In accordance with the previous directive from HRH Prince Mohammed bin Salman bin Abdulaziz Al Saud, Crown Prince and Prime Minister to initiate a new package of regulatory measures for the rental market in Riyadh, in response to the challenges witnessed in the capital in recent years concerning the rise in residential and commercial rental prices.
The Real Estate General Authority (REGA) has studied these measures in line with best international practices and experiences to regulate the relationship between landlords and tenants. The Council of Ministers and a Royal Decree have approved the regulatory provisions, which include the following:
First: Suspension of Annual Increases in Total Rental Value of Residential and Commercial Property Lease Contracts (Existing or New). The suspension shall apply to properties located within Riyadh's urban boundaries for a period of five (5) years, starting from today, 03 Rabi’ Al-Akhir 1447 AH, corresponding to 25 September 2025. Accordingly, landlords shall not be permitted to increase the total rental value of a property as agreed in either existing or new contracts from this date onwards. Furthermore, the provisions governing the regulation of annual rental value increases may be applied, in whole or in part, to other cities, governorates, and centers (when needed), pursuant to a decision issued by REGA’s Board of Directors and following the approval of the Council of Economic and Development Affairs (CEDA).
Second: Effective as of today, Total Rental Value of Lease Contracts for Vacant Residential and Commercial Properties Located within Riyadh's Urban Boundaries (that have previously been leased) shall be fixed according to the Total Rental Value of the last executed “Ejar” Contract. For Residential and Commercial properties (that have not been previously leased), the Total Rental Value shall be determined based on the Agreement reached between the landlord and the tenant.
Third: Registration of Lease Contracts on “Ejar” Network: Landlords in respect of any Lease Contract not registered on the electronic leasing services network “Ejar” must submit an application for registration of the Contract in “Ejar.” Tenants shall also have the right to submit an application for the registration of the Contract in “Ejar.” The other party may file an objection before REGA against the Contract details within sixty (60) days from the date of notification of registration. If that period expires without an objection, the Contract details shall be deemed valid.
Fourth: Regulation of Automatic Renewal Provisions in Lease Contracts: Lease Contracts (across all cities of the Kingdom) shall be deemed automatically renewed unless either party notifies the other of its desire not to renew at least sixty (60) days prior to the expiry of the Contract Term, with the exception of the following cases: Fixed-Term Contracts with a remaining term of ninety (90) days or less upon the entry into force of these provisions, or in the case of Contracts that the parties agree to terminate by mutual consent after the lapse of the specified period for submitting notice of Non-Renewal. REGA shall extend the Notice Period stipulated in the model contracts to align with the term and type of the Contract. In the event that the tenant wishes to renew the Contract (for properties located within Riyadh's urban boundaries), a landlord shall not refuse the renewal nor oblige the Lessee to vacate the property except in three cases:
- Tenant’s failure to pay.
- The existence of structural defects in the property that affect its safety and the safety of the occupants, according to a technical report approved by the competent governmental entity.
- Landlord’s desire to use the residential unit for his personal use, or for the use of a first-degree relative.
Or any other cases as may be determined by REGA’ Board of Directors, in accordance with the regulations and standards it sets.
Fifth: Landlords shall have the right to object to the rental value determined pursuant to these provisions, in cases other than existing Contracts, and in any of the following cases: If the real estate unit has undergone substantial structural or constructional renovations that affected its rental value, or if the last Lease Contract for the property was concluded before 2024, and any other cases approved by REGA’s Board of Directors, which shall prepare the necessary regulations and mechanisms to consider and receive the submitted objections.
Sixth: Regulations of violations and fines arising therefrom: A fine of up to (12) months’ rent for the contracted real estate unit shall be imposed on anyone who violates these provisions, in addition to rectifying the violation and compensating the affected party. REGA’s Board of Directors shall issue a schedule of violations and their corresponding fines based on these provisions, taking into consideration the seriousness of the violation and its circumstances when determining the penalty. Committees formed pursuant to Article (20) of the Real Estate Brokerage Law issued by Royal Decree No. (M/130) dated 30/11/1443 AH shall consider violations of these provisions and impose the prescribed fine. Anyone against whom a violation decision is issued may appeal it before the competent judicial authority within (30) days from the date of being notified of the violation decision. An incentive reward of no more than (20%) of the amount of the fine collected for any violation of these provisions (the regulatory provisions specifically governing the relationship between landlord and tenant) shall be granted to whoever reports it — other than those responsible for enforcing them — if the information provided leads to the issuance of a final decision confirming the violation. REGA’s Board of Directors shall determine the rules for disbursing rewards and the mechanism for their distribution in case of multiple reporters.
Seventh: In matters not specifically addressed in these provisions: The provisions of the Civil Transactions Law, issued by Royal Decree No. (M/191) dated 29/11/1444 AH, shall apply. The Council of Ministers may amend these provisions based on a recommendation from CEDA, in light of reports submitted by REGA regarding these provisions.
Directives related to real estate balance have stipulated that REGA shall activate and monitor the implementation of the new regulatory measures in accordance with what has been approved, in cooperation with the relevant entities and in line with the implementation plan. This also includes continuing to monitor real estate rental prices and market movements to ensure compliance, with the ability to propose any further corrective measures as needed. HRH Crown Prince also directed that periodic reports be submitted on the progress of implementing these provisions, including reports on real estate prices and relevant market indicators. This reflects his keenness to achieve balance in the real estate sector in a way that safeguards the rights of all parties.
To ensure the effective implementation of the regulatory measures adopted to govern the relationship between landlords and tenants, REGA, together with relevant entities, will publish clarifications, explain the mechanisms adopted in this regard, and raise awareness.
These provisions represent a pivotal step toward restoring balance in the residential and commercial rental market in Riyadh, strengthening fairness and transparency in the contractual relationship between landlords and tenants. They also mark an important stage in providing a fair and secure investment environment that enhances quality of life and supports efforts for sustainable urban development