Conditions for obtaining an extension for developing undeveloped land in Saudi Arabia
The Saudi Ministry of Municipal and Rural Affairs and Housing announced a conditional extension for landowners subject to the vacant land tax, allowing them to complete development or sale procedures. This step is part of a regulatory framework aimed at increasing compliance and accelerating urban development in Saudi cities, in line with the goals of Vision 2030.
General context of the White Land Program
The “White Land” program is a strategic government initiative launched in 2016 to address challenges in the real estate and housing sector. The program aims to increase the supply of developed land within the urban boundaries of major cities to curb monopolistic practices and unjustified price hikes. This is achieved by imposing an annual fee of 2.5% of the estimated land value on undeveloped land, incentivizing owners to develop it or sell it to other developers. Ultimately, this contributes to balancing supply and demand and providing affordable housing options for citizens.
Terms and conditions of the extension period
The ministry clarified that granting the extension is not automatic, but rather subject to specific conditions demonstrating the owner's commitment to developing the land. These conditions include the existence of an actual development plan, which can be proven through one of the following documents:
- Valid building permit.
- Approved land development plan.
- Implementation contracts for the development of the land's infrastructure.
- Off-plan sales contracts.
- Licensed real estate investment.
The ministry stressed the need for all submitted documents to be valid and in effect at the time of application through the program's official electronic portal.
The importance of the decision and its expected impact
This decision is of paramount importance on both the local and economic levels. Locally, it provides flexibility for serious developers who may face challenges hindering project completion speed, thus supporting the continuity of real estate projects. Economically, accelerating the development of these lands is expected to inject more residential and commercial units into the market, contributing to price stability and enhanced competitiveness. Furthermore, this step will stimulate the contracting and construction sector, create new job opportunities, and support the non-oil economic growth that the Kingdom seeks to achieve.
Application process and compliance monitoring
The extension request is submitted electronically through the beneficiary's account on the "White Land" portal. The "Request an Extension" service is selected, and supporting documents and a project implementation schedule approved by an engineering office are attached. A specialized committee reviews each request and determines the extension period based on several criteria, such as land area and project nature. Adherence to the schedule will be monitored through periodic reports (every six months) submitted by the supervising engineering office. Failure to comply will result in the cancellation of the extension and the application of applicable fees.
The ministry stressed that granting the grace period does not stop the issuance of annual fees, and the sale of land is prohibited before its development is completed during the grace period, to ensure the achievement of the program’s main objective, which is to increase the supply of developed real estate.
