In a decisive move aimed at recalibrating the Saudi Arabian real estate market, the General Authority for Real Estate the adoption of a new set of regulations designed to rectify violations of the provisions governing the landlord-tenant relationship. These decisions are part of a comprehensive strategy to enhance compliance and promote transparency in real estate transactions.
The context of the organization and the importance of the "Ejar" network
These moves fall within the ongoing efforts to regulate the real estate sector, which is one of the main pillars of the Kingdom’s Vision 2030. The electronic rental services network “Ejar” has played a pivotal role in documenting contracts and preserving the rights of the parties, but the emerging challenges in the market, especially in major cities with high population density, have called for new regulatory intervention to close the gaps that some may exploit to harm the stability of the market.
Details of the four violations and corrective mechanisms
The new regulations identified four main types of violations that require immediate correction, with a particular focus on the capital, Riyadh, due to the significant real estate activity there:
- Irregularly raising the rent: The regulations require the landlord who raised the total rent to rectify the situation in accordance with the applicable regulations.
- Exploitation of vacant properties in Riyadh: A special regulation has been put in place for those who have increased the rent of a vacant property in the city of Riyadh compared to the last registered lease contract, whereby the value must be returned to its legal limit.
- Refusal to register with "Ejar": The Authority stressed the obligation to document contracts via the electronic network, considering failure to register a violation that requires immediate action to guarantee legal rights.
- Forced eviction for non-renewal: The decisions included protecting tenants in Riyadh who were forced to vacate because the landlord refused to renew the contract outside of the legal cases, as it became obligatory for the landlord to renew as long as the tenant wanted to do so and there was no legal impediment.
Legal procedures and time limits
The General Authority for Real Estate has confirmed that violators will be given a grace period of no more than ten days to rectify their situations. If this period expires without a response, the Authority has the right to take the necessary legal measures, which may include intervening to adjust the rent or renew the contract by force of law. In complex cases, such as renting the property to a third party (in good faith), the dispute will be referred to the competent court for adjudication, thus ensuring that rights are not lost.
Expected economic and social impact
These regulations are expected to have a tangible positive impact on the stability of renting households, as they will curb arbitrary and unjustified increases in rental prices, particularly in areas experiencing rising demand. Furthermore, these measures will enhance the attractiveness of real estate investment by creating a clear and transparent environment governed by regulations and laws rather than individual whims, ultimately benefiting the national economy as a whole.
