Saudi Arabia Approves Tax on Empty Land

June 15, 2016 Taxation in Saudi Arabia

RIYADH – Prices of houses of Saudi Arabia could be fall by 50 percent following the approval of a new tax on undeveloped land.

The government of Saudi Arabia has approved sweeping reforms to the property sector in order to boost home-ownership rates and affordability, according to a release made by the Saudi press Agency on June 14th.

The main element of the announcement is a 2.5 percent tax on any undeveloped land plots in excess of 10 000 square meters which has been designated for housing or office development.

The tax is aimed directly at reducing the amount of land packing and speculative investment.

The government hopes that the tax will boost growth in the property sector from 4 percent to 7 percent, while reducing the average price of a house from 10 times the average gross salary to 5 times the average salary, and, also, boosting home-ownership rates from 47 percent to 52 percent.

Some property experts in Saudi Arabia have already claimed that the prospect of the tax has already spurred some land-owners to begin development of residential housing.

Photo By: Andrew A. Shenouda