Saudi land tax ‘to cut prices by up to 40%’
Tax on vacant plots in urban areas will spur development and help lower land and property prices – report
The new tax on vacant land in urban areas of Saudi Arabia will spur development and help reduce property prices by up to 40%, according to reports.
Saudi Arabia’s cabinet last week approved details of the tax, which is being introduced as a way to address the kingdom’s housing shortage.
Experts quoted by Arab News said this will also help reduce prices outside of Saudi Arabia’s main cities.
Prices are likely to drop between 20% and 40% over the next two years and then stabilise, Mansour Abu Riyash, chairman of the real estate committee at Makkah Chamber of Commerce and Industry, was quoted as saying.
Awad Al-Dosi, deputy chairman of the valuation committee at the Jeddah Chamber of Commerce and Industry, said the tax would force some landowners to develop or sell plots, helping push prices down by about 30%.
Fees on undeveloped lands will be introduced in stages, according to an earlier statement by the state news agency SPA.
It will first be applied to undeveloped land with an area of 10,000 square metres and more, and later apply to plots of more than 5,000 square metres.
The Saudi housing ministry in May outlined the rules of the upcoming annual tax, saying that the rate has been set at 2.5% of the value of land held by individuals or non-government entities.
Analysts estimate that 40-50% of land inside major cities remains vacant, which has caused a lack of affordable housing, especially for young Saudis.
