilities. The bank gives an initial indication of how much it can finance.
2. Property selection and valuation You choose a property; the bank orders a valuation to ensure the price is reasonable and aligns with its lending policies.
3. Final approval and documentation Bank issues an offer stating profit rate, term, monthly payments, and fees. You sign the financing agreement.
4. Mortgage registration The bank's security interest is registered against the property, usually through Najiz as part of the transfer process.
5. Disbursement Bank pays the seller directly; you start making monthly payments according to the agreed schedule.

Key points to negotiate and check

• Total cost of financing (not just the advertised profit rate).
• Early settlement and partial prepayment rules and penalties.
• What happens if you miss payments or want to sell the property before the term ends.
• Eligibility for government-supported programs via the Real Estate Development Fund (REDF) and Ministry of Housing initiatives.

What are common risks and red flags in Saudi real estate deals?

The main risks in Saudi real estate transactions involve unregistered titles, unlicensed brokers or projects, off-plan delays, hidden encumbrances, and unclear ownership in inherited or jointly owned properties. These risks often lead to long disputes, loss of deposits, or difficulty registering your ownership.

Recognizing and addressing these issues before you sign or pay protects your investment.

Common red flags

• Unclear or missing title deed
  • Seller cannot produce a valid Sak, or details on the deed do not match the property.
  • Property is still documented only in old municipal or tribal records without proper formal registration.
• Unlicensed broker or marketing platform
  • Brokers without a valid REGA license or Ejar registration may not follow the required rules.
  • Payments requested to personal accounts rather than regulated escrow or company accounts.
• Off-plan projects without Wafi license
  • Developer cannot show Wafi registration for the project.
  • No escrow account details or clear construction milestones.
• Hidden disputes or encumbrances
  • Property subject to a court case, inheritance dispute, or government expropriation.
  • Existing mortgage that the seller has not settled or disclosed.
• Unrealistic prices or returns Promises of guaranteed high returns or prices far below market without clear justification.

Practical risk mitigation steps

• Always verify the property and seller on Najiz and through municipal records.
• Use only licensed brokers and verify their registration number through REGA systems.
• For off-plan, insist on Wafi documents and escrow account details.
• Do not pay significant amounts in cash or to personal accounts without traceable receipts.
• For large or complex deals, order an independent legal and technical due diligence report.

When should you hire a real estate lawyer or expert in Saudi Arabia?

You should hire a real estate lawyer or expert in Saudi Arabia whenever the transaction involves significant value, foreign ownership, off-plan projects, complex corporate structures, or existing disputes. For straightforward residential purchases or leases, a lawyer is not mandatory but can still prevent common mistakes.

The higher the value and the more parties involved, the more critical professional advice becomes.

Situations where legal support is strongly recommended

• Foreign ownership or investment structures
  • Applying for a MISA license or structuring a foreign-owned company.
  • Acquiring property in sensitive locations or strategic sectors.
• Commercial and industrial projects
  • Long-term land leases, musataha or usufruct rights.
  • Mixed-use developments, malls, warehouses, and industrial sites.
• Off-plan and large residential communities Reviewing sale and purchase agreements, association bylaws, and developer obligations.
• Existing disputes or complex ownership history
  • Inherited properties with multiple heirs.
  • Properties with old or conflicting documentation.
  • Ongoing litigation or enforcement actions.
• Portfolio acquisitions, REITs, and funds Transactions involving multiple assets, cross-border financing, or capital market regulations.

What a Saudi real estate lawyer typically does

• Review and negotiate sale, lease, and financing contracts.
• Check title, encumbrances, and regulatory approvals.
• Advise on RETT, VAT, and other tax implications.
• Coordinate with notaries, municipalities, banks, and regulators.
• Represent clients in rental, construction, and ownership disputes.

What are the next steps if you plan a real estate transaction in Saudi Arabia?

Your next steps are to define your objective, select the right property type and location, verify all official records, and assemble the right team of licensed broker, surveyor, bank, and (where appropriate) lawyer. Moving in this order reduces delays and protects you from legal and financial loss.

Treat each step as a checkpoint before committing more money.

Step-by-step action plan

1. Clarify your objective Decide whether your primary goal is housing, long-term investment, development, or business use, and define budget and timing.
2. Choose location and property type Shortlist cities and neighborhoods, and decide between apartment, villa, land, retail, office, or industrial property based on your use case.
3. Engage licensed professionals
   • Use a REGA-licensed broker or agency.
   • For larger deals, instruct a real estate lawyer and (for construction) an engineer or surveyor.
4. Perform due diligence
   • Check Najiz for title and encumbrances.
   • Confirm zoning and building permissions with the municipality.
   • Review any association bylaws or service charge structure.
5. Secure financing and tax planning Discuss financing options with several banks, and clarify RETT, VAT, and any available subsidies or exemptions.
6. Negotiate and document the deal Use clear written contracts, avoid undocumented side agreements, and keep all payments traceable.
7. Complete registration Finalize the transaction on Najiz or Ejar, obtain all electronic confirmations, and store documents securely.
8. Monitor compliance For investments or rentals, ensure ongoing compliance with municipal rules, Ejar renewals, and tax/reporting obligations.

Following these structured steps in the Saudi system will help you move from interest to secure ownership or tenancy with fewer surprises and a much lower risk of future disputes.