Lease extensions for 365 days: Details of the new Real Estate Authority decision
The CEO of the General Authority for Real Estate, Abdullah Al-Hammad, issued a new regulatory decision aimed at enhancing the stability of the residential rental sector in Saudi Arabia. The decision extends the term of standard residential lease contracts to 365 days. This period begins from the date the landlord notifies the tenant of their intention not to renew the contract, provided that the remaining term of the original contract at the time of notification is less than one full year.
This decision comes as a continuation of a series of regulatory measures recently taken by the Authority, as the CEO had previously approved raising the notice period for the landlord to the tenant of not wanting to renew to no less than 365 days before the end of the contract, specifically in cases where the landlord wishes to reclaim the property for his personal use or for the use of one of his first-degree relatives, a decision that was made specifically for properties in the city of Riyadh due to the nature of its rapidly growing market.
The context of the decision and its organizational dimensions
These steps fall within the General Authority for Real Estate's comprehensive strategy to regulate the contractual relationship between the parties involved in the rental process (landlord, tenant, and real estate broker). These amendments primarily aim to reduce real estate disputes that may arise due to sudden evictions or short notice periods, thus giving tenant families sufficient time to arrange their housing and seek suitable alternatives without time pressure, which contributes to social stability.
Expected economic and social impact
This decision is expected to contribute to greater balance in the residential real estate market, particularly in major cities experiencing increasing demand. On the one hand, the decision guarantees tenants' right to stability and protection from hasty evictions. On the other hand, it encourages landlords to plan their property management early and notify tenants well in advance, thus enhancing transparency and reliability in real estate transactions and aligning with the Kingdom's Vision 2030 goals of increasing satisfaction with housing services.
Mechanism for appealing the fare amount
In a related matter concerning market regulation, the Authority had previously established a specific mechanism for landlords and tenants to submit objections to the total rent for vacant properties. These objections are subject to precise controls approved by the Authority's Board of Directors, aimed at promoting price fairness.
The authority clarified that accepting an objection requires substantial justification, such as structural changes or major renovations to the property, or the property being offered for rent again after a long period of vacancy. Submitting an objection requires attaching all supporting documents that prove the impact of these changes on the market rental value. This must be done through official electronic channels within the specified legal timeframes, thus ensuring the protection of all parties' rights and preventing price manipulation.
