A list of non-Saudi ownership of real estate…a digital identity and fines of 10 million riyals for violators

Basic requirements for individuals.

Basic requirements for individuals.

Basic requirements for individuals.

Basic requirements for individuals. Non-Residents

The regulation required non-Saudi, non-resident natural persons to complete three main requirements before purchasing any property or acquiring any right in rem over it, which are obtaining a digital identity approved by the Ministry of Interior, opening a bank account within the Kingdom in his name, and issuing a Saudi phone number linked to the digital identity, with the aim of ensuring verification of the customer’s identity and linking all financial procedures and transactions with documented official data.

Obligations of foreign companies

The regulation obligated non-resident companies. Saudi Arabia wishing to own property must register with the Ministry of Investment in accordance with the procedural guide to be issued by the General Real Estate Authority, with full disclosure of the direct and indirect owners, and the appointment of a legal representative with an approved identity within the Kingdom, in addition to opening a bank account in the name of the company.

The Ministry of Investment is responsible for issuing a registration number for the company after completing the regulatory requirements, while the regulations require companies to notify the Ministry within a period not exceeding 15 days when ownership of not less than 5% of the company’s shares is transferred, whether this is done in one process or via Several operations, as well as when there are regulatory arrangements in the country of incorporation that give another party the authority to influence the company’s decisions or limit its independence, in addition to any other cases determined by the General Real Estate Authority.

Regulation of Non-Profit Entities

The regulatory provisions included non-profit Saudi entities, as the regulation obligated them to register with the National Center for the Development of the Non-Profit Sector, disclose the persons in direct or indirect control, appoint a legal representative with an approved identity, and open a bank account within The Kingdom.

It required those entities to notify the Center of any fundamental changes in its organizational structure or persons influencing its decisions, or in the event of arrangements that grant another party influential authority or limit its independence, within a maximum period of 15 days.

Requirements for other legal entities

The requirements were extended to include any non-Saudi legal person that the Council of Ministers may determine in the future, as the regulations obligated those entities to register with the entity. competent authorities, disclosing the owners or persons controlling them, appointing a legal representative, opening a bank account within the Kingdom, and reporting any fundamental changes within a period not exceeding 15 days.

An electronic portal for completing all transactions

Among the most notable innovations of the regulation is the establishment of an electronic portal managed by the General Real Estate Authority and linked to the real estate registry, to be the official platform for receiving requests to own real estate or acquire property rights or dispose of them, whether by non-Saudis or Saudi companies in which non-Saudis participate in Its capital.

The regulation stressed that all payments related to the purchase or disposal of real estate must be made through electronic payment methods approved in accordance with the payment system and services of the Central Bank of Saudi Arabia, provided that the procedures for issuing instruments and transferring ownership are completed through the real estate registry.

Controls for ownership by family members

The regulation regulated the non-Saudi family’s ownership of residential real estate, as it considered the non-Saudi husband and his non-Saudi children as his dependents when owning the home, and prohibited any of them from owning An independent residence, unless the marital relationship ends or the son or daughter reaches the age of twenty-five, which prevents multiple homeownership within one family.

Provisions for Saudi companies with foreign partners

The regulations permit Saudi companies not listed in the financial market in whose capital non-Saudis participate to own real estate or acquire real estate rights outside the specified geographic areas, with the exception of Mecca and Medina, for use in conducting activity or housing workers, after obtaining the approval of the Ministry of Investment.

These companies were allowed to own real estate within geographical areas, including Mecca and Medina, without the need for the approval of the Ministry of Investment, as long as they adhered to the controls stipulated in the system.

2% fees and exemptions in 10 cases

The regulations set a 2% fee on non-Saudis’ disposal of real estate rights for various uses within the cities of Riyadh, Jeddah, Mecca and Medina.

On the other hand, it stipulated complete exemptions from the fee in ten cases, most notably the division of estates, final judicial rulings, expropriation for the public interest, donations to endowments and public entities, returning the property to its previous owner within 180 days according to specific conditions, and dividing the joint property without increasing the partners’ shares.

The exemptions included the actions of diplomatic representations and international bodies in accordance with the principle of reciprocity, and the transfer of the property from a natural person to a company or investment fund that owns all of the property. Its shares or units, in addition to the sale of real estate units resulting from the development of land owned by a non-Saudi, on the condition that the project is completed within the license period and the units are sold within one year of its expiration.

Reportation mechanisms and executive guide

The regulations clarified that all regular notifications are considered to have had their effects if they are made through means of communication registered in the electronic portal or through text messages sent to the mobile phone number documented in government systems.

The General Real Estate Authority was obligated to prepare A detailed procedural guide explaining the mechanisms for implementing the system and regulations, to be approved by a decision of the Authority’s Board of Directors to be the executive reference for all procedures and requirements.

Monitoring powers and a period to correct violations

The regulation granted inspectors designated by the General Real Estate Authority the authority to detect and prove violations of the system and regulations, whether individually or collectively.

It also required the competent committee to take into account the nature of the violation when imposing penalties. And its effects, with the violator being given a period of time to correct his situation ranging from 10 days to 180 days depending on the type of violation and the possibility of remediation, before applying the penalties mentioned in the schedule of violations.

Financial penalties amounting to 10 million riyals

The regulation adopted a schedule for classifying violations and penalties, which includes imposing a fine of up to 5% of the value of the real right subject to the violation, and a maximum of 10 million riyals, in the event that a non-Saudi provides information or documents. Incorrect or misleading to obtain the right to ownership.

The violations included submitting incorrect data to obtain the approval of the Ministry of Investment, refraining from enabling inspectors to perform their duties, not correcting violations within the specified period, and failing to inform the competent authorities of the changes required by the regulation or when changing legal status.

The regulation adopted the principle of gradualness in penalties, as some violations begin with a warning and then escalate to fines ranging from 0.1% and 3% of the value of the real right, with a maximum limit of up to 4 million riyals depending on the type of violation and the number of times it is repeated, while fines for some reporting violations reach two million riyals when the violation is repeated.